In the midst of the current economic hardships, Dr. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), has highlighted the pivotal role of the micro, small, and medium enterprise (MSME) sector in Nigeria’s economic prosperity, provided it operates in a conducive environment.
Yusuf also underscored the potential of MSMEs to generate over 20 million jobs, emphasizing that this sector has been grappling with challenges due to insufficient attention from authorities.
Speaking at the 2023 business roundtable with the theme “MSMEs: The Catalyst for Nigeria’s Economic Rejuvenation and Growth,” organized by the National Association of Small and Medium Enterprises (NASME) in Lagos, the former Director General of the Lagos Chamber of Commerce and Industry (LCCI) emphasized that there are approximately 39.65 million MSMEs in Nigeria, with a staggering 96.9 percent of them being micro-enterprises.
He pointed out that even if only 50 percent of these micro-enterprises could create just one job each, they would collectively generate approximately 20 million new jobs.
Yusuf acknowledged the daunting challenges currently faced by businesses, particularly MSMEs, in light of recent reforms such as the removal of fuel subsidies and the partial unification of the exchange rate. While acknowledging the necessity of these reforms, he expressed concerns about their social consequences.
He attributed the high mortality rate among Nigerian MSMEs to various obstacles in the business environment, including structural constraints related to infrastructure, the depreciation of the naira exchange rate, inflation, regulatory compliance costs, high transaction costs at ports, multiple taxes and levies, costly logistics, insecurity affecting the agricultural sector, the influx of inexpensive Asian products into Nigerian markets, and the cost of funds.
Yusuf proposed several solutions to address these challenges:
- Prioritize critical infrastructure, particularly electricity supply and logistics.
- Address foreign exchange liquidity and currency depreciation issues.
- Exempt MSMEs with annual turnovers of N50 million and below from corporate tax and value-added tax (VAT).
- Tackle the problem of multiple taxes and levies on small businesses by both state and non-state actors.
- Focus on improving productivity and competitiveness of manufacturing firms by addressing structural infrastructure issues.
- Address concerns regarding unfair competition from imported finished goods.
- Tackle regulatory and institutional challenges affecting MSMEs, including access to credit, the cost of credit, and tenure of funds.
By implementing these measures, Yusuf believes that the MSME sector can thrive and play a significant role in driving economic growth and job creation in Nigeria.