A groundbreaking study conducted by Small Firm Diaries and published by the National Bureau of Statistics (NBS) has shed light on the ownership landscape of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. The report, titled “Country Data Overview,” uncovers the fact that an encouraging 40% of MSMEs in the country are owned by women, signifying a significant step towards gender inclusivity in entrepreneurship.
Contrasting data from the World Bank, which indicates that globally, firms with female representation in ownership stand at 32.9%, the Nigerian figure surpasses expectations, showcasing a remarkable 16.8%. However, the study further reveals that in large firms, female representation in ownership drops to a mere 12.2%, indicating room for further progress in fostering gender diversity in bigger enterprises.
With MSMEs playing a critical role in the Nigerian economy, constituting 96% of companies and employing 86% of the total workforce, understanding their operations and dynamics becomes imperative. The study draws data from 161 firms across Enugu, Kaduna, and Lagos states, encompassing various sectors such as light manufacturing, agri-processing, and services.
Key insights from the study highlight the financial performance and adoption of digital financial services by MSMEs. On average, MSMEs in Nigeria generate annual revenue of N2.3 million, with an operating margin of N768,000. However, it is concerning to note that 62% of MSMEs experience monthly revenue below N300,000, and 47% struggle with monthly revenue lower than N200,000, indicating the need for support in enhancing financial sustainability.
Regarding the adoption of digital financial services, 97% of MSMEs reported having a bank account, although less than 50% utilize it regularly. Male-owned MSMEs tend to rely more on loans, with 47% seeking credit facilities, while 45% of female-owned MSMEs turn to loans to support their businesses. Additionally, over 80% of MSMEs claim ownership of a debit card, 65% utilize mobile banking services, and 56% use POS machines for transactions. However, only a small fraction (5%) of MSME owners have utilized credit cards so far.
The study also identifies challenges faced in adopting digital financial services, with 60% of respondents pointing to the major problem of delayed money arrival. About 30% cited loss of access and missing funds as their primary obstacles in using DFS. Interestingly, 63% of respondents reported using DFS because they were receiving payments through this medium.
Looking at the adoption of technology for business, over 50% of MSME owners consider cost as the major barrier, while 27% highlight the lack of necessary skills as the hindrance.
MSMEs, defined by SMEDAN, are the backbone of the Nigerian economy, employing more people than formal sectors. These businesses are categorized as micro, employing 1 to 10 workers with assets less than NGN 5 million, and small, employing 10 to 49 workers with assets ranging from NGN 5 to 50 million. As they continue to be a driving force in the country’s economic growth, empowering and supporting MSMEs, especially those owned by women, remains crucial for sustained prosperity and development.