Are there any specific government policies for small enterprises in Nigeria? Small enterprises function within an economic ecosystem, making them open and vulnerable to the changes that may occur over time due to Government policies.
Government policies affect many small businesses than business owners know. It is important to understand these policies for what they truly stand for and how they affect our businesses.
This is important not only to stay on the right side of the law but also to position our businesses in a way where these policies become favorable.
Let’s start by defining what a small enterprise is and a Government policy.
Small enterprises or SMEs are privately-owned corporations or sole proprietorships with fewer employees and less annual revenue than regular-sized businesses. They are small enterprises because they can apply for government support and qualify for preferential tax policy. With this out of the way, what is a government policy?
A government policy is a plan or course of action that intends to change a particular situation. It is also a rule or principle that better guides decisions, resulting in positive outcomes that promote the community or unit.
Government Policies for Small Enterprises in Nigeria
In this article, we will be exposing you to 5 Government policies for small enterprises in Nigeria. Without further ado, let’s dive in.
- Licensing and registration of small enterprise
- Tax
- Loans
- Advertising
- Privacy
Licensing And Registration
As an entrepreneur looking to start a small enterprise in Nigeria legally, you need to register with the government. Doing this is necessary because it gives you an advantage over your competitors. It also helps to get loans, incentives, and benefits from the government.
As a small enterprise, you must register your business with CAC (Corporate Affairs Commission). By doing so, you have the upper hand in terms of business expansion, operational license, liability limitation by shareholders, entrepreneurial boost, and much more.
This means that no one can use the name of your enterprise because it has already been registered and licensed by the CAC.
Whether small or large, licensing businesses is part of the government policy, be it at the federal, state, or local level. You could also contact either your local government or state government if you need a license for a particular product you would want to produce.
For instance, some states require small enterprise owners in specific industries to obtain licenses, especially enterprises that sell highly regulated substances like alcohol. It is important to note that as a small enterprise owner, you need to always renew your licenses as at when due.
Tax
The government is very particular about tax because it is part of their government policy. They hold taxes in very high esteem, and every business owner, whether small or large scale, must have in mind that they have to pay taxes.
Paying taxes is compulsory because the government uses the taxes for developing the economy. It does this by investing in infrastructural developments and construction.
Today there has been a paradigm shift whereby small enterprises now sell most of their things online, making it difficult for the government to implement ‘government policies for small enterprises in Nigeria’ to pay taxes. However, there are still indirect ways of paying taxes.
For instance, if you sell wigs and weaves online, remember that you use styling oil, thread, hair moisturizer, and so on. There is always a percentage of the tax rate that the retailer or wholesaler who sells those materials adds to the cost. This is an INDIRECT TAX.
Loans
The government policy on loans is primarily for small enterprises. This is because the loans help them boost their business and take care of some problems such as the provision of modern technology and low managerial skills. However, the government also determines who gets loans among all the applicants, and they also determine the interest rate on loans.
As a small enterprise owner, you have the advantage of being given a loan. This is because of your business registration and licensing that allows you to apply for government loans.
The Federal Government set up several credit platforms to assist SMEs with funding. It achieved this with the support of the World Bank and African Development Bank. There are other ways that a small enterprise can get funding through grants from government and non-government institutions.
Advertising
The government policy and regulation warn against fake and unauthentic advertising as it applies to small and large enterprises. As a small enterprise, ensure that whatever product or services you are advertising must be legal and unique. Avoid plagiarism in your ads as it is punishable under the law in the Nigerian constitution.
In this computer age, advertising has gone beyond billboards, newspapers, and magazines. It has expanded into the web, and so has the government policy also evolved. You can track your advertising by using different digital platforms like email, Google advertising, etc.
Privacy
According to the government policy, small enterprise employers or owners should never disclose their employee’s personal information to any person. This Is because of security reasons. This rule is a general rule as it applies to all business owners in Nigeria and abroad.
Ensure that you keep all of your employee’s personal information intact. Such personal information includes:
- Name
- Address
- Health conditions
- Financial status
However, employers could monitor employees’ activities with surveillance cameras inside the workplace and share that footage with the employees.
Conclusion
Government policies small enterprises in Nigeria have could positively or negatively affect these enterprises. We have shown you some of these policies in this post. Which other ones do you know? Drop them in the comments section. Meanwhile, check out SME360 for other articles on how to start a business in Nigeria.