German Mittlestand: Any Lesson for Development and Sustainability of Small and Medium Scale Enterprises in Nigeria?

The small and medium scale enterprises (SMEs) sector has been identified as a critical sector for the various roles it plays in the socio-economic development of an economy. Such roles include employment generation, bedrock of entrepreneurial development, avenue for investment and innovation, poverty reduction and economic growth. It is also a source of forward and backward linkages to multinational corporations (MNCs) which will engender foreign direct investment and local technological development. In Nigeria, the SMEs are faced with many challenges which include limited access to fund; lack of capacity of managers etc. These have undermined the growth, development and sustainability of the sector. It is in order to ameliorate these numerous challenges that government over the years have formulated and implemented several policies to develop, encourage and sustain SME success in Nigeria. The study is aimed at drawing important lessons from the success stories of German Mittlestand by importing, adopting or adapting their characteristics. The Mittlestand was chosen as a benchmark because the sector is resilient and was able to weather economic storms during the economic meltdown than many of their competitors. Important lessons that could be learnt by Nigeria’s SMEs include amongst others, the importance of investing in human resources through the adoption of Germany’s dual vocational system; production of high quality goods and services; investing in research and development; provision of after sales services; having a sound business plan that consents to business inheritance, etc. On the part of government, the lessons that could be learnt include: provision of critical infrastructure; creating enabling environment for small businesses; passing and enforcing the local content bill etc.