No less than 42 Small and Medium Enterprises (SMEs) in Lagos have shut down due to challenges posed by the harsh business environment. This is according to the National President, Association of Small Business Owners of Nigeria, Dr Femi Egbesola.
Egbesola explained that the SMEs closed down their businesses between 2014 and 2019 due to the losses they battled with.
The affected businesses were registered members of the association in Lagos. Egbesola disclosed that the sectors were in the manufacturing sector, importation of commodities, and consulting/services.
“About 92% of the 42 businesses that shut operations were manufacturing companies; 6% were into importation of commodities, while the remaining 2% were into consulting/services business,” he said.
Egbesola stressed that the SMEs all ran out of business because they had losses repeatedly. This he said led to negative liquidity and inability to meet up with financial obligations.
What you should know: The Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry (LCCI) had reacted to the report by the National Bureau of Statistics on Nigeria’s GDP rising to 2.55% in the fourth quarter of 2019.
While MAN noted that the GDP growth had failed to meet up with the surge in the population, the LCCI argued that the growth had failed to address the unemployment challenge in the country, while the economy could be best described “as weak and sluggish.”
The associations had noted that the manufacturing sector had remained stunted due to a tough operating environment, poor infrastructure and unpredictability of government policies. These issues were what many of the SMEs, which shut down, faced.
The government needs to create an enabling environment, ensure patronage of locally produced goods and reform processes while putting in place adequate infrastructures.