The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has identified high financial illiteracy and a lack of business managerial skills as key factors contributing to the underperformance of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria.
Moshood Lawal, SMEDAN’s Head of Corporate Affairs, highlighted these issues while responding to a recent report by PwC Nigeria, which revealed that 67% of MSMEs experienced a decline in demand for their products over the past two years. Lawal noted that the challenging business environment in Nigeria, coupled with the limited financial literacy among MSME operators, has significantly impacted their performance.
“What we discovered at SMEDAN is a high rate of financial illiteracy and business managerial skills among the nano, small, and medium businesses in Nigeria,” Lawal stated. He emphasized that SMEDAN, under the leadership of Mr. Charles Odii, is actively working to address these challenges.
In an effort to support MSMEs, the Federal Government, through SMEDAN, has introduced various financial interventions. These include a N5 billion SMEDAN-Sterling Bank partnership that offers credit to MSMEs at a single-digit interest rate, and a N4 billion SMEDAN matching fund available to MSMEs in Enugu, Abia, Katsina, and Imo States. These initiatives aim to enhance the global competitiveness of Nigerian MSMEs and equip them to access funding opportunities.
The PwC Nigeria report, which surveyed over 500 MSMEs across 13 sectors with annual sales turnovers of N5 million and above, indicated that 38% of MSMEs reported a decrease in demand due to the high cost of products, while another 36% attributed the decline to low purchasing power.
The report also highlighted that Nigerian MSMEs require an estimated $32.2 billion (N13 trillion) in financing to meet their needs.
Commenting on the findings, Segun Kuti-George, National Vice President of the Nigerian Association of Small Scale Industrialists (NASSI), described the situation as “gloomy.” He acknowledged government interventions but expressed concern that many affected business owners were not benefiting from these efforts.
“I don’t think many of our people are accessing the interventions by the government. The money we get at all is nothing, to be honest,” Kuti-George remarked. He urged the Federal Government to involve industry players in its decision-making process, citing the tedious process of accessing government grants as a significant hurdle for small business owners.
“We know who needs the grants more than the government,” Kuti-George added. “The process can be so tedious that sometimes you give up along the line.”
The report underscores the need for continued efforts to improve financial literacy and business management skills among Nigerian MSMEs to ensure their sustainable growth and development.
