BusinessDay

How government policies push Nigeria’s 1.8m MSMEs to the brink

....as total assets value of business enterprises stood at N8.41 trillion end Dec, 2020

Apart from the coronavirus outbreak which adversely impacted the business activities of Micro, Small and Medium Enterprises, several government policies constituted a major setback to their operations and growth in the 2020 fiscal year.

According to the 2020 National Survey of MSMEs report, released by Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in collaboration with the National Bureau of Statistics, high fuel price, high taxes, high electricity tariff and high interest rate and insecurity led to a compulsory shut down of over 1. 8 million Enterprises across the country.

The Survey which was conducted in all the 36 States of the Federation and FCT, covered enterprises in Nigeria employing below 200 persons (i.e. nano, micro, small and medium enterprises – MSMEs) and aims to generate up to date data on MSMEs with a view to determining the effect of the recent socio-economic development as well as global occurrences like Covid 19 pandemic.

Details of the report obtained by BusinessDay shows that the total number of MSMEs as at December, 2020 stood at 39,654,385, with total assets valued at N8.41 trillion.

A breakdown of the value showed that Non-residential building accounted for the highest value (N5.6 trillion) representing 66.9 percent, followed by residential buildings at N1.8 trillion (21.1 percent), while office Furniture 55.3 billion (0.7 percent) recorded the least.

Similarly, a breakdown of the total number of MSMEs showed that micro enterprises were 38, 413,420, while small and medium enterprises were 1,240,965.

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“The 2020 National NMSME Survey Report revealed a significant shrink in the total number of NMSMEs in Nigeria from 41.5 million in 2017 to 39.6 mlllion in 2020, representing a 4.5% decrease.

“In addition to government’s unfavorable policies, other reasons for the drop in the number of NMSMEs cannot be totally divorced from the open global competitiveness that has had negative impacts on the NMSMEs and also the worsening case of insecurity,” it stated.

According to the report, the COVID 19 pandemic also had a great impact on MSMEs nationwide as most SMEs (53.2 percent) were temporarily closed while 37.3 percent of MEs were permanently closed.

Commenting in the report, Statistician-General of the Federation, Simon Harry stressed the importance of MSMEs to the growth of the economy which is evidenced by its contributions to the Nation’s Gross Domestic Product (GDP), employment and exports over the years.

Harry, however regretted that in spite of the contribution of the sector to economic growth, there are still challenges hindering its rapid growth and development and key among them is the dearth of robust, timely and reliable data on MSMEs.

“It was in attempt to address this problem that the fourth round of MSMEs was conducted nation-wide so as to generate up to date data on MSMEs with a view to determining the effect of the recent socio-economic development as well as global occurrences like Covid 19 pandemic,” he said.

Dikko Umaru Radda, Director General/Chief Executive of SMEDAN, in his remark stressed on the need for more collective and sustained actions aimed at creating the enabling environment for NMSMEs especially in the areas of funding, compliance, infrastructure, technology and markets.

He said the new survey was necessitated by the need to provide realistic, robust and useful data to economic planners given that the previous reports in 2010, 2013 and 2017, had been outdated.

Radda said, “This is an area that the agency has been assiduously working on to address even in the face of dwindling resources.”

He said the absence of data that clearly profile NMSMEs or adequately explain the peculiar challenges they face in their operating environment, had been a major source of worry to SMEDAN.

Apart form businesses that were shut down, the sectors contribution to the Gross Domestic Product (GDP)declined. This is despite a marginal increase of 3.7 percent in the sector’s employment within the period, there was however a decrease of 3.5 percent in the contribution to GDP in 2020 compared to 2017.

Also identified as a problem was the financial challenges faced by MSMEs, which was reported to be workers’ wages and social security charges and rent.

States with the highest distribution of business enterprises in Nigeria are Lagos State (91,097 entities), Rivers State (84,613 entities) and Kano State (79,328 entities), while, states with the least number of enterprises were Bayelsa State (15,758 entities) and Kebbi State (17,305 entities).

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