South-East SMEs squeezed as sit-at-home persists

The continuous sit-at-home order in the southeast is stifling many nano, micro, small and medium enterprises in the region.

A recent report by the International Centre for Investigative Reporting (ICIR) puts the annual loss of the sit-at-home order in the region at N4.6 trillion.

Based on their financial records, the report by ICIR extrapolated the losses of nano and micro businesses in the region using the most recent report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency (SEMDAN) research on the number of nano, micro, small and medium businesses in the country.

The order which has lasted for 29 months is forcing businesses in the region shut down operations as operating costs continue to surge amid accelerating inflation and shrinking consumer spending.

“The sit-at-home order in the southeast region is crippling business activities. The nano and micro businesses survive on their daily income, hence any disruption automatically affects their operations,” Friday Opara, director of partnerships and coordination at SMEDAN.

“Many of them are informal businesses and are the worst hit of the sit-at-home order.”

Nano or homestead enterprises have one to two workers and make an annual turnover of less than N3 million. Micro businesses, on the other hand, have three to nine staff members and an annual turnover of N3 million to N25 million, according to the NBS/SMEDAN.

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“A lot of businesses have already shut down operations and the combination of the current crisis is going to suffocate more of the businesses in the region,” said Abdulrashid Yerima, national president of the Nigerian Association of Small and Medium Enterprises in a response to questions.

“Some businesses there are relocating to survive. Without adequate security, no business can survive.”

Businesses in Africa’s biggest economy are left to battle with various issues ranging from accelerating inflation, and poor power supply to restrictive economic policies, FX violability and tax multiplicity among others.

The situation has forced 1.9 million micro, small and medium enterprises (MSMEs) to exit the Nigerian business landscape between 2018 and 2020, according to NBS and SMEDAN.

Their contribution to GDP for the period also declined from 50 percent in 2017 to 46.3 percent. Experts say there would be a further drop when the figure for 2022 is released.

The insecurity in the southeast is further compounding the problem for businesses in the region.

“The issue has been lingering for a while now and the government is yet to resolve it. It is getting worse and lots of nano and micro businesses are shutting down daily,” said Femi Egbesola, national president of the Association of Small Business Owners of Nigeria.

“The region is the hub of nano and micro businesses but this order is killing and changing the entrepreneurship narrative of the region.”

The South-East zone is made up of five states: Anambra, Enugu, Imo, Abia and Ebonyi. It is the only region with five states in Nigeria, with the other five zones having six, except the North-West region which has seven.