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The Critical Role of SMEs in Integrated Healthcare Delivery

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The Critical Role of SMEs in Integrated Healthcare Delivery

For a long time Nigeria has not been able to adequately tap into the inalienable benefits embedded in the existence of a thriving small and medium scale enterprise driven environment. This is because SMEs in the country have not really gotten the boost they need to flourish and even survive. The health sector as in all other sectors is in dire need of government support and funding as the country is still grappling with basic health development challenges. Health Editor, MORGAN NWANGUMA gives a picture of what the issues are, and how the country can properly harness the advantages inherent in a viable SMEs driven economy, as well as the critical role SMEs can play in the healthcare sector.

It is on record that SMEs make a sizeable contribution towards the manufactured export markets of most of the industrialised East Asian countries’ economies such as we have in China and India. Industry and economic experts have advocated the need therefore for a comprehensive state support of SMEs by assisting them properly with funding because they have been identified as viable tools for driving sustainable healthcare in the country. Small and medium enterprises’ contributions in places like China and India range from 31-56%, and this is far more than what obtains in most of African countries, the best so far coming from countries like Tanzania and Malawi; but they rather fare comparatively low at just around 1% for instance.

At a recent forum tagged ‘Exploring Opportunities for SMEs Financing in the Health Sector’, the stake-holders made it clear that the government can however not singularly take care of the financial investment needed to drive a viable healthcare system except through the creation of a harmonious and collaborative working relationship with the private sector. The forum which was organised by the Lagos State government in collaboration with UKAIDS’s Partnership for Transforming Health System Phase 2 (PATHS2), and Bank of Industry (BOI), considered finance as a major constraint among all the factors confronting the demand and supply aspect of healthcare delivery.

There is an urgent need for financial institutions, government, and other partners to devote adequate funding to healthcare providers and facilities especially in the private sector so that the society can attain qualitative healthcare. By the foregoing, it points to the fact that most countries in Africa including Nigeria are yet to even key into the race for the development of SMEs as a means of sustainable development let alone in the health sector.

But according to stake-holders, healthcare delivery must be qualitative if it is to be competitive; and in the words of Mr. Rasheed Olaoluwa, the Managing Director, Bank of Industry, this is the ‘indices upon which the millennium development goals (MDGs) are predicated’. There is therefore an urgent need for the government to seriously target policies that will encourage the establishment and growth of SMEs, and the boosting of their export potentials for the growth and development of the country in general.

In today’s global economies, SMEs are the core drivers of any viable society – generating employment for most of the teeming workforce while contributing also a larger chunk of the countries’ gross domestic product (GDP). Thus this is the case in advanced economies including the industrialised countries of the Far East. But unfortunately it has not been so in most of African countries including Nigeria.

Considering all of these, it is therefore not surprising that in the advanced and industrialised economies SMEs and organised micro-enterprises are responsible for over 95% of business outfits. They also account for 60-70% of employment, 55% of gross domestic products (GDP) and they are equally responsible for making available most of the new employments which include also those in the healthcare sector.

Having considered the very crucial role and importance of SMEs in thriving economies, it therefore implies that healthcare delivery can adequately be facilitated by the inclusion and empowerment of the informal sector. Thus the role of small and medium enterprises cannot be overemphasised here because unlike what we get in the Far East and Asian countries, the case in Nigeria is rather pathetic – the country being the seventh largest producer of crude oil in the world, with one of the highest natural gas reserves in the world, and being so endowed in so many other ways.

According to Mr. Mike Egboh, national programme manager, PATHS 2, it is very important for banks to work in collaboration with the health sector; he said, “The country contributes 10 per cent of maternal mortality cases globally. Some war-torn countries are better off. Liberia’s health indices are better than those of Nigeria,” he added.

Mr. Egboh also insisted that if more investment is channelled towards the healthcare sector there will be visible signs of development and that would in no small measure reduce the current phenomenon of health tourism embarked upon by many Nigerians. Speaking further, he added that “Many Nigerians still lack access to healthcare. There is the need for us to have social responsibilities.” This is clearly a pointer to the fact that government cannot go it alone and healthcare ought to be everybody’s concern. The private people led by the SMEs must take up the challenge to key into the available opportunities while nudging government to create the enabling environment for them to thrive through the drafting of meaningful policies, and quality programmes.


This is again very important when you realise that doctors are really not trained to be businessmen but rather they are trained to save lives and care for patients; and in the words of Dr. Femi Olugbile, former Permanent Secretary, Lagos State Ministry of Health, SMEs are to be responsible for looking after health seeking encounters of people on a daily basis. He emphasised also that the state government owns just about 300 heath facilities while the rest running into a total of about 3,000 belong to the private sector operators.

It is evident that private sector financing in Nigeria has not been encouraging; if anything at all, it has always been lopsided and lacking in vision. If only the financial institutions play their roles properly we should see a rapid growth in the economy as well as GDP. Small and medium scale businesses or investors find it extremely difficult getting access to credits, and this by extension is killing whatever gains would have been made on the health and economy of the citizenry. Since private healthcare facilities are mainly part and parcel of this catchment, it simply means that by denying the small clinics, private hospitals, maternity homes, pharmacy stores, and even the popular patent medicine stores and caregivers alike the desired leverage to thrive, general healthcare is bound to suffer.

According to United Nations Conference on Trade and Development (UNCTAD, 2001) report, emerging economies like Nigeria represent a huge potential market for credit, mainly in sub Saharan Africa where according to the United Nations Capital Development Fund (UNCDF) only 4% of people on the continent have a bank account. Evidences abound to show that local financial institutions that have successfully served the SME market in developed economies have found it extremely lucrative.

And so, just imagine if a more concerted effort is made to deliberately pursue a policy of equipping SMEs the more, they will easily be the engine room of development in Nigeria for instance, and this is what ought to be. If only we are able to eliminate the burdens of unnecessary licensing and multiple taxation, lighten importation rules and procedures on the part of small private investors, this will of course rub off on healthcare delivery giving rise to a more efficient and affordable healthcare and of course, a healthier population.

A good example of how financial institutions can play a pivotal role in this regard is what is happening today with Barclays Bank of the UK which has a huge presence in Africa. It has its tentacles spread across 12 African countries, employing 41,000 people on the continent – being one-third of its total workforce. The bank also has on its customer base a total of 8 million people. It is on record therefore that Africa accounts for 13% of the group’s total profits. Thus Barclays bank has worked assiduously to integrate SMEs into its operations.

SMEs can help a lot to alleviate poverty in the Nigerian economy since subsistence enterprises make up the bulk of SMEs in developing countries. Outside of the agricultural sector most of which are also subsistence, official reports say they make up about 90 per cent of small firms – most of which are micro-enterprises consisting of family businesses. In that SMEs are localised, they have interests in the community development, creating employment opportunities and growing small sized incomes that multiply in several folds.

Furthermore, they provide essential goods and services at affordable costs as may be needed by the communities in which they operate and by so doing they are collectively helping the government to solve bigger economic problems on the national levels much of which is embedded in the health and wellbeing of the individual.

And so it becomes imperative that government on its part must go the extra mile to ensure that the necessary incentives are in place so that especially cottage industries which also include very small community and neighbourhood healthcare facilities blossom. Such incentives may include the removal of such clogs as over-taxation; granting tax rebates or holidays, and reduced import tariffs on raw materials, and so on.

Other areas to give attention include ensuring that operating costs are minimised by putting in place reliable and constant power supply, elimination of bureaucratic bottlenecks, adequate security, and efficient transportation modes, etc. Thus by so doing SMEs in the healthcare industry will be better placed and empowered to compete while also delivering affordable and prompt services.

Government must be seen to be involved in the activities of SMEs and so it behoves them to create the much needed enabling environment for them to thrive. Other incentives such as the provision of start-up funds and subsidies that are akin to the ones made available to large corporations and state-owned projects are needed so that very efficient and very cheap healthcare can be accessed by the citizenry. However, it is worthy to note here that government is beginning to double its efforts in this direction by reaching out to the SMEs through the initiatives of a few government organs and institutions such as the Bank of Industry (BOI).

Of recent the bank within its limited scope has been encouraging small level enterprises in the country that are able to meet up with its stipulated requirements by enabling them access loans at minimal interest rates. It is gladdening that eight companies at the moment are using their facilities to enhance manufacturing good practice. According to the managing director, two companies have already achieved this height while leaving their doors open to fresh proposals from individuals and companies that are suitably qualified to also come on board.


The Bank of Industry is also taking on a new phase of activities which involves the categorisation of specific groups of prospective (skilled) applicants into clusters for a more effective catchment of people in the various sectors of the economy. This is rather an open invitation to organised healthcare delivery outfits as well as allied care-givers to partake of the opportunities that the bank is offering; this they can do by approaching the bank through their umbrella bodies. Taking advantage of its spread and accessibility via their 14 offices across the federation as well as the bank’s online portal, the Bank of Industry is poised to play even a greater role in driving investments in the healthcare sector.

Speaking further on these isues, Mr. Olaoluwa cautioned that they will only consider and support applicants that put forward very clear business models; emphasising on this he said, “As a lender we want to be sure that their businesses can generate sufficient funds to pay back their loans.”

From the foregoing It will be most desirable therefore that government enables measures that will eventually lead to the creation of an investor-friendly environment; it can go a step further to partner with SMEs in a bid to promoting and concretising the philosophy of public-private sector initiatives. This no doubt will further enable specifically the health enterprises attract venture capital funds which could lead to higher levels of investment in this critical sector.

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