Micro, Small and Medium Enterprises (MSMEs) Development In Nigeria

CONTRIBUTED BY CHIBUEZE JAMES

INTRODUCTION

Nigeria is home to over 36.9 million MSMEs, comprising 96.7% of all businesses in Nigeria.^[1] 67% of these businesses are owned by young people and these MSMEs contribute over 45% to the country’s gross domestic product (GDP), with 98.8% of them falling under the micro cadre.^[2] They nearly account for 90% of the jobs in the country.^[3] These staggering statistics reveal the importance and opportunities that MSMEs offers to Nigeria’s economy.

There are many legal concerns that MSMEs must keep in mind while setting up their business, such as; the legal structure, taxation, and Intellectual Property rights. For MSMEs to grow and advance in Nigeria, it is essential to have an adequate grasp of the legal structure and benefits of intellectual property.

This article examines the meaning of MSMEs, the legal structures under CAMA, and the benefit of IPR in MSMEs.

MICRO, SMALL, AND MEDIUM ENTERPRISES. [MSMEs]

The definitions of micro-business, small business, and medium business depend on the country and who is defining the terms. In Nigeria, Micro Small and Medium Enterprises (MSMEs) are generally referred to as enterprises with up to 250 employees.^[4]

The breakdown of MSMEs according to number of employees are:

1. Micro Enterprises: between 1 and 9 employees.
2. Small Enterprises: between 10 and 49 employees.
3. Medium Enterprises: between 50 and 249 employees.

These Micro, Small, and Medium enterprises are essential to Nigeria’s economy as they are the cornerstone of economic growth, making significant contributions to job creation, innovation, and poverty alleviation.

THE LEGAL STRUCTURE FOR MICRO, SMALL & MEDIUM ENTERPRISE (MSME)

MSMEs can take a variety of legal forms depending on the type of business to be run and the owner’s idea. There are different types of legal structures available under the Company and Allied Matters Act (CAMA)^[5] which are:

1. BUSINESS NAME

This refers to the registered name under which a venture operates. It is suitable for a small business venture. The registration falls under Part E of the CAMA. Section 815 (1) CAMA makes it mandatory for every firm, individual or corporation required to be registered under Part E, to complete the registration within Twenty-Eight (28) days from the date of the commencement of the business. The applicant must provide the address of the individual, firm, or company’s principal place of business, as well as a written statement in the prescribed form, signed as required by this section, and containing the following information:

1. The business name;
2. The general nature of the business;
3. The postal address of the principal place of business; and
4. The postal address of every other place of business.

On the registration of any individual, firm or corporation under the Act, the Registrar shall issue a certificate in the prescribed form containing the business name, name of the individual, firm or corporation.^[6]

1. INCORPORATION OF COMPANY

A company can be formed by any two or more people who comply with the requirement of CAMA for company registration. Furthermore, if the CAMA requirements are met, a single person may be permitted to form a private company.^[7]

A company limited by shares, a company limited by guarantee, or an unlimited company are among the types of organizations that can be incorporated under Section 19 CAMA 2020. Any of these organizations may be private or public. This is an advantage as MSMEs can make choices based on the list of the type of companies available under the Act which they want and can go ahead and make name reservations pending the registration of the company, upon the payment of the requisite fees.

The reservation must be made within 60 days, and the company must be registered using the reserved name. However, the Corporate Affairs Commission (CAC) has the right to revoke or cancel a reservation if it discovers that another business already bears the same or a name that is very similar to it.^[8]

While the article specifies how the company should be run, the memorandum establishes the company. After the reservation and availability of name, an application is required for registration, stating the following:

1. The company’s proposed name;
2. The registered office address;
3. Whether the liability of the members of the company is to be limited and if so, whether it is to be limited by shares or by guarantee; and
4. Whether the company is to be a private or a public company.

The business becomes a body corporate known by the name on the certificate or memorandum upon the eventual registration of the company, which is evidenced by the issuance of a certificate of incorporation and is then able to exercise all the rights and fulfil all the obligations of an incorporated company.^[9]

BENEFITS OF REGISTRATION OF MSMEs UNDER CAMA 2020

In line with the structures available under CAMA, it is advisable for MSMEs to be duly registered as it provides them with a variety of benefits, including:

1. It helps their business remain relevant on the record of the corporate affairs commission;
2. It gives their potential customers assurance that they are doing business with a trustworthy company;
3. It gives the business owner an advantage over many other businesses, especially those that are not registered; and
4. It is simpler to obtain loans from banks and Development Finance Institutions with a registered business.

MSME & INTELLECTUAL PROPERTY RIGHTS

Many MSMEs proprietors are of the belief that once a business name, company, or partnership has been registered as a legal entity, it is sufficient to own their intellectual property rights. A name registered with the Corporate Affairs Commission (CAC) and a name or mark registered as a trademark with the Trademarks and Patent Registry are two different things. This means the name is protected by the two registrations’ rights, which are derived from different authorities.

A trademark identifies and provides information about the origin or quality of goods and services of the enterprise, while registration with the CAC, protects the name of the enterprise or company. The World Intellectual Property Organization provides a clear explanation of what intellectual property is by stating the following:

Intellectual Property (IP) refers to the creation of mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Intellectual Property (IP) is protected by the law, by, for example, patents, copyright and trademarks which enable people to earn recognition or financial benefit from what they invent or create.^[10]

The relevance of Intellectual property to MSMEs cannot be overemphasized, because of its importance towards innovation and creativity, which in turn creates jobs and boosts competitiveness. The literary and entertainment industries have so far demonstrated the importance of IP towards originality and growth in their various spheres which is worthy of emulation by MSMEs.

Under IP, there exist other types of IP which include:

1. Patent: Patent rights are protected under the Patent and Designs Act of 1970.^[11] A patent is a grant by a country to an inventor of an exclusive monopoly, the right to preclude another person from exploiting, making, using, importing, or selling invention his invention without his consent for a fixed period of twenty (20) years.^[12]

In accordance with Section 3 of PDA, the patent application must be submitted in the prescribed format, which must include the applicant’s full name, address, a description of the relevant invention, any necessary plans and drawings, a specification, a claim or claims, and any other information that may be specified, along with the prescribed fee.

1. Copyright: This area of IP grants protection automatically upon compliance with the requirement of law which provides that the work has been fixed in any medium of expression known or later to be developed, from which it can be perceived, reproduced or otherwise communicated either directly or with the aid of any machine or device.^[13]

The following broad categories of works, including literary works, musical works, artistic works, cinematographic works, sound recordings, and broadcasts, are listed as eligible for copyright protection in the Copyright Act.

1. Industrial Design^[14]: Industrial Design focuses mainly on any aesthetic feature of a company or organization. According to the Patent and Designs Act, an industrial design includes any colours, combination of lines (or even both), or three-dimensional forms (whether having colours or not), of which is the intent of the maker to use as a model or pattern, which will be multiplied by the industrial process. Simply, an industrial design is an aesthetic feature that makes the product identifiable in the market.

It is important that an industrial design is moral and not contrary to the public, otherwise, it will not be accepted for registration. Yes, it is compulsory to register the industrial design, and the registration lasts for a period of 5 years. It is then renewed twice, for a period of 5 years each.

BENEFITS OF INTELLECTUAL PROPERTY TO MSMEs

1. IP enables small and medium-sized businesses to profit from their inventiveness and creativity through licensing, loan collateral, and the commercialization of IP-related goods and services, which will promote and support additional innovation;
2. Intellectual Property rights registration prevents rights infringement, and when infringed, appropriate sanctions and compensation can be sought;
3. IP rights protect inventions and promote exclusivity to control and exploit their creations; and
4. Intellectual property rights can increase the value of MSMEs to prospective investors and financial institutions within the local and global community.

CONCLUSION

The preceding has revealed that MSMEs are a critical component of the country’s economy with a recognized legal structure put in place by the law. It also revealed the benefits that intellectual property offers MSMEs. It is necessary, therefore, to promote intellectual property protection and awareness, so that business owners are aware of the advantages in registering their businesses and protecting their intellectual property rights.

1. Jumoke Oduwole ‘ What next for micro, small and medium enterprise in Nigeria’ accessed at https://businessday.ng/backpage/article/what-next-for-micro-small-and-medium-sized-enterprises-in-nigeria ↑

2. Ibid. ↑

3. Ibid. ↑

4. Akeem ‘MSME – An Overview of Micro, Small and Medium Enterprises In Nigeria’ accessed at investsmall.co/msme-in-nigeria. ↑

5. Companies and Allied Matters Act, 2020 No. 3 A13. ↑

6. CAMA 2020, section 817 (2). ↑

7. CAMA 2020, section 18. ↑

8. CAMA 2020, section 31. ↑

9. CAMA 2020, section 36 (2) ↑

10. ‘What is IP? ‘accessed at https://www.wipo.int/about-ip/en/. ↑

11. Patent and Design Act 1970 P2 Laws of the Federation of Nigeria 2004. ↑

12. http://www.resolutionlawng.com/patents-law-in-nigeria. ↑

13. Copyright Act 2022, section 2(1). ↑

14. Joy Ayara: Laws Regulating Intellectual Property In Nigeria ↑