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October 12, 2025 - 1:05 AM

30% of Nigeria’s MSMEs Shut Down in Two Years –NESG Warns of Economic Challenges

A staggering 30% of Nigeria’s 24 million registered Micro, Small, and Medium Enterprises (MSMEs) shut down between 2023 and 2024, according to the Nigerian Economic Summit Group (NESG).

This revelation underscores the harsh economic climate that has forced thousands of small businesses to close despite their critical role in job creation and economic growth.

Key Challenges Facing Nigeria’s Private Sector

Speaking at the launch of the 2025 Private Sector Outlook: Adapting to Economic Uncertainties for Growth and Resilience in Lagos, Segun Omisakin, NESG’s Chief Economist and Director of Research, provided a comprehensive analysis of the private sector’s struggles in 2024.

Omisakin identified several major obstacles that hindered business growth, including:

  • Foreign Exchange Shortages – Limited access to foreign exchange hampered imports and increased production costs.
  • Insecurity – Ongoing security challenges have made business operations difficult, particularly in rural areas.
  • Poor Infrastructure – Inconsistent power supply and inadequate transportation networks raised operational expenses.
  • Limited Market Access – Many businesses struggled to expand due to unfavorable trade policies and weak consumer demand.

While policy reforms helped improve forex availability, Nigeria’s currency weakened significantly, with the official exchange rate averaging N1,479.9 per US dollar in 2024.

Fiscal Constraints and Rising Public Debt

Despite trade surpluses and increased foreign capital inflows, Nigeria’s economic outlook remained clouded by fiscal instability. According to Omisakin, the nation’s public debt surged to N142.3 trillion by September 2024, intensifying concerns about long-term economic sustainability.

NESG’s Acting Head of Strategic Communication and Advocacy, Ayanyinka Ayanlowo, emphasized the need for businesses to embrace adaptive strategies to survive economic volatility. The organization recommended a framework focusing on stabilization, consolidation, and acceleration, stressing the importance of monitoring reform effectiveness and strengthening policies that boost private sector competitiveness.

Signs of Growth Amid Economic Struggles

Despite these challenges, NESG Board Director, Mrs. Wonu Adetayo, highlighted that Nigeria’s economy grew by 3.4% in 2024, marking the highest growth rate since 2021.

She noted that the number of expanding economic sectors increased from 32 in 2023 to 38 in 2024, driven by key policy reforms such as:

  • Fuel Subsidy Removal – Helped reduce government spending but led to inflationary pressures.
  • Exchange Rate Harmonization – Improved forex liquidity but caused short-term volatility.

However, Adetayo cautioned that stagnant productivity levels and macroeconomic imbalances continued to erode living standards and increase financial hardship for many Nigerians.

Urgent Need for Private Sector Inclusion in Policy Decisions

A key concern raised at the event was the lack of immediate monetary interventions following the removal of fuel subsidies, which exacerbated inflation and worsened economic hardship.

Additionally, inconsistent Customs regulations and fluctuating exchange rates were identified as major barriers to investment and operational stability for businesses.

Stakeholders at the event advocated for stronger collaboration between the public and private sectors, urging policymakers to:

  • Engage business associations like NASME, NASSI, and NECA in economic decision-making.
  • Reduce government interference in private sector affairs.
  • Create policies that foster long-term stability and business growth.

A Call for Proactive Policy Reforms

As Nigeria grapples with economic uncertainty, the survival of MSMEs remains crucial to job creation and national development. NESG has called for policy consistency, investment-friendly regulations, and strategic economic interventions to ensure businesses can thrive in an increasingly volatile environment.

The road ahead requires bold reforms and stronger public-private partnerships to revive Nigeria’s business ecosystem and sustain economic progress.

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