Peter Obi promises to invest heavily in MSMEs, good idea or nah?

As part of his agenda if he wins the 2023 presidential elections, Peter Obi of the Labour Party has stated his intention to invest heavily in micro, small, and medium-sized enterprises, MSMEs.

Investing in MSMEs is the practice of providing financial support to businesses that are typically smaller in size and have fewer employees than larger corporations.

This type of investment can take many forms, such as providing loans, offering equity financing, or providing grants. Investing in MSMEs is often seen as a way to support economic growth and development, as these businesses are typically the backbone of many local economies. They also provide important opportunities for entrepreneurship and job creation.

There are several advantages to investing in MSMEs, including:

1. Economic growth and development: MSMEs are often the engines of economic growth in local communities, and investing in them can help to stimulate economic development and promote job creation.
2. Diversification of investments: Investing in MSMEs can help to diversify an investment portfolio, reducing the risk of loss from any one investment.
3. Social impact: Investing in MSMEs can help to support businesses that are focused on providing goods and services that benefit local communities, such as supporting environmental sustainability or promoting social inclusion.
4. Potential for high returns: While investing in MSMEs can be risky, there is also the potential for high returns if the businesses are successful.
5. Supporting entrepreneurship: Investing in MSMEs can help to support entrepreneurs and provide them with the resources they need to grow and succeed. This can help to foster a culture of innovation and creativity.

There are also several potential disadvantages to investing in MSMEs. Some of these potential drawbacks include:

1. Risk: SMEs are generally considered to be higher-risk investments compared to larger, more established companies. This is because they tend to have limited financial resources and may be more vulnerable to economic downturns or industry-specific challenges.
2. Volatility: SMEs may experience more volatility in their financial performance and stock prices compared to larger companies. This can make it more difficult to accurately value the investment and may lead to greater price swings.
3. Limited liquidity: SMEs may not have the same level of liquidity as larger companies, which can make it more difficult for investors to sell their holdings when they want to.
4. Limited information: SMEs may not have the same level of transparency as larger companies, which can make it more difficult for investors to get accurate and up-to-date information about the company's financial performance and prospects.
5. Dependence on a few key customers or suppliers: Many SMEs may be heavily dependent on a few key customers or suppliers, which can create additional risk for the company and for investors.
6. Limited access to funding: SMEs may have more limited access to funding compared to larger companies, which can make it more difficult for them to grow and expand.

These are arguments for and against the idea of the government investing heavily in small and medium-sized enterprises.

Overall, it is important for an Obi-led government to carefully consider the risks and potential benefits of investing in SMEs, and to develop strategies that take these factors into account.