The mortality rate of Nigeria’s micro, small and medium-sized enterprises has been on an all-time high.
Micro, small and medium-sized enterprises are businesses that are owned, led by one or a few persons, with direct owners’ influence in decision-making. They are usually started with small capital and often have low market shares.
MSMEs are recognised as the engine of economic progress and important contributors to employment as well as economic and export growth.
According to the Nigeria SME Survey, they contribute 48 per cent to the national GDP, account for 96 per cent of businesses and are responsible for 84 per cent of employment. This shows that SMEs are the pillars of the Nigerian economy.
In the last five years, MSMEs in Nigeria have been major contributors of employment, with a total of about 17.4 million jobs. They account for about 50per cent of industrial jobs and nearly 90per cent of the manufacturing sector employment in terms of the number of enterprises. However, in a recent report, SMEDAN said the number of MSMEs in the country dropped by about two million between 2017 and 2021.
“The major reason for the drop in the number of MSMEs could be traced to the COVID-19 pandemic, the challenges MSMEs have in accessing funds to start or grow their enterprise and the problems of globalisation.”
Radda, who was represented by the Director, Planning, Research, Monitoring and Evaluation, SMEDAN, Wale Fasanya, said both the public and private sectors had roles to play in the sustainable development of MSMEs in Nigeria.
He also noted that the contribution of MSMEs to Nigeria’s Gross Domestic Product dropped by 3.5 per cent in 2021, adding that MSMEs accounted for 6.2 per cent of external trade in the same year.
The pandemic was a major tragedy for both large and small-scale businesses, and businesses globally suffered major setbacks. Apart from COVID-19, power situation was also culpable. The power problem has persistently crippled the potential for business success in the country as the unstable nature of the grid has not only thrown the country into darkness but also forced manufacturers and SMEs to embrace expensive alternative power sources such as diesel and fuel.
“Running this business has been a combination of hard work and bouncing back after the pandemic. Getting funds has been hard, and getting funds to move out of my current location has been futile. I spend an average of N10k per week to run my shop. From January to this point, I spent N300k on fuel,” Adebiyi said.
Bolanle Abass, a young mother who runs a small-scale frozen foods business, complained bitterly about the low power supply of her business. “I had to put my business on hold when the light problem worsened. For three straight days, there was usually no light. I sell frozen foods from the confines of my home, but when the power problem got worse, I could not keep up with the fuel price. My freezer is big, and it takes a while before the fish and beef can become iced. I gave up because I began to run at a loss. It was so nerve-wracking. Most of my products also got spoiled.”
Read more at: https://punchng.com/why-two-million-msmes-collapsed-in-two-years/
