Price Waterhouse Coopers (PwC) has revealed that Micro, Small, and Medium Enterprises (MSMEs) in Nigeria face a significant financing gap of N13 trillion ($32.2 billion).
In its latest survey, titled “Building Resilience: Strategies for MSME Success in a Changing Landscape”, PwC emphasized the urgent need for innovative solutions to close this gap and promote sustainable growth within the sector.
The survey, which included responses from 567 MSMEs across 13 sectors and 29 states, highlighted that over 67% of MSMEs have experienced declining demand in the past two years. High prices and reduced consumer spending were identified as the main factors driving this trend.
“Nigerian MSMEs require an estimated $32.2 billion (N13 trillion) in financing,” the report stated. “Micro and small enterprises, especially in agriculture and retail, need loans under $20,000. However, limited private sector lending, inadequate infrastructure, and insufficient documentation have restricted access to credit. While digital finance is gaining traction, innovation is essential to bridge the gap and serve MSMEs effectively.”
The report noted that many businesses rely on funding from family, friends, and bank loans, but face challenges due to high interest rates and stringent collateral requirements, which constrain their growth potential. A significant 35% of the surveyed businesses identified financing constraints as their most pressing challenge.
Additionally, the report highlighted that headline inflation reached 28.92% in December last year, driven by rising food prices, naira devaluation, and increased energy costs. Although inflation is projected to decrease slightly to 21% in 2024, MSMEs are expected to continue facing inflationary pressures, impacting their operational costs and profitability.
The report also stressed the importance of digital transformation as a strategy to enhance the resilience of MSMEs. By adopting digital solutions for financial transactions, regulatory compliance, and marketing, businesses can improve operational flexibility and efficiency, expanding their market reach through e-commerce platforms and online marketplaces.
Furthermore, the report called for supportive policies to create an enabling environment for MSMEs. “The government must implement reforms to reduce the financing gap, promote financial literacy, and encourage private sector investment in MSMEs to unlock their potential for economic development,” PwC stated.
Sam Abu, the Country Senior Partner at PwC Nigeria, remarked, “MSMEs are pivotal to Nigeria’s economic growth, but their potential remains untapped due to persistent challenges. Addressing these issues requires a collaborative effort between the government, financial institutions, and the business community to create a supportive ecosystem for MSMEs.”
The report also emphasized the need to invest in skills development and foster community engagement to strengthen the resilience of the MSME sector.
“To meaningfully contribute to Nigeria’s economy, MSMEs must embrace digital innovation and operate within a supportive business environment. Addressing the estimated $32.2 billion financing gap requires government reforms, MSME advocacy, financial literacy programs, and partnerships with investors. Focusing on these areas will empower MSMEs to achieve sustainable growth,” the financial consulting firm declared.
In a related development, PwC’s 2024 Global Workforce Hopes & Fears Survey revealed that workers globally have experienced an increase in their workloads over the past 12 months. The report, which surveyed over 56,000 workers across 50 countries and territories, highlighted that employees are prioritizing long-term skills growth to advance their careers amid rising workloads and heightened workplace uncertainty.
