The Association of Small Business Owners in Nigeria (ASBON) estimates that 7.8 million of its member enterprises have gone out of business in the past two years. ASBON president, Femi Egbesola, made the announcement, saying that the figure, which spans from January 2021 to current, represents 20% of the approximately 39 million enterprises available now and covered in the survey. Egbesola praised President Bola Tinubu’s announcement to provide palliative for small and medium businesses, however, he cautioned the government to relate with the executives of relevant associations to prevent the relief measures from being diverted by corrupt politicians.
Egbesola emphasised the imperative of comprehending the terms and conditions regarding access to the palliatives. Historical records indicate that previous instances of such interventions often got diverted to another source. Having a comprehensive policy framework, coupled with diligent oversight and proficient execution is absolutely essential in this case. If the government chose to allocate palliative measures to small and medium-sized enterprises (SME), it is crucial to ensure that the beneficiaries are indeed business owners, he added.
2 million SMEs had closed down between 2017 and 2021.
Making the terms fair and accessible for the business community is a key component in facilitating the fund’s deployment to entrepreneurs. The vast majority (96%) of informal business owners who operate a nano and micro sector are illiterate. For this reason, the process of implementing such a palliative strategy must be carefully regulated to prevent the entitled segment from being sidelined. Egbesola said that the palliatives would have little to no effect if the government did not take immediate action to improve the unfavourable business environment businesses encountered.
A 2022 report by the Small and Medium Enterprises Development Agency of Nigeria found that at least two million SMEs in the country had closed down between 2017 and 2021. During a press conference, SMEDAN Director-General Dikko Radda revealed that the number of small and medium-sized enterprises (SME) in the country had decreased from the 2017 survey report of 41 million to 39 million. According to the latest data from ASBON, this figure has fallen from 39 million to 31.2 million.
Govt is not inclined to resolve small enterprises’ obstacles.
In an interview with the media, Solomon Aderoju, National Vice President of the Nigerian Association of Small and Medium Enterprises, blamed the eventual demise of Small and Medium Enterprises on an array of factors such as high operating costs, inflationary pressure, excessive taxation, and a lack of available funding. Aderoju bemoaned that in spite of SMEs’ enormous contribution to the economy, the government is not inclined to resolve the obstacles that hinders small enterprises from flourishing.
He highlighted the high cost of operations, lack of funding, inadequate infrastructure, and several levies are all too having major effects on business. The ripple effects of several taxes on small and medium-sized enterprises were discussed during visit to LIRS, he added. A survey by the FATE Foundation, an entrepreneur support group based in Lagos, found that the businesses that fold up are those most affected by the post-COVID-19 economic reality. 74 percent of respondents to the organization’s poll indicated access to financial resources as their main requirement.
Disbursement of the funds should be simple to access.
To address basic demands like salaries and operating capital, the report stressed the importance of generating financial support packages through grants, interest-free loans, and bridge financing from ecosystem partners that can give funding alternatives. The disbursement of the funds should occur quickly, be straight-forward, and be simple to access. World Bank data corroborated the findings of the FATE Foundation analysis, which found that just 15% of small and medium-sized enterprises (SME) in Nigeria reported having a bank loan or line of credit, despite the fact that SMEs accounted for almost 80% of Nigeria’s employment.