In his keynote address for fiscal year 2018, President Muhammadu Buhari acknowledged Nigeria’s poor economic performance while Governor Atiku Bagudu of Kebbi State blamed the lingering insecurity, food shortage, inflation and unemployment on the elite class.

However, the president expressed hopes in the roles of agriculture and SMEs but stressed on CBN’s connivance with policymakers to inflate food import bill and drain federal reserves. Over 50% of the export bill was also discovered to have been falsified by the apex bank. On this premise, it becomes clear that the Nigerian SME sector is facing corruption and lack of commitment from policymakers as some of its major challenges (Aziken & Yakubu., 2017). To buttress this fact, Nigeria has sold oil in the internal market for over five decades at more than $100 per barrel while daily production rate stood at nearly 2.2 billion barrels. Yet, the country is rated among world’s poorest nations with low survival rates for SMEs (Anyanwu., 2001).


Figure 5: Chances of business survival in Nigeria

Source: World Bank/Trading Economics (2018)

World Bank’s annual Ease of Doing Business compares countries according to the safety of business environments, regulatory frameworks and property rights, with the most favorable economies ranked from 1 to 20. The analysis indicates that Nigeria ranks 146th among 190 economies, having slipped from 145th in 2017.

Further, ease of doing business in Nigeria averaged 145.09 between 2008 and 2018, as shown in Figure 3, with a record-high 170 in 2014 and lowest score of 120 in FY 2018. These results highlight the negative impact of corruption, incompetent leadership, over-dependency on the oil and gas sector, and political instability which reduced cash inflow from investors as well as stifled growth of SMEs ahead of the 2019 general elections (Udah., 2010).

Since exiting recession in 2016, Nigeria’s SME sector has improved but is yet to match records from the pre-crisis period. Industrial production, decreased by 3.30% in Q4 2017 compared to an average of 0.9% documented between 2007 and 2017.

Figure 6: Industrial production in Nigeria

Source: World Bank/Trading Economics (2018)

FG and BOI, which now replace NIDB and NBCI as the chief sources of long-term financial credits, have shown commitment towards rebuilding the SME sector.

Lagos State government has also taken bold steps to help entrepreneurs through infrastructure development and elimination of bureaucratic bottlenecks in processing loans. In addition, the World Bank has promoted Nigeria’s economic diversification goals through the establishment of SME I and SME II Initiatives. These applaudable efforts raise hopes, once again, that SMEs in the country need time, focus and diligence to achieve competitiveness.

Figure 7: Nigeria’s current physical infrastructure levels

Source: Financial System Strategy (2020)

Notwithstanding the external and internal shocks from Nigeria’s recent economic recession, the World Bank said SMEs in manufacturing production documented incremental growth by 3.40% as at March 2018. The growth rate shows an applaudable gap from the -7% in Q1 2016.

Figure 8: Manufacturing production in Nigeria (2015-2018)

Source: World Bank (2018)

Nigerian Bureau of Statistics (NBS) also noted that output from the agricultural sector, which is interlinked with the SME sector, improved from ₦3,487,312.92m in Q1 2018 to ₦3,789,720.12m in Q2 2018, a result which highlights the potentials of SMEs in Nigeria (Ezeana., 2018).

Figure 9: GDP Contributions from the Agriculture Sector (2015-2018)

Source: NBS (2018)

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