Despite the naira’s stability and improved foreign exchange interactions in the first quarter of 2025, Nigeria’s micro, small, and medium enterprises (MSMEs) continue to face major hurdles including shrinking consumer purchasing power, high inflation, surging production costs, and restricted access to affordable credit.
A report by the Association of Small Business Owners of Nigeria (ASBON) revealed that while FX stability slightly boosted SME performance metrics, spiraling energy costs, expensive loans, and weakened household incomes severely impacted business inventories and sales.
National President of ASBON, Dr. Femi Egbesola, noted that despite market stability, SMEs are still heavily reliant on the black market for foreign exchange, unlike large corporations that access official FX channels, which further erodes their competitiveness.
Egbesola disclosed that over 7.8 million MSMEs have shut down in the last two years, citing inflation, over-taxation, poor access to finance, and an unfriendly business environment. He called on the government to urgently provide low-interest loans, grants, tax incentives, and funding support to keep small businesses alive.
He further urged SMEs to explore export opportunities under the African Continental Free Trade Area (AfCFTA) to earn foreign currency and improve margins, noting that tapping regional markets could offer a lifeline amid local challenges.
Similarly, the Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, lamented rising electricity costs, pointing to a 200% increase in Band A tariffs and a spike in lending rates to 35.5% in 2024. He stressed that these factors have pushed financing costs for manufacturers to over N1.3 trillion, severely limiting expansion efforts.
Echoing the concerns, the Director-General of the Nigerian Association of Small and Medium Enterprises (NASME), Charles Odi, highlighted that although inflation has slightly eased to 23.18%, high prices continue to cripple consumer spending. Many SMEs struggle to restock due to escalating goods prices, reducing overall market activity.
Odi also backed calls for internal compliance in retail outlets, urging businesses to ensure only certified products are stocked to boost consumer confidence.
Stakeholders across the SME sector agree that policy reforms, forex liquidity improvements, energy cost adjustments, and strong government support are urgently needed to restore purchasing power, ease supply chain pressures, and stabilize the MSME ecosystem.
