7.8million SMEs risk folding up in Nigeria every two years

: “The Demise of Small Businesses in Nigeria: A Harsh Business Environment Takes Its Toll”

7.8million SMEs risk folding up in Nigeria every two years

According to the president of the Association of Small Business Owners of Nigeria, Femi Egbesola, within the past two years, 7.8 million small businesses in Nigeria have ceased to exist. This represents 20% of the 39 million businesses in the country. Despite commending President Bola Ahmed Tinubu’s initiative to support small and medium enterprises (SMEs), Egbesola raised concerns about the issue of diverted funds and palliatives. He urged the government to address the harsh business environment faced by businesses, as the palliatives would have minimal impact without improvements in the environment. The collapse of SMEs was attributed to factors such as high costs, lack of funding, poor infrastructure, and multiple taxes.
 

According to Femi Egbesola, the president of the Association of Small Business Owners of Nigeria (ASBON), over the past two years, 7.8 million small businesses in Nigeria have ceased to exist. This represents 20 percent of the 39 million businesses recorded in the country. Mr. Egbesola also praised President Bola Ahmed Tinubu’s initiative, which he believes is advantageous for small and medium enterprises.

However, Mr. Egbesola raised concerns about the misappropriation of funds and relief supplies, which has been an ongoing issue in the country. He cautioned that without collaboration between the government and relevant associations, corrupt politicians could hinder the distribution of intended palliatives, leaving those in need with nothing. He emphasized the need for the government to address the challenging business environment to ensure the effectiveness of the palliative measures.

Mr. Egbesola stated, “Our statistics remain the same, and it is even more profound. I can categorically tell you now that 20 percent of businesses have gone under within the past two and a half years, from January 2021 till date… If you look at 20 per cent of that is 7.8 million businesses that have gone under.”

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) conducted research in 2022, revealing that at least two million SMEs in the country collapsed between 2017 to 2021. This aligns with ASBON’s findings.

Meanwhile, SMEDAN’s Director-General, Dikko Radda, disclosed that the number of SMEs in the country dropped from 41 million to 39 million. He stated, “According to the 2021 MSME Survey, there are 39 million MSMEs in Nigeria. This is a significant drop from 41 million MSMEs reported in the 2017 survey report… Going by ASBON’s report, this number has dropped further from 39 million to 31.2 million SMEs.”

Solomon Aderoju, the National Vice President of the Nigerian Association of Small and Medium Enterprises, attributed the collapse of SMEs primarily to the harsh business environment. He highlighted issues such as high operating costs, inflationary pressure, over-taxation, and lack of access to funding. He stated, “The reason is obvious. The high cost of operations, lack of funding, poor infrastructure, multiple taxes.”

 

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