The micro, small, and medium-sized enterprise (MSMEs) sector in Nigeria holds the key to economic growth if the correct operating environment is provided, according to Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), despite the country’s severe economic woes.
Additionally, Yusuf stated that MSMEs have the potential to create over 20 million jobs, adding that the industry has been floundering as a result of inadequate attention from the government.
The former director general of the Lagos Chamber of Commerce and Industry (LCCI), speaking at the 2023 business roundtable with the theme “MSMEs: The Catalyst for Nigeria’s Economic Rejuvenation and Growth,” was emphasizing that there are 39.65 million MSMEs, of which 96.7 percent are micro-enterprises. The event was organized by the National Association of Small and Medium Enterprises (NASME) in Lagos.
According to him, they would provide roughly 20 million new employment if, for example, only 50% of them were able to create one job apiece.
He stated that: “These are very challenging times for businesses, especially the MSMEs. Any MSME that is still standing, despite the prevailing difficulties, deserves to be celebrated and specially commended.”
“The MSMEs are the pillars and the life wire of the Nigerian economy. They are the major sources of the resilience that the Nigerian economy had long been reputed for, amid numerous shocks. We are currently going through another round of shocks inflicted by the fuel subsidy removal and the partial unification of the exchange rate. Even though these reforms were desirable, the social outcomes have been very profound.”
According to Yusuf, the high death rate among MSMEs in Nigeria is caused by the various challenges faced by the country’s business community.
“These challenges include the structural constraints, especially around infrastructure, the naira exchange rate depreciation and related liquidity crises in the foreign exchange market, galloping inflation, weak purchasing power, regulatory compliance costs, high transaction costs at the ports, the multiplicity of taxes and levies, high cost of logistics, insecurity effects on the agricultural sector, the influx of cheap Asian products into the Nigerian markets and the cost of fund,” he stated.
Suggesting a way out, Yusuf stated: “The systemic issues of infrastructure should be addressed as a matter of utmost priority. 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.”
“We should fix the foreign exchange liquidity and currency depreciation issues. MSMEs with annual turnover of N50 million and below should be exempted from corporate tax and value-added tax (VAT). This is in addition to tackling the problem of multiple taxes and levies on small businesses both by state and non-state actors.”
“Structural issues on infrastructure should be addressed to improve productivity and competitiveness of manufacturing firms. We should address concerns about unfair competition from imported finished goods.”
“We should address regulatory and institutional problems affecting MSMEs challenges of access to credit, cost of credit and tenure of funds should be addressed.”