The future of small businesses in Nigeria

With the recent happenings in Nigeria, it is apparent that the Nigerian economic environment is not conducive for growth especially for small and medium businesses. Experts have persistently raised an alarm on Nigeria’s gradual economic downfall while government officials have persistently lived in denial.

 

Just recently, inter-state transporters; private transport companies said they may have to increase fares by as much as 70 percent in order to stay in business, they also said the increase is inevitable, beginning from the end of the third quarter if no immediate support comes from the government and its agencies.

 

In Nigeria, SMEs are one of the major contributors to the economy as they account for about 64 percent of employment and 90 percent of the industrial sector in terms of their number. These enterprises provide everyday products and services which citizens use.

 

Nigeria’s 37 million micro, small, and medium-size enterprises (MSMEs) play an important role in the country’s economy, but accessing loans to grow their businesses remains a mirage. The Tony Elemulu Foundation recently signed a Memorandum of Understanding with the ECOWAS commission to deepen the activities of SMEs in Nigeria.

 

Also, in May 2016, the Central Bank of Nigeria launched a modern online collateral registry with the support of the World Bank Group. “The benefits of the collateral registry include enabling businesses to leverage their assets to obtain credit for growth, improve assets liquidity especially short-term assets, and allow asset diversification as well as to reduce cost and promote prudent lending,” said Mainasara Muhammad, the Registrar of the National Collateral Registry.

 

But how far has the initiative gone? Are Nigerians benefiting already?  Not yet. But if the new programme introduced by the World Bank and CBN work the economic condition in Nigeria will surely get better. Moreover, young people would be able to do business, made in Nigeria goods will thrive and the unemployment rate will decrease

 

Interestedly, SMEs are on the radar of forward looking individuals and businessmen. When Mark Zuckerberg, Facebook founder visited Rosemary Njoku, a medium scale entrepreneur in Yaba and commended her efforts to increase connectivity in Nigeria, he inadvertently drew attention to the impact which a small business could have on society at large.

Nigeria has a vibrant and entrepreneurial ecosystem there. The nation already boasts several up-and-coming startups and has some financial potential for international companies as well. Even with the just concluded ASO VILLA DEMO DAY, a lot assumed that just maybe the government is interested in the small business ecosysyem.

 

Perhaps the biggest challenge which SMEs have faced in the last 15 months have revolved around funding, inflation and the exchange rate which have all government to affect their animal spirit. Government has promised to resolve these issues while call for lower interest rates have gone louder.

Given the size and potential of Nigeria’s market, the potential for SME growth remains high, but those that manage the economy must do what it takes to make the environment more conducive.

Oluwatobi  Adesuwa Balogun