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These easy to overlook challenges are killing SMEs in Nigeria



Challenges Killing SMEs

Whenever you come across one of those reports indicating that SMEs are the fundamental forces driving economic growth across the world, you better believe it because it’s true. According to PwC Nigeria, the SME sector is the backbone of major developed economies just as much as it plays a pivotal role in enabling employment and trade. In Nigeria, the sector is responsible for 84% of employment, accounts for 96% of businesses, and contributes 48% of the national GDP. 

Unfortunately, the small businesses that comprise this important sector are being threatened by some challenges which are often disregarded. To shed light on these problems, Nairametrics investigated. Below is the report, alongside some possible solutions. 

A Visit to the Markets 

The semi-industrial Lagos neighbourhood of Ogba is popular for many things, including its markets —the Ogba Market, the Sunday Market, and the newly-reconstructed Ogba Multipurpose Shopping Complex. It was around here that I met Taiwo that sunny Saturday afternoon. As a trader, he specialises in selling all kinds of men’s clothes and accessories. 

In case you haven’t figured it out already, I was not here on a fashion mission. But in order to get my mission accomplished, I had to pretend to be a customer. Having done this before, I knew that the key to getting traders to talk freely is simple — patronise them. That was exactly what I did. And after successfully negotiating a backpack which was nicely displayed in front of his shop, I asked Taiwo to talk to me about the challenges he faces as a small business owner.  

[READ: Financial Risk Management Tips for Individuals and SMEs]


As expected, the man had a list of problems to share off the back of his head; the lack of funding being chief among them. Now, it is already common knowledge that the lack of easy access to finance is the biggest challenge small business owners have to grapple with. But I wanted to learn about the often-overlooked problems that are also forcing small businesses to shut down. So, I rephrased my question, and soon Taiwo was telling me everything. 

Typical small business setup in Lagos, Nigeria.

High Cost of Rent, Poor Accommodation 

Taiwo highlighted a long list of challenges he tries to handle as a small business owner. Out of all of them, the one that stood out is the high cost of his rent. For the relatively small space he occupies, the man pays as much as N150, 000 in annual rents. And while this may not seem like much for some people, for the father of two who is also the breadwinner of his family, it is quite a lot…

Other traders have had more difficult challenges when it comes to the issue of accommodation. Somewhere around Ikeja Underbridge, some five kilometres away from Ogba, I met Sam who sells used clothes. Unlike Taiwo, Sam cannot even afford a proper shop. To survive, he displays his wares by the roadside, but within a limited space which can barely accommodate his table. For this small space, the young man must pay the sum of N40, 000 per annum or risk being “kicked out”. Here, roadside traders pay rents to the owners of the buildings in front of which wares displayed. 

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Sam's roadside shop in Ikeja Underbridge

The Rain and Sun Are Problems 

For roadside traders like Sam, securing a roadside space is one thing while coping with the challenges that come with owning the space is another thing. A shoe seller, who refused to be named, lamented how his goods are often damaged by both the rain and the sun just because he cannot afford a proper shop. The man, who has a small space right next to Sam’s, said the following; 

“When the rain is not falling on the shoes, the sun is beating it and damaging its quality. At the end of the day, customers will refuse to buy. And when they don’t buy, what is the essence of paying for this space in the first place?” 

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[READ: 10 Mistakes to avoid for Start-Ups]

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KAI Officials Pose a Challenge 

Many traders who can neither rent a shop nor a small roadside space, have often resorted to turning the railway in Ikeja New Garage into a makeshift marketplace. Here, you will see all kinds of traders struggling to make ends meet. They too must deal with the challenges posed by the rainfall and the scorching sun. Most of all, they also have to deal with KAI Officials.

Market place

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In their determination to Kick Against Indiscipline in Lagos State, the KAI officers are known to attack unexpectedly, arresting and confiscating the wares of the traders illegally trading on the railway. If arrested, one could allegedly spend months in jail unless they pay bribes.  

Other “peculiar” Challenges… 

Madam Gold, as she is popularly called, sells male underwear somewhere along Kudirat Abiola Way. She too cannot afford to pay for a proper shop. However, not having a store of her own comes with a special kind of challenge asides the sun and the rains. 

“Some customers believe that those of us who sell in open spaces like this are selling cheap materials. For that, they price our goods ludicrously” she said. “There is no difference between what we sell here and what they sell inside some of these boutiques around. The only difference is that you enter there and some of them have fans and ACs. So, they add up the cost of the AC and people like you willingly pay. But when you come here, you try to buy the same quality at reduced rates…” 


Any trader caught by a KAI Officer would be detained in this van alongside his/her wares.

Multiple Taxation for medium-scale enterprises 

Medium-scale businesses may not exactly be facing the same kind of challenges smaller ones face, but they have their problems quite alright. These range from multiple taxation from the government, to the challenge of finding quality staff. 

In conclusion, there are just some of the challenges facing small and medium scale enterprises in Nigeria. There is the need to proffer solution to these challenges, bearing in mind the importance of SMEs in every economy. Nairametrics is, therefore, using this medium to call on the Government, grant agencies, and NGOs to come up with more schemes that could help ameliorate the problems highlighted above. 

Market place


Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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The FG in partnership with the private sector will continue to support MSMEs – Osinbajo

Osinbajo has stated that the FG in partnership with the private sector would continue to provide interventions to boost the growth of small businesses.



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Nigeria’s Vice-president Prof. Yemi Osinbajo during an MSME stakeholders’ meeting, disclosed that the Federal Government in partnership with the private sector would continue to provide interventions to boost the growth of small businesses across the country.

According to a press statement issued by Laolu Akande, the VP made this statement on Monday at the first meeting of MSMEs stakeholders for the year 2021.

Prof. Osinbajo said the Government would continue to support innovation and interventions to deepen the involvement of new and existing MSMEs in the nation, this he said would help to improve the economy and create more employment opportunities for Nigerians.

He stressed further that the implementation of the Economic Sustainability Plan Survival Funds has sent positive economic signals. In a bid to complement the gains in this space, the Government needs to scale up interventions in the MSMEs sector.

In this vein, Osinbajo urged stakeholders in the public and private sectors at the virtual meeting to be innovative in the interventions planned for small businesses across the country, so as to consolidate on the gains recorded in the MSMEs space in the past few years.


What they are saying

Prof. Yemi Osinbajo, during the MSME stakeholders’ meeting, said:

“We must continue to be innovative in the interventions that we plan for MSMEs because small businesses are the engines of growth of any economy, in the areas of wealth creation and employment opportunities, MSMEs are very important.”

Continuing, Prof. Osinbajo said:

“We really have to think out of the box in our engagements going forward. We need to change the way we do many things, we need to look for ways of multiplying our efforts because the challenges in this space are greater than what we have been able to achieve so far. Of course, we have done a lot, but looking at the numbers in need, you will find out that there is a lot more to be done.”

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What you should know

  • The Federal Government’s MSMEs Survival Fund grant scheme, which includes Payroll Support, Artisans and Transport support tracks, is a component under the Nigerian Economic Sustainability Plan, NESP.
  • The Survival Fund scheme was designed to cushion the economic effects of the COVID-19 pandemic especially on the most vulnerable small businesses, is a conditional grant to support vulnerable MSMEs in meeting their payroll obligations and safeguard jobs in the MSMEs sector.
  • The scheme is estimated to save not less than 1.3 million jobs across the country. However, 283,023 Nigerians employed by MSMEs across the country have benefited from the Payroll Support Scheme. This leaves millions of Nigerians out of the consideration of the scheme.

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283,023 Nigerians employed by MSMEs have benefited from FG Payroll Support Scheme

The FG has revealed that over 200,000 persons have so far benefited from its Payroll Support Program.



Nigerian MSMEs suffer negative impact of COVID-19

The Federal Government of Nigeria has disclosed that 283,032 Nigerians employed by MSMEs across the country have so far benefited from the Payroll Support Scheme of the Federal Government.

This disclosure was made in a tweet shared via FG Survival Fund’s official Twitter account.

What you should know

  • The Payroll Support Program by FG under the Survival Fund initiative was created to provide an adequate buffer against the impact of the COVID-19 on the stream of income of MSMEs.
  • This, however, is an offshoot of the Survival Fund initiative, established to support and protect small businesses from potential vulnerabilities brought about by the COVID-19 pandemic.
  • In line with the mandate of the programme, the government will support MSMEs with staff salaries for 3 months.
  • It is important to note that the COVID-19 pandemic and other regulatory actions of the Federal Government affected the core segments of SMEs, as well as the revenue and income vehicles of Small businesses in Nigeria.
  • According to a survey by NBS, it became public knowledge that the total number of Micro, Small and Medium Enterprises in the country was about 41.5 million, as of December 2017, with significant employment contribution running to millions.
  • In the light of this, it is plausible to say that the Payroll support programme is not inclusive enough, as the recent move by FG to support MSMEs leaves millions of MSMEs and their employees out of the radar.

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FG warns applicants of N75 billion MSME Fund against fraudulent websites

FG warned unsuspecting members of the public to beware of fraudulent websites demanding account details.



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The Federal Government has warned unsuspecting members of the public, who wish to apply for the MSME Survival Fund, to beware of fraudulent websites demanding account details, before giving applicants N50,000.

According to Punch, the disclosure is contained in a press statement that was issued in Calabar by the Project Delivery Office (the Coordinating office of the scheme) under the Federal Ministry of Industry, Trade and Investment, and titled ‘Portal requesting for beneficiaries account details to get N50, 000 not known to us.’

READ: CBN reacts to videos, pictures of new N2,000 and N5,000 in circulation

The PDO is coordinated by the SA to the President on MSMEs, Office of the Vice President, Tola Johnson.

What the Trade, Industry and Investment Ministry is saying


The Ministry, in its statement said, “Our attention has been drawn to the activities of fraudsters parading themselves as operators of the Federal Government’s Survival Fund Scheme.

“The syndicate operating a fraudulent portal with the link are asking unsuspecting members of the public to check their eligibility for the scheme by providing their account details on the portal in order to be paid N50, 000 grant under the Survival Fund Scheme.

READ: How to access FG’s new grant for Bus, Uber, Bolt drivers, cart pushers

“It is pertinent to note that the Project Delivery Office (the coordinating office of the scheme) does not operate any such portal and beneficiaries do not require to go to the website to verify their eligibility for the federal government’s Survival Fund as indicated on the fraudulent portal.

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“The website requesting beneficiaries account details is, therefore, a scam. The PDO does not operate any such portal and wishes to advise all Nigerians and beneficiaries of the different tracks of the survival fund to be wary and desist from having dealings with the operators of the site.

READ: CBN raises alarm over fake tweet posts on N50 billion COVID-19 fund

The Ministry pointed out that the authentic survival fund portal remained and the PDO would always inform members of the public on updates about the scheme whenever it was necessary.

What you should know

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The MSME Survival Fund, which is part of the N2.3tn stimulus package of the Nigeria Economic Sustainability Plan, was introduced by the Federal Government as part of efforts to help businesses overcome challenges posed by the Covid-19 pandemic.

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The MSMEs Survival Fund scheme is a conditional grant to support vulnerable micro and small enterprises in meeting their payroll obligations and safeguard jobs in the MSMEs sector. The scheme is expected to save at least 1.3 million jobs across the country and specifically impact on over 35,000 individuals per state.

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READ: Germany’s 18th Century old bank begins a Bitcoin, Stellar, Ethereum Fund

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