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.
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.
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.
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?”
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.
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…”
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.