Over 7 million SMEs die in two years

Femi Egbesola, the president of ASBON, claimed that data acquired indicated that over 7 million small businesses affiliated with the organization had shut down in the previous two years.

Our figures stay the same, and that is much more significant, he said. I can state unequivocally that, in the period starting in January 2021 and ending as of the present, 20% of firms have failed.

“Today, nearly 39 million existing enterprises are recorded in data, according to our survey. 20% of it has been consumed. 7.8 million enterprises have failed if you look at 20% of that number.” Egbesola added

Speaking also about the remedies President Bola Tinubu announced for the benefit of small and medium-sized businesses, Egbesola applauded the action but cautioned that the government should make sure it liaised with the leadership of appropriate organizations to ensure that the remedies were not diverted by dishonest politicians.

We must be aware of the guidelines for obtaining palliative care, he stated. Such amazing interventions have occurred in the past, but they typically wind up in the hands of non-business owners.

“Having a policy is one thing; having effective monitoring and implementation of that policy is quite another. It’s okay if the government decides to provide SMEs with palliatives. The next step is to confirm that the people who actually use this fund are the business owners.

“Making the requirements reasonable and accessible to that industry is one way that business owners might utilize this money. 96% of persons who own enterprises work in the nano and micro sector, and the majority of them are illiterate informal workers. Therefore, if a policy like this is created and the procedure is not done properly, you risk excluding this industry from its benefits.

Following a study from 2022 stating that at least two million SMEs were facing crashes, Egbesola encourages Nigeria’s government to address the difficult business environment because if it persists, palliatives may not have much of an impact.

Nigeria’s SMEs have significantly decreased from 41 million to 39 million, according to SMEDAN Director-General Dikko Radda’s 2021 MSME Survey, with a further decrease to 31.2 million according to ASBON’s report.

Solomon Aderoju, national vice president of the Nigerian Association of Small and Medium Enterprises, ascribed the failure of the SMEs to a challenging business environment that included high operating costs, pressure from inflation, excessive taxes, and a lack of access to financing, among other factors.

Aderoju bemoaned the government’s unwillingness to overcome these obstacles, which continue to force small enterprises out of business despite their significant economic contribution.

The Lagos-based entrepreneur development group FATE Foundation discovered that many SMEs were severely hurt by the post-COVID-19 economic realities.

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Access to financing was cited as the greatest requirement by 74% of survey respondents. The necessity of financial assistance programs including grants, interest-free loans, and bridging funding is emphasized in the paper. Only 15% of Nigeria’s SMEs have a bank loan or line of credit, according to a World Bank survey.