Incentives to Support SMEs In Nigeria

Despite the various obstacles that small and medium-sized enterprises (SMEs) encounter, there are a number of programs and grants supported by both public and private organizations to aid in the expansion and advancement of SMEs in Nigeria. Private organizations that give free legal advice to SMEs include law clinics, webinars, and IP groups, in addition to law societies. In order to support and accommodate SMEs or startups, the majority of legal firms offer lower rates on their fees.

In a similar vein, government organizations such as the National Agency for Food and Drug Administration and Control (NAFDAC) and the Central Bank of Nigeria (CBN) have started a number of programs and incentives to help SMEs in Nigeria. For example, in order to alleviate their regulatory burden and improve the caliber of their services, NAFDAC introduced an electronic registration platform and drastically cut the cost of product registrations by 75%.

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The Secured Transactions in Movable Assets (STMA) Act, passed by the National Assembly, gives MSMEs access to credit and the ability to lend responsibly to them based on their movable assets. The STMA Act gives the CBN’s earlier initiatives to make it easier for SMEs to obtain loan financing legal support.

Furthermore, the new Finance Act 2019 recently amended the Companies Income Tax Act, providing exemptions from paying Company Income Tax for small businesses with annual turnovers less than N25 million, as well as a reduction in Company Income Tax to 20% from 30% for businesses with annual turnovers between N25 million and N100 million.

Apart from the benefits mentioned above, multilateral agreements such as the African Continental Free Trade Agreement, the World Trade Organization, and other regional trade agreements provide developing and least developed countries, as well as SMEs, with greater access to regional and international markets and opportunities to expand their reach.