A recent report titled “Perception Study: Efficiency and Impact of Regulatory Activities of Standard Organisation of Nigeria on SMEs” highlights the alarming rate at which Small and Medium Enterprises (SMEs) in Nigeria are failing before their fifth anniversary. The report identifies harsh economic environments, limited access to capital, and poor business practices as the primary factors impeding the growth and transition of micro-businesses.
The study emphasizes that approximately 80 percent of SMEs face significant challenges that hinder their survival and progress. It attributes these obstacles to the unfavorable and risky economic climate influenced by various variables, thereby discouraging foreign investments. The report emphasizes that despite economic expansion and potential prospects, the Nigerian business environment poses constraints that pose a threat to businesses’ longevity.
Among the identified constraints, multiple taxations stands out as a major burden that negatively impacts businesses across the country. Manufacturers Association of Nigeria (MAN) has raised concerns about the oppressive weight of several taxes, warning that they have the potential to bankrupt companies. MAN’s survey revealed that only 39 of the 119 authorized taxes and levies under the Taxes and Levies (Approved List of Collection) Act 1998 were being imposed by different levels of government in three states.
In addition to excessive taxation, the report identifies other challenges faced by SMEs in Nigeria. These include the high cost of accessing adequate technology, insufficient facilities for research and development, declining demand for locally produced goods, and increased demand for imported products. The study also highlights the lack of formal educational and technical competency among SME owners and staff, weak organizational frameworks, limited utilization of information technology, issues in people management, and inadequate accounting records as significant obstacles faced by SMEs in Nigeria.
The findings of this report shed light on the critical issues that hamper the success and sustainability of SMEs in Nigeria’s MSME sector. It underscores the urgent need for comprehensive measures to address the harsh economic climate, simplify taxation systems, enhance access to capital, and improve business practices. By addressing these challenges, policymakers and stakeholders can create a more conducive environment for SMEs to thrive and contribute significantly to Nigeria’s economic growth.
