According to the latest data from the National Bureau of Statistics (NBS), the small-scale industrial sector in Nigeria has seen a significant decrease in the number of entrepreneurs in the last two years due to economic difficulties. The report shows a 45% decline in small-scale industrialists, with the total number falling from 246,200 in 2020 to 170,098 in 2022. Nigeria’s goal of reaching a one trillion dollar Economy is facing a major hurdle due to the decrease in small-scale industries, which are a high contributor to the GDP and crucial for driving economic growth.
Overall, the collective data indicates a significant decrease in the presence of small-scale industrialists in different industries. The number of small-scale industrialists went from 246,200 in 2020 to 213,402 in 2021 and then fell to 170,098 in 2022. Although the NBS data did not offer an explanation for the significant decrease, it is probable that a combination of economic uncertainty, obstacles related to policies and regulations, limited access to funding, Infrastructure shortcomings, and the repercussions of the COVID-19 outbreak are responsible for the decline in the number of small and medium-sized enterprises (SMEs) in Nigeria.
A 45% decline in SMEs may weaken economic strength.
Also, this decrease could be attributed to SMEs either transitioning into micro businesses or unexpectedly expanding into large-scale enterprises. The decline has serious implications for the country’s economy as SMEs have over the years play a vital role in Nigeria’s economic framework by creating jobs, boosting the GDP, and promoting Innovation and entrepreneurship. A decrease of 45% in this industry may result in an increase in unemployment, less variety in the economy, and weakened economic strength.
This dwindling trend underscores the necessity for specific designed support for small businesses, essential for boosting the economy and creating jobs. The wholesale and Retail Trade industry experienced a notable decline in small-scale industrialists. There were 44,397 small-scale industrialists in the sector in 2020, but that number dropped to 42,229 in 2021, and significantly plummeted to 22,488 in 2022. The drop can be attributed to the harsh effects of economic factors on both consumer habits and business activities. Reasons like lower consumer expenditures, intense market rivalries, and economic instabilities may have played a role in this downturn.
Agricultural sector’s SMEs dropped to 36,348 in 2022.
In the Manufacturing sector, small-scale businesses significantly decreased over the years, with 27,723 in 2020 dropping to 20,736 in 2021 and further to 17,450 in 2022, marking a 37% decline. This may be attributed to supply chain disruptions, economic policies, and rising production costs. In the Agriculture sector, the number of SMEs also saw a decrease from 39,109 in 2020 to 36,431 in 2021 and slightly dropped to 36,348 in 2022. The sector’s ability to maintain a 7% decrease shows signs of resilience, potentially attributed to government backing and initiatives aimed at boosting agricultural practices.
Within the Real Estate industry, a significant decline was experienced over the past few years. Starting with nearly 20,000 in 2020, the numbers decreased to 12,720 in 2021 and further dropped to 8,313 in 2022. This represents a 58% decrease, highlighting the industry’s struggle amidst economic uncertainties and changes in policies or market dynamics. Total number of SMEs in the Information and Communication Technology (ICT) sector saw a decline from 33,842 in 2020 to 28,816 in 2021 before falling even further to 23,101 in 2022.
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The Mining sector’s SMEs number of 24,852 in 2020 decreased to 22,721, and further dropped to 22,522 in 2022. Despite the 9% decline, the sector has shown signs of stability through increased extraction activities and investments. Nevertheless, potential challenges like regulatory shifts and fluctuating commodity prices continue to pose risks for the sector. The Education sector SMEs number of 56,321 in 2020 declined to 49,749, and then dropped even further to 39,876 in 2022. This decline of 29% over two years highlights the considerable difficulties facing the sector.