A successful IP system is crucial to the growth of small and medium enterprises in Nigeria, however, there are some major challenges hindering its development.
Small and Medium-scale enterprises (SMEs) are the result of continuous human innovation and creativity, which serves as the running engine through which the economy survives. They contribute immensely to the development of entrepreneurial skills amongst the population, employment generation, poverty elevation, structural transformation of rural areas, industrial spread, amongst others and therefore there is a need for these to be promoted and protected.
After Nigeria’s independence from the British colonial rule in 1960, SMEs were radically promoted by the Federal Government as a means of reducing the incidence of poverty and unemployment in the country with the adoption of several economic reform programs like the establishment of the Nigerian Industrial Development Bank in 1962 with a special unit that focused on SMEs financial requirements, the Small Scale Industries Credit Scheme, the World Bank SME I Loan Scheme and the World Bank SME II Loan Scheme in the 80s and 90s.
More recent programs like the establishment of the Bank of Industry to provide credit facilities to SMEs at an interest rate of 10 percent, the Small and Medium Enterprises Credit Guarantee Scheme in 2010, the Central Bank of Nigeria’s Real Sector Support Facility in 2014 and finally the establishment of the Entrepreneurship Development Centers in various parts of the country, were aimed to develop strong SMEs that can compete globally and contribute to the national growth and development.
"According to the Nigerian Bureau of Statistics, small and medium scale enterprises (SMEs) in Nigeria have contributed about 48% of the national GDP in the last five years. With a total number of about 17.4 million, they account for about 50% of industrial jobs and nearly 90% of the manufacturing sector", as PWC Nigeria PME survey states. The Statistician-General of the Federation and CEO of the National Bureau of Statistics (NBS), Dr Yemi Kale, also revealed that 41.5 million Micro, Small and Medium Enterprises (MSMEs) were registered in 2017, which is a testament to the immense growth of SMEs and a crucial step towards building a flourishing and diversified economy.
However, instead of a slow chain of progress through many decades, IP can significantly accelerate the progress of SMEs, in order for Nigeria to attain a decent level of desired economic development, in line with its vision to be among the leading economies in the world by 2030.
"According to the Nigerian Bureau of Statistics, small and medium scale enterprises (SMEs) in Nigeria have contributed about 48% of the national GDP in the last five years." (in PWC Nigeria SME survey)
How IP Can Benefit SMEs
IP Challenges Faced by SMEs In Nigeria
Lack of adequate information on the relevance of IP to SMEs limits their ability to benefit from the IP system. We believe most SMEs in Nigeria are unaware of IP benefits due to the absence of informative seminars on IP, the non-incorporation of courses on IP in the curriculum of Nigerian universities, amongst other inherent challenges.
Most SMEs do not consider it necessary to protect their business due to its small size while viewing registration and protection as only necessary for big businesses with big inventions and trademarks, however, SMEs should protect every idea or invention from larger competitors who are in a better financial position to commercialize the product or services depriving the original creators of its benefits. For example, in the case of Ayman Enterprises Limited v. Akuma Industries Limited the judgment given by KaribiWyhte JSC held that “Right of action on passing off is statutorily based on Section 3 of Trade Mark Act 1965, which can only be available where there is an infringement of a trademark registered under the said Act”. SMEs risk the loss of exclusivity when they fail to protect their businesses.
Cost of Registration and protection of IP rights are perceived by most SMEs as an additional financial burden which most cannot afford, considering that majority of the costs are incurred before the product or services reach the market. An IP infringement hinders the essential growth needed by SMEs by undermining the confidence in the quality of the brand and its products or services. Piracy and counterfeiting is a major menace amongst businesses in Nigeria. Limited human resources and IP experts accessible to SMEs. An efficient IP management system requires an array of skilled experts ranging from legal to scientific, commercial, and technical and, unfortunately, there are very few IP firms and consultancies in Nigeria.
Having examined the IP challenges encountered by SMEs in Nigeria, below are some suggestions on how IP can promote the protection and development of the new industries as well as strengthening the old ones, with 3 examples of SMEs that have used IP rights to protect their businesses and to promote its growth.
- Public/private sector partnership to educate SMEs on their IP rights, and the ability to realize its commercial potential through technical training on IP, advertisement. IP should be inculcated into the curriculum of higher institutions, etc.
- Government should make policies that impact the market through the promotion of wider and effective use of the IP system, e.g., tax incentives for SMEs, a plethora of policies that create awareness of IP rights, customs regulations to promote conformity with global markets requirements, etc.
- IP strategies should be incorporated in the integral business strategy of SMEs to increase their potential market value.
- The cost of IP protection can be subsidized for SMEs to aid in the protection of their creativity.
- An IP enforcement agency should be created and equipped to combat IP infringement and in cases of infringement adequate penalties and compensation should be awarded.
IP rights can be used to protect and create value for businesses, yet many SMEs in Nigeria are unaware of its value, therefore, eliminating the chance to improve and grow their businesses through the effective use of the IP system. Studies show that when businesses are IP savvy and acquire IP rights they are more equipped to grow in the increasingly knowledge-driven economy.