“The future of SMEs in Nigeria will therefore remain uncertain and grim if parameters such as business friendly environment and the right policy frameworks likely to revamp the system are continually ignored by the policy makers.”
By Olawale Lamina
The Nigerian harsh economic climate has a semblance of the climate of fear, where there is high cost of living and a remarkable difference in the gap between the rich and the poor amidst a soaring youth population, leaving the poor even poorer.
Despite the fact that the Small and Medium Scale Enterprises, SMEs have the potential to reposition the nation along the path of economic growth if properly managed as seen in a clime like India, Nigeria’s experience has been largely dominated by challenges which include low patronage of local innovation ( resulting in an unfavorable balance of trade to the country, when viewed against the nation’s penchant for foreign goods), lack of access to credit facilities cum high interest rates, policies that are inconsistent with steady economic growth and, not in the least, lack of regular power supply and high tariffs on same.
These drawbacks over the years have contributed immensely to the harsh economic climate now visibly manifest in terms of high unemployment rate, job losses, abysmal increase in the cost of living and, above all, the high cost of doing business, which is a direct affront on the development of Small and Medium Scale Enterprises in Nigeria. Little wonder, these realities, not too long had compelled global economy outlook ranking institutions to classify Nigeria in the lowest wrung and labeled the country, sadly, as the Poverty Capital of the World.
Despite the grim statistics characterizing the nation’s SMEs which cast a shadow on the future of same, it is worth noting that SMEs remain pivotal to sustainable national economic growth and development, as seen in the classic example of India, where the SMEs received necessary boost and appropriate supportive policies injection, which in turn repositioned a country with the second largest population in the world for economic recovery with high reduction in poverty level.
To appreciate the critical role of the SMEs is to consider the PricewaterhouseCoopers (PwC) report on Nigeria, that SMEs are responsible for about 48 percent of the national GDP- (Gross Domestic Products), 96 percent of businesses, and 84 percent of employment. And same report notes that, as a result of the Nigeria’s economic downturn, at least 1.9 million SMEs have been lost since 2017.
Similarly, a report by the Association of Small Business Owners of Nigeria (ASBON), states that about 8 million small businesses and potentially big businesses have closed shop between January 2023 and June 2024, as a result of harsh economic policies, increasing inflation, and rising cost of living, mainly occasioned by the removal of fuel subsidy and currency devaluation.
Presently, Nigerian SMEs operators lack the resilience to brave whatever odds that come along, as they shut down by choice where there are no incentives to drive or nurture their businesses to growth.
The future of SMEs in Nigeria will therefore remain uncertain and grim if parameters such as business friendly environment and the right policy frameworks likely to revamp the system are continually ignored by the policy makers.
The government of the day should rejig the economy and give necessary filip to the SMEs, as a way of resuscitating the economy and jerk down the level of poverty, inflation and unemployment in the country through the introduction of policy initiatives and programmes germane to the survival of the critical sector as the SMEs.
I consider the gains of the SMEs to the general wellbeing of the nation, as good job creators, employers of labour at micro level and major daily income generators for the nation’s teeming youth population.
Therefore, President Tinubu-led administration can do more by pursuing reforms, policy initiatives and programmes that are germane to the survival of a critical sector as the SMEs. This sector is populated by young and resourceful Nigerian youths and requires government and development partners interventions to save it from imminent and total collapse.
Olawale Lamina is the Publisher/Editor-in-Chief of The Pinnacle Times newspaper. Email mypressbox2013@gmail.com
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