At least 7.8 million small businesses (SMEs) under the Association of Small Business Owners of Nigeria (ASBON) have died within the last two years, President of ASBON, Femi Egbesola, has said.
According to The Punch, Egbesola said, “Our statistics remain the same, and it is even more profound. I can categorically tell you now that 20 per cent of businesses have gone under within the past two and a half years, from January 2021 till date.
“Today, according to our survey, we have about 39 million existing businesses that are captured by data. 20 per cent of that is gone. If you look at 20 per cent of that is 7.8 million businesses that have gone under.”
Egbesola, who also spoke on the palliatives announced by President Bola Tinubu for the benefit of Small and Medium Enterprises, commended the move, but warned that the government should ensure that it liaised with the leadership of relevant associations to ensure that the palliatives were not diverted by corrupt politicians.
He said, “We have to know the terms and conditions of accessing the palliatives. In times past, we have had wonderful interventions like this, but most times, it ends in the hands of people who are not business owners.
“One thing is to have a policy; another thing is to have effective monitoring and implementation of that policy. If the government chooses to give palliatives to SMEs, that is fine. The next thing is to ascertain that it is actually the business owners that access this fund.
“One way that business owners can access this fund is by making the conditions affordable and accessible to that sector. 96 per cent of those in businesses are in the nano and micro sector, and these are people who are informal and mostly illiterates. So, if you come up with a policy like this, if the process is not done well, you may seclude this sector from benefitting from it.”
Egbesola urged the government to move swiftly to address the harsh business environment faced by business as the palliatives would have little effect if the environment remains harsh.
ASBON’s survey was disclosed after a 2022 report by the Small and Medium Enterprises Development Agency of Nigeria in 2022, which noted that at least two million SMEs in the country crashed between 2017 to 2021.
The Director-General, SMEDAN, Dikko Radda, who made the disclosure stated that the number of SMEs in the country had dropped from 41 million to 39 million.
He said, “According to the 2021 MSME Survey, there are 39 million MSMEs in Nigeria. This is a significant drop from 41 million MSMEs reported in the 2017 survey report.
“Going by ASBON’s report, this number has dropped further from 39 million to 31.2 million SMEs.”
While speaking with The PUNCH, the National Vice President of the Nigerian Association of Small and Medium Enterprises, Solomon Aderoju attributed the collapse of the SMEs to a harsh business environment from high cost of operations, inflationary pressure, over-taxation, lack of access to funding, among others.
Aderoju lamented that despite its immense contribution to the economy, there had been a lack of willingness on the part of the government to address these bottlenecks that continued to send small businesses out of operations.
He said, “The reason is obvious. The high cost of operations, lack of funding, poor infrastructure, multiple taxes. Today we went to LIRS where we talked about multiple tax and how it is affecting the SMEs.”
According to a report by a Lagos-based enterprise support organisation — FATE Foundation, many SMEs that went out of businesses were the ones hardest hit by the post-COVID-19 economic realities.
A report by the group noted that access to finance was the top need area indicated by 74 per cent of its survey respondents.
The report read in part, “For ecosystem stakeholders who are able to provide financing opportunities, developing financial support packages through grants, interest-free loans and bridge financing to meet critical needs such as salaries and working capital are particularly important at this time. The funds must be easy to access, clear in their terms and prompt to disburse.”
FATE Foundation’s report also tallied by a survey by the World Bank which said that, although small businesses provided over 80 per cent of Nigeria’s jobs, only 15 per cent of SMEs in the country reported had a bank loan or line of credit.