THE FUTURE OF SMEs IN NIGERIA

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future of SMEs

The future of SMEs in Nigeria and the World at large is bright and entrepreneurs should be very optimistic.

The definition of Small and Medium Enterprises popularly called SMEs varies across countries. In Nigeria, The Federal Ministry of Commerce and Industry defines SMEs as firms with a total investment (excluding cost of land but including capital) of up to N750, 000, and paid employment of up to 50 persons.

According to the Central Bank of Nigeria report, SMEs are defined as firms economically independent companies with about 11 to 300 employees and an annual debit turnover of between N5 million to N500 million.

The role of SMEs in a country cannot be over-emphasized; SMEs have always been pivotal to the growth of a country’s economy. “The Micro, Small and Medium Enterprises have been globally recognized as the fuel required to power the engine of the socio-economic revolution and progress of any nation in the 21st century”, opined a financial Analyst. The CBN also recognizes the importance of SMEs stating that SMEs are critical to the development of any economy through improvement of local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries.

Entrepreneurs running Micro, Small or Medium Enterprises in Nigeria should be optimistic about the future of SMEs, even in this prevalent economic downturn because:

  • SMEs serve as the backbone of the country’s employment structure:

SMEs are actually the major job-creation support of the country. A study done by the Federal Office of Statistics shows that about 97% of all enterprises in Nigeria employ less than 100 employees. Incidentally, looking at our earlier definitions of SMEs, it then means that 97% of all businesses in Nigeria fall into the categories of SMEs. The SME sector provides, on average, 50% of Nigeria’s employment, and 50% of its industrial output.

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As a matter of fact, it would be discovered that the number of SMEs in the country is more compared to non-SMEs. This means there are more people working in the SMEs than Large establishments. In 2003, The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) revealed its survey results: there were 17.28 million SMEs in Nigeria employing 32.41 million people. Today, the number has greatly increased.

You can then imagine how the unemployment rate the country, would have be grossly alarming without SMEs. This shows the immense contribution SMEs have to reducing unemployment rate in the World. With more SMEs springing, the future of SMEs looks very great.

  • Favourable Governmental Policies and Schemes

The Nigerian Government is gradually turning to small and medium scale industries and entrepreneurs as a means of developing the economy and solving problems. Some governments have specifically formulated policies to aid the empowering, growth, development and performance of SMEs, while assisting through loans and fiscal incentives.

SMEDAN was established in 2003, to facilitate the promotion and development of a structured and efficient Micro, Small, and Medium Enterprises (MSMEs)

Recently, several schemes and programs have been established by the government, investors and some private institutions to favour SMEs. These programs include: National Social Investment Programmes (N-SIP),the equity investment (N26 billion) set aside by banks for agriculture and SMEs, the Lagos state Employment Trust fund , etc. Infact, the National Agency for Food and Drug Administration and Control (NAFDAC) just gave 50% Off Registration Fee For SMEs On NAFDAC Registration.

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future of sme

In addition, the Central Bank of Nigeria launched the MSME Development Fund on August 15, 2013 with a share capital of N220 billion. The Fund was established in recognition of the significant contributions of the Micro, Small and Medium Enterprises (MSME) sub-sector to the economy and the existing huge financing gap.All these policies and developments are in place to strengthen the future of SMEs development in the country.

Meanwhile, statistics has shown that most SMEs in Nigeria die within their first five years of existence; a smaller percentage goes into extinction between the sixth and tenth year, while only about 5 to 10% survive, thrive and grow to maturity. This is due to some factors such as: infrastructural inadequacy, corruption, lack of funding, cost of implementation, inadequate skills and training, etc.

However, with the spread of knowledge, application of Technology, adoption of supportive governmental policies, upward rise in capitalism and interests from investors as well as private bodies, it is only a matter of time before all negative factors become completely annihilated.

Therefore, entrepreneurs should be encouraged, optimistic and motivated because the bright and auspicious future of Micro, Small and Medium Enterprises, not only on Nigeria but the World at Large.


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