Addressing key structural challenges is crucial for the revitalization of Nigeria’s 39.6 million Micro, Small, and Medium Enterprises (MSMEs), says an expert. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, highlighted the pressing need to tackle issues surrounding infrastructure and foreign exchange liquidity.
Speaking at the National Association of Small and Medium Enterprises roundtable, themed ‘MSMEs: The Catalyst for Nigeria’s Economic Rejuvenation and Growth,’ Yusuf emphasized the current high mortality rate among small businesses due to various economic challenges.
Structural constraints, particularly in infrastructure, the depreciation of the naira exchange rate, foreign exchange liquidity crises, and soaring inflation, are major hurdles faced by MSMEs. Despite these challenges, MSMEs remain a vital source of resilience for the Nigerian economy.
Yusuf noted that recent policy reforms, including subsidy removal and the naira float policy, have brought about significant social outcomes, albeit necessary. However, these changes have led to a surge in inflation across various product categories, affecting business sustainability, profit margins, job retention, and loan servicing for small businesses.
To combat deindustrialization, Yusuf stressed the urgency of taking measures to revitalize industrial estates that have been repurposed into event spaces, warehouses, and supermarkets. He highlighted areas like Ilupeju, Ogba, Ikeja, Sango-Ota, Agbara, and others as examples of declining industrial zones.
Factors contributing to deindustrialization include the influx of substandard products, foreign exchange scarcity, inadequate power supply, high energy costs, and multiple taxation from government agencies. Urgent steps are needed, particularly in electricity supply and logistics, to create a competitive industrial sector and drive transformation.
Yusuf also called for solutions to address foreign exchange liquidity and currency depreciation issues. Additionally, he proposed the removal of multiple taxation and tax exemptions for MSMEs with turnovers of N50 billion and below, which would bolster productivity in this sector.
Empowering MSMEs requires a comprehensive approach to alleviate constraints and create an environment conducive to growth and sustainability.
