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18 th AATWA Annual Conference (Lagos, 2013) . GROWING SMALL & MEDIUM ENTERPRISES. THE OPPORTUNITY FOR ACCOUNTING TECHNICANS. Albert Folorunsho FCA, FCTI, ADIT. Pedabo Associates Limited. INTRODUCTION. INTRODUCTION -Cont’d.

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18th AATWA Annual Conference (Lagos, 2013)

GROWING SMALL & MEDIUM ENTERPRISES

THE OPPORTUNITY FOR ACCOUNTING TECHNICANS

Albert Folorunsho FCA, FCTI, ADIT.

Pedabo Associates Limited

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INTRODUCTION -Cont’d

At the end of the presentation, participants will be more acquainted with:

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1

SMEs Definition / Classification

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SMEs Definition / Classification

  • The UN and OECD have provided general criteria for SME definition;
    • Turnover
    • Asset base
    • Number of employees
  • Japanese Ministry of Economy, Trade and Industries defines SMEs as follows:

Capital Employees

  • Retail & service sector ≤ USD 600,000 <50
  • Wholesale Sector < USD1.2 Million <100
  • Manufacturing Sector <USD3.6 Million <300
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SMEs Definition / Classification - Cont’d

  • Small Business Administration of USA defines SMEs as businesses that are:
    • Independently owned and operated
    • Non-dominant and profit oriented
    • Classification based on number of employees and sales volume

Turnover B/S

    • < 50 employees ≤ €50 million ≤€43 million
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SMEs Definition / Classification - Cont’d

  • Ministry of Economic Affairs – Taiwan
  • IFC & Multilateral Investment Guarantee Agency (MIGA)
    • < 50 employees
    • < $3million total annual sales
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2

Nigeria

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SME Definition in Nigeria

  • CBN under Small & Medium Enterprise Credit Guarantee Scheme(SMECGS)
    • Asset Base (excluding land) – between N5m & N500m.
    • Labour force - between 11 and 300 employees
  • National Council of industry (2001)
    • Employee ≤ 300
    • Asset base ≤ N200 million
  • National Policy on SMEs
    • Micro enterprises - ≤ 10 employee and <45 million asset base
    • Small Enterprise between 10 – 49 employees and between N5m & N50m asset base
    • Medium Enterprise: From 50 – 199 employees
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Roles & Significance of SMEs

The following have been said of SMEs:

SMEs contributes 50% of GDP …..(OECD).

65% of employment in high income countries are from SMEs.

SMEs generate 70% - 90% of employment in middle income countries.

Significant impact on the export earnings in developing countries.

SMEs enhances entrepreneurship innovation and invention

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Roles & Significance of SMEs - Cont’d

SMEs drive technology change and growth in productivity

Catalyst to private sector development

According to IFC, 96% of business in Nigeria fall under SMEs

90% of manufacturing and industrial sector in numbers fall under SMEs.

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Problems Limiting the Success of SMEs in Nigeria

Deficient public infrastructure

Bureaucratic bottlenecks & inefficiency in the administration of incentives

Lack of easy access to funds

Discrimination by banks, due to credit risk

High cost of packaging appropriate business proposals

Uneven competition and preference for imported products

Dependence on imported raw materials – foreign exchange risks

Low and dwindling consumer purchasing power resulting in low demand for local products

Dumping & importation of substandard products

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Problems Limiting the Success of SMEs in Nigeria – Cont’d

Inadequate educational & technical background.

Weakness in organization, marketing, personnel, accounting records and information usage, processing & retrieval.

Multiplicity of regulatory agencies & taxes, increasing high cost of doing business.

Absence of long term finance.

Poor intellectual capital resources

Lack of appropriate & adequate managerial & entrepreneur skills

Inadequate training & leadership development

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Agencies set up to support SMEs

Small & Medium enterprises credit Guarantee Scheme (SMECGS) of CBN.

Small & Medium Industries Equity Investment Scheme (SMIEIS) of CBN.

Family Economic Advancement Program (FEAP)

Industrial Development and Coordinating Centre.

National Directorate of Employment

Nigerian Bank for Commerce & Industries (NBCI)

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Agencies set up to support SMEs – Cont’d

Nigerian Industrial Development Bank (NIDB)

National Economic Reconstruction Fund (NERFUND)

The African Development Bank / Export Stimulation Loan (ADB/ESL)

Nigerian Export Import Bank

Microfinance Banks

Bank of Industry (BOI)

Small & Medium enterprises Development Agency of Nigeria (SMEDAN).

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Major Areas Identified for Development to boost SMEs

Institutional, Legal & Regulatory framework.

Human Resource Development.

Technology, Research & Development.

Extension & Support Services

Marketing

Infrastructure

Finance.

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Other Steps to boost SMEs Growth

Nigerian Investment Promotion Commission (NIPC).

Nigerian Export Promotion Commission (NEPE)

The Industrial Development Act.

Nigerian Content Development Act.

Private Sector participation in Power, Tourism, Manufacturing and Export.

Solid Mineral Mining etc.

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3

The Roles of the Accountant

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The Roles of the Accountant

Accountability and Planning.

Feasibility Report.

Business Plan Preparation.

Financial Modeling.

Accounting Services & Book Keeping.

Tax Management Services.

IT Services.

Audit & Assurance Services.

Asset Verification & Certification.

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Competence Areas for the Accounting Technicians

  • Budget Preparation
  • Cashflow forecasting
  • Basic Accounting functions
    • Analysis of payables & receivables
    • Bank Reconciliation
    • Petty cash management functions
    • General Ledger entry.
  • Tax Compliance functions
  • Payroll management functions
  • Preparation of management accounts.
  • Basic internal control functions
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Opportunities for and place of the Accounting Technicians.

  • Employment opportunities
  • As accounts officers in SMEs.
  • Outsourcing materials for big/medium size firm.
  • Direct contract services for SMEs.
  • Assist SMEs to be complaint with IFRS effective from 2014.
  • Ample opportunity to diversify from Accounting Profession to several lines of business under the SMEs schemes.
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4

Thank You