Finance Ministry, FIRS disagreement hampers MSE growth in Nigeria

More facts have emerged on why the expected two per cent growth in the micro, small and medium enterprises could not be achieved for 2016.

An investigation revealed that a disagreement between the Federal Ministry of Finance and the Federal Inland Revenue Service (FIRS) on how to attract fund from international donor agencies has caused a drop of financial support from the donors.

It was gathered that the question of taxing funds for the purpose of supporting the small scale enterprises, as suggested by FIRS has discouraged most entrepreneurs from applying for such fund facilities between 2015 and 2016.

An official of the revenue body said: “The ministerial guideline included funds from foreign investment, whereas such donor agencies’ funds fall into taxable category.

“But most times, the ministry will give an impression to the micro entrepreneurs that such funds are tax free, thereby creating mistrust between the operators and FIRS assessment officers.”

The official said more than $20 million in tax was anticipated from the sector in 2016, but not up to 40 per cent of the projection has been realised at the end of the third quarter.

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However, a spokesman of the ministry said the need to sanitise tax collection system and assist the small scale firms survive the recession had made it imperative for a review of the revenue collection approach, which has been in place before the recession.

He confirmed that the desire of the ministry to attain the two per cent growth projection for the small scale enterprises in 2016 compelled the Minister, Kemi Adeosun, to pay attention to the appeal by the national executive of National Association of Small and Medium Enterprises (NASME), to consider the possibility of supporting a programme that could expose them to more foreign investors and donor agencies.

It could be recalled that the Federal Ministry of Finance, Central Bank of Nigeria and Bank of Industry had in 2015 moved to aid creation of support funds to be directly assessed by micro enterprise operators.

But the recession, which hit the country hard from May 2016, is said to have made this dream difficult to attain.
By Emma Eke….

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