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|E-commerce: How Foreign Currency Spending Limit Affects Smes In Nigeria by projectregards7: 10:57pm On Oct 05, 2020|
Small and medium Enterprises play vital roles in the growth and development of any nation whether developed or developing nations. Many countries across the globe have come to the full realization of the importance and relevance role SMEs play in the development of the country and the value it adds in terms of economic growth of the country. However, these SMEs are characterized by witty innovations, dynamism, efficiency as well as their small size which allows for faster decision making process.
It is an established fact that SMEs are very important to the development even though they are small in size but there contributions are well felt in all spheres of the country. They have contributed greatly to the enhancement of major economies in the world. They can as well be seen as the back bone of the Nigerian economy and any other developed or developing nation.
E-Commerce builds on traditional commerce by adding the flexibility and speed offered by electronic medium, thereby facilitating improvement in operations leading to substantial cost savings, as well as increased efficiency and competitiveness through the redesign of traditional business methods.
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SMEs play an important role as a breeding ground for entrepreneurs and provider of solutions to address the problems of unemployment, job creation, innovation, and long-term economic development.
Nevertheless, SMEs are faced with the current challenge of foreign currency spend limit which is not so good for small business because with the limit placed on foreign currency which automatically affects their transaction, it can slow down businesses as well as sever on their relationship with their foreign client who may think they are not willing or ready to make payment for a particular goods and services rendered. SMEs whose business is online may have their business site taken down if complete payment is not made.
Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.
Electronic commerce or e-commerce (sometimes written as e-Commerce) is a business model that lets firms and individuals buy and sell things over the internet. It also means buying and selling of goods, products, or services over the internet. It however, involves the transaction of money, funds, and data which are all considered as E-commerce.
Types of E-commerce Models
There are four main types of ecommerce models that can describe almost every transaction that takes place between consumers and businesses.
i). Business to consumer (B2C): this is an e-commerce model where a business sells a good or offers a service to an individual who is a consumer.
ii). Business to business (B2B): this is when a business sells a good or service to another business.
iii). Consumer to consumer (C2C): when a business sells a good or service to another consumer it is considered as an e-commerce model of consumer to consumer.
iv). Consumer to Business (C2B): this is an e-commerce model that entails consumers selling their own products or services to a business or organization.
Examples of Ecommerce
Ecommerce can take on a variety of forms involving different transactional relationships between businesses and consumers, as well as different objects being exchanged as part of these transactions.
i). Retail: the sale of a product by a business directly to a c0onsumer without any intermediary.
ii). wholesale: the sale of products in bulk, often to a retailer who in turn sells to the consumers.
iii). Drop shipping: the sale of product which is manufactured and shipped to the consumer by the third party.
iv). Crowd funding: the collection of money from consumers in advance of a product or service being available to raise the startup capital necessary to bring it to the market.
v). Subscription: the automatic recurring purchase of a product or service on a regular basis until the subscriber chooses to cancel.
vi). Physical products: this is any tangible good that requires inventory to be replenishes and orders to be physically shipped to the customers as sales are made.
vii). Digital products: this is downloadable digital goods, templates and courses, or media that must be purchased for consumption or licensed for use.
Viii). Services: a skill or set of skills provided in exchange for compensation. The service provider’s time can be purchased for free.
PERFORMANCE OF SMES
The performance and growth of small and medium enterprises (SMEs) is a major driver and indices for the level of industrialization, modernization, urbanization, gainful and meaningful employment for all those who are able and willing to work, income per capital, equitable distribution of income, and the welfare and quality of life enjoyed by the citizenry, because SMEs contribute to employment growth at a higher rate than larger firms. The SME sector is globally regarded as an important force of driving the economic growth and employment creation in both developing and developed countries, which is well documented. SMEs (firms with 200 or less employees) makes up the largest business sector in every world economy, and governments around the globe are increasingly promoting and supporting the SME growth as part of their overall national development strategy.
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SME sector offers linkage development of large industries and essential for a competitive and efficient market apart from the stated contributions. SMEs have remained a harbinger of change and a pivot of economic catalysts in industrialized states as they are in the developing world.
In Nigeria, the Small and Medium Scale Enterprises (SMEs) is the driving force and establish an important mainstay of the Nigerian economy. A few years ago SME represent about 90 percent of the industrial sector in terms of the number of enterprises. This sector economically, holds the key to sustainable development of the country and its importance can be put in proper aspect in relation to the structure of the Nigerian economy with many performance contributions as the source of technology innovation and new products
The performance and development of Small and Medium Sized Enterprises (SMEs) has throughout the world, been of great interest to, among others, development economists, entrepreneurs, governments, venture capital firms, financial institutions and non-governmental organizations. Performance management involves establishment of a shared understanding about what is to be achieved, how it is to be achieved; and an approach to managing people that increases the probability of achieving success within an agreed framework of planned goals, standards and individual and team competence requirements. Performance is from the aspect of tangible and intangible resources.
FOREIGN CURRENCY SPENDING LIMIT AND E-COMMERCE
You cannot take away foreign currency or exchange from e-commerce. This is because; SMEs that are e-commerce business need to make transactions with their foreign client which automatically involves foreign currency or exchange. But with the limit placed by the central bank of Nigeria on foreign currency spending limit, it will greatly affect on the business of the SMEs in Nigeria.
Small and medium enterprises (SME) performance forms a very important part of the Nigerian economy. The SME sector is a major engine which encourages the growth of jobs and wealth creation in the country’s economic system. SMEs performance act as a significant part that is linked to the strengthening and enhancement of the development of the country.
The SME sector of the economy cannot be overlooked because it plays a very important role in a nation's economy and this is true for both developed and developing countries. They also form a high proportion of business activities and engender more employment opportunities than the large corporations in recent years.
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