According to an expert, fixing Nigeria’s structural constraints surrounding infrastructure and foreign exchange availability are some of the ways millions of small enterprises might be repositioned to boost growth.
Speaking at a business roundtable hosted by the National Association of Small and Medium Enterprises on the theme ‘MSMEs: The Catalyst for Nigeria’s Economic Rejuvenation and Growth,’ Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, stated that the death rate among small firms is currently very high due to the country’s numerous economic headwinds.
“These challenges include the structural constraints, especially around infrastructure, the naira exchange rate depreciation and the related liquidity crises in the foreign exchange market, and the galloping inflation, among others,” he stated.
MSMEs, he claims, are the key sources of resilience that the Nigerian economy has long been known for in the face of numerous shocks.
He stated that the country’s small business operators are currently experiencing another wave of shocks as a result of the subsidy removal and naira float policy.
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He remarked that, despite their necessity, the reforms had substantial social consequences.
“We have seen a significant surge in inflation across the broad spectrum of products, food and non-food, driven largely by sharp depreciation in the naira exchange rate and increases in energy costs,” he stated.
“These have taken a huge toll on business sustainability, profit margins, job retention, and the capacity of small businesses to service their loans,” he said.
He emphasized the importance of stemming the trend of deindustrialization in the Nigerian economy, claiming that many factory facilities have been turned into event centers, warehouses, and supermarkets following their demise.
“Many of our industrial estates have deteriorated into shadows of their former selves.” This is evident in industrial estates in Ilupeju, Ogba, Ikeja, Sango-Ota, Agbara, and many other sections of the country, particularly in the east and north.”
“It is therefore imperative to take urgent steps to stem the tide of deindustrialization if we must curb the growing unemployment and the increasing import dependence of our economy.”
Some of the factors responsible for deindustrialization, according to him, include the influx of cheap and substandard products into the country, which creates unfair competition for our domestically produced goods; foreign exchange scarcity; poor power supply; high energy, gas, and diesel costs; and multiple taxes imposed by numerous government parastatals and agencies, among others.
He asked the federal government to prioritize addressing fundamental concerns about infrastructure deficiencies, stressing that the immediate focus should be on electricity supply and logistics.
“Unless we have these two critical infrastructures in place, it will be very difficult to ensure a competitive industrial sector and to make possible the transformation of the sector.”
He also urged the administration to address foreign exchange liquidity and currency depreciation challenges. He also stated that the elimination of multiple taxes and tax exemptions for MSMEs with a turnover of N50 billion or less will aid in increasing MSMEs’ productivity.
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