The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has identified high financial illiteracy and a lack of business management skills as key factors contributing to the underperformance of Micro, Small, and Medium Enterprises (MSMEs) in the country.
Speaking to Our Correspomdent, SMEDAN’s Head of Corporate Affairs, Moshood Lawal, noted that the agency is aware of the decline in MSME performance, which is largely due to the challenging business environment and widespread financial illiteracy.
“What we have found at SMEDAN is a significant rate of financial illiteracy and inadequate business management skills among nano, small, and medium enterprises in Nigeria,” Lawal explained.
His comments came in response to a report by PwC Nigeria, an audit and advisory firm, which revealed that 67% of MSMEs in Nigeria experienced a decline in product demand over the past two years.
To address these challenges, Lawal highlighted SMEDAN’s efforts, stating, “Under the leadership of Mr. Charles Odii, the agency is fully aware of these challenges. The Federal Government, through SMEDAN, has launched a N5 billion partnership with Sterling Bank to provide credit to MSMEs at a single-digit interest rate.”
He also mentioned the agency’s N4 billion matching fund for MSMEs in Enugu, Abia, Katsina, and Imo States, aimed at enhancing the global competitiveness of these businesses and improving their access to funding opportunities.
The PwC Nigeria report, which surveyed over 500 MSMEs across 13 sectors with annual sales turnovers of N5 million and above, revealed that 38% of MSMEs experiencing a decrease in demand attributed it to high product costs, while 36% pointed to low purchasing power.
The report further estimated that Nigerian MSMEs need approximately $32.2 billion (N13 trillion) in financing.
Commenting on the report, the National Vice President of the Nigerian Association of Small Scale Industrialists (NASSI), Segun Kuti-George, described the findings as painting a “gloomy picture” that accurately reflects the realities faced by small business owners.
Kuti-George acknowledged government interventions but expressed skepticism about their impact. “I don’t believe many of our members are benefiting from these government interventions. The funds we receive are minimal,” he remarked.
He also urged the Federal Government to involve industry stakeholders in decision-making processes, noting that the procedure for accessing government grants is often cumbersome. “We know who needs the grants more than the government. The process can be so tedious that sometimes you feel like giving up,” Kuti-George added.
