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The Nigerian Economy: The Role of SMEs

Small and Medium Enterprises (SMEs) as defined by the National Council of Industries are business enterprises whose total cost excluding land is not more than two million naira (N2, 000,000) only. The Federal Ministry of Commerce and Industry defines SMEs as firms with a total investment (excluding cost of land but including capital) of up to N750, 000, and paid employment of up to fifty (50) persons.

Despite an understanding of the importance of MSMEs in Nigeria in particular, there is a dearth of information about their number, people they employ and sectors they operate in within Nigeria. The Micro, Small and Medium Enterprises are globally acknowledged as the oil required to lubricate the engine of socio-economic transformation of any nation. The MSME sector is strategically positioned to absorb up to 80% of jobs, improve per capita income, increase value addition to raw materials supply, improve export earnings and step up capacity utilization in key industries.

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established in 2003, to facilitate the promotion and development of a structured and efficient Micro, Small, and Medium Enterprises (MSMEs) sector that will enhance sustainable economic development in Nigeria.

In the year 2010, SMEDAN AND NBS conducted a survey to combat the challenges associated with building a credible and reliable MSME database required to strategically reposition the sector. The bureau revealed its survey results: there were 17.28 million MSMEs in Nigeria employing 32.41 million people.

According to a recent survey and findings by Economist Insight, to support SME productivity, Nigeria’s government must stabilize macroeconomic policy and install a more transparent tax and customs system. In its survey it also buttresses the need to support greater productivity gains, the importance of now turning to simplifying the tax system, reducing import barriers, stabilizing macroeconomic policy and building a more transparent customs system.

Most SMEs in Nigeria die within their first five years of existence, a smaller percentage goes into extinction between the sixth and tenth year, while only about five to ten percent survive, thrive and grow to maturity. SMEs encounter issues such as insufficient capital, irregular power supply, infrastructural inadequacies (water, roads etc.), lack of focus, inadequate market research, over-concentration on one or two markets for finished products, lack of succession plan, inexperience, lack of proper book keeping, lack of proper records or lack of any records at all, inability to separate business and family or personal finances, lack of business strategy, inability to distinguish between revenue and profit, inability to procure the right plant and machinery, inability to engage or employ the right caliber of staff, and cut-throat competition.

The solution to the problem of Nigerian SMEs can only be realised if both the leaders and the citizens concertedly work together.

This why ConnectNigeria.com is so passionate about growing #1MillionSMEs in Nigeria. How do we hope to achieve that? Through your help! We already have over 100,000 businesses in our business directory (these business are growing because they have better online visibility, thanks to our huge readership and loyal partners) but we need more. Tell us about a small business in your neighbourhood by sending the details to info@connectnigeria.com and let’s grow Nigeria together. For business, money and career tips, subscribe to our Newsletters and follow us on Twitter, Facebook and Instagram @ConnectNigeria.

 

About the Writer: Eniola Adeniji is a woman after God’s own heart, a motivational Writer, Speaker, Fashion and Photography addict. She is also a Business Developer, Social Media Manager and the founder of Woman Of Value. She blogs at ennmae.wordpress.com

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1 Comment

1 Comment

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    Ayelehin Femi

    10th April 2017 at 10:40 pm

    [* Shield plugin marked this comment as “trash”. Reason: Failed GASP Bot Filter Test (comment token failure) *]
    Thank for the write-up. Very educative. But why not make it accessible to copy as reference material with citation?

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