The Lagos State Employment Trust Fund (LSETF) has projected 2025 as a transformative year for Micro, Small, and Medium Enterprises (MSMEs) in Nigeria, with tax cuts, export incentives, and key policy reforms poised to reshape the sector’s future. In its report titled *Resilience and Opportunities: A Review of 2024 and Outlook for MSMEs in Nigeria in 2025, LSETF highlighted the challenges faced by MSMEs in 2024 and outlined the promising outlook for the coming year.
The report acknowledged the economic hurdles of 2024, including the Central Bank of Nigeria’s decision to hike the monetary policy rate to 27.5%, which made credit more expensive and less accessible for MSMEs. Despite these challenges, initiatives like the Lagos State Employment Trust Fund and presidential grants provided vital support, enabling businesses to remain operational.
One key highlight of 2024 was the revision of Nigeria’s minimum wage to N70,000, with some states implementing even higher rates. While this increased household incomes, the soaring cost of living, particularly food inflation at 39%, limited the positive effects.
Looking ahead to 2025, the report painted an optimistic picture, largely due to the Nigerian government’s proposed tax reforms aimed at easing the financial strain on MSMEs. Key measures include zero-rated VAT on exports, which will make Nigerian products more competitive in the global market, and tax exemptions for businesses with annual turnovers of N50 million or less, covering VAT, withholding tax, and corporate income tax.
“These initiatives are expected to provide significant relief to MSMEs, allowing them to reinvest their savings into business growth and expansion,” the report noted. Additionally, the reduction of corporate income tax by 5% over the next two years, from 30% to 25%, will further enhance the profitability of small businesses.
The government also plans to simplify the tax landscape by harmonizing various taxes and levies into a single, reduced rate, easing compliance for businesses. The establishment of a tax ombudsman to resolve disputes and protect vulnerable taxpayers is another crucial part of the reform package.
With these reforms, LSETF anticipates a more business-friendly environment for MSMEs, setting the stage for substantial growth and increased competitiveness in 2025.
