This piece of informative writing is centered on the overview of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. MSMEs in Nigeria is perceived as businesses with up to 250 employees. Over the years to date, MSMEs have been at the frontline of the nation’s economy playing an immense role in GDP production and employment creation. To learn more about the MSMEs industry, make sure to read this article vehemently to the very end.
MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMES) IN NIGERIA – AN OVERVIEW
MSMEs have been around for a long time and what seems to have gradually begun has now grown to form an integral part of the country’s economy contributing immensely to the economy and employment growth. The number of MSMEs is growing in Nigeria and in-fact it has the largest number of companies by a wide margin and the most employer of labor in the country. This goes to show how important SMEs are for economic and social reasons, especially the role it plays in employment.
What is the Meaning of MSMEs?
It is important that we start our discussion by first providing an answer to what MSMEs means.
MSMEs is an acronym for micro-business, small business, and medium business. In Nigeria, Micro Small and Medium Enterprises are generally referred to as enterprises with employee strength that is up 250.
Below is a quick definition of small and medium enterprises:
- Micro Enterprises: between 1 and 9 employees.
- Small Enterprises: between 10 and 49 employees.
- Medium Enterprises: between 50 and 249 employees.
Benefits of MSMEs to Economic Growth
The effect of MSMEs on the Nigerian economy cannot be undermined as the country march on the shoulders of small and medium-sized businesses. MSMEs are considered to be the powerhouse for the development of any economy because they form the bulk of business activities in a growing economy, especially a country like Nigeria.
Probably you are wondering what the effect of MSMEs in Nigeria, below are some of the benefits of MSMEs to the Nigerian economy, they include:
- MSMEs contributes to the nation’s economy particularly in terms of output of goods and services;
- The high rate of job creation especially in the fast-growing service sector.
- MSMEs contribute to the reduction of income disparities.
- Create quite a number of skilled and semi-skilled workers which are perceived as a basis for future industrial expansion.
- MSMEs helps improve forward and backward connections between economically, socially, and geographically diverse sectors of the economy.
- MSMEs offers great opportunities for developing and adapting appropriate technological approaches in recent businesses.
- MSMEs has proven to be an excellent training ground for entrepreneurial and managerial talent to develop their business skills and techniques, the critical shortage of which is often a great handicap to economic development, among others.
The population of MSMEs In Nigeria
Presently, Nigeria houses over 37.07 million micro, small, and medium-scale enterprises, according to the Ministry of Industry, Trade, and Investment. MSMEs are believed to be responsible for over 84% of total jobs in the country. More so, the MSMEs enterprises in Nigeria account for about 48.5% of the gross domestic product (GDP), as well as about 7.27% of goods and services exported out of the country. From our standpoint, Micro Enterprises account for the bulk with 36,994,578 enterprises, this is about 99.8%, while small enterprises are responsible for 68,168, and medium enterprises 4,670.
Funding Gap for MSMEs in Nigeria
As we continue to provide you with information that will enhance your knowledge about the MSMEs, we also deemed it necessary to provide you with the source of funding for MSMEs in Nigeria.
It is no doubt that the lack of finance for MSMEs has been a great concern for the bodies concerned especially the government, industry leaders, and financial institutions at large. The majority of the MSMEs businesses in Nigeria have challenges sourcing for funds to improve and grow their businesses.
Howbeit in 2013, The Central Bank of Nigeria launched the MSME Development Fund with a share capital of N220 billion. The Fund was established to support MSMEs because of the industry’s significant contributions to the economy and the existing huge financing gap in the country. The main essence why the fund was established is to channel low-interest funds to the MSME sub-sector of the Nigerian economy through Participating Financial Institutions (PFIs).
More so, Banks and fintechs (financial technology companies) in Nigeria have also been instrumental in filling the financial gap in the market by providing soft and short-term financial loans to MSMEs in Nigeria. However, banks often demand a large amount of paperwork, including a business plan, as part of the application prerequisite, while Fintechs on the other hand leverage data and technology to provide smooth and quick access to funds.
Also, the Nigerian government in the bid to enhance MSMEs and help them grow and expand also established numerous schemes and programs such as SMEDAN, YouWin, TraderMoni, N-Power, etc. The programs are aimed at providing grants to MSMEs that meet the set requirements. All of these schemes are put together to form a great step at closing the gap for MSMEs in Nigeria.
Conclusion on Micro, Small, and Medium Enterprises (MSMEs) in Nigeria – An Overview
We have come to the conclusion of our discussion about MSMEs in Nigeria and we sure hope you enjoy reading through. It is no doubt that Nigeria is unarguably one of the largest economies in Sub-Saharan Africa and we have the MSMEs to thank for their immense contribution to that effect. It is imperative that the government pay more attention to this industry because it is no doubt one of the powerful contributors to the economic growth of the country. MSMEs continue to grow and increase in Nigeria with tons of MSMEs enterprises established almost on daily basis with numerous entrepreneurs now coming forth. The government is relentlessly partnering with the MSMEs so that their spectrum will continue to expand and their effect on the Nigerian economy will continue to grow.
We hope to hear from you especially how helpful you find this article by giving us feedback.
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