More Nigerians Abandon Entrepreneurship Dreams, Return to Job Market As Economy Bites Hard

More Nigerians Abandon Entrepreneurship Dreams, Return to Job Market As Economy Bites Hard

  • According to a new report by the NBS, the number of small-scale industrialists and businesses is on the decline
  • Various factors have contributed to this decline, including the policies implemented by the CBN
  • Additionally, the environment has caused Nigerians who dream of becoming the next Dangote to choose to return to the job market

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

An increasing number of Nigerians are abandoning their entrepreneurial pursuits and returning to the job market.

According to the 2023 social statistics report by the National Bureau of Statistics (NBS), the number of individuals operating as small-scale industrialists across various economic sectors stood at 170,098 in 2022.

Harsh policies affecting SMEs in Nigeria
More SME closes down in Nigeria Photo credit: Adetona Omokanye
Source: Getty Images

This represents a 45% decline from the 246,200 recorded in 2020 and a decrease from 213,402 in 2021.

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The new data also indicates that 76,102 Nigerians decided to end their entrepreneurial pursuits within two years.

Other sectors' decline breakdown

Here is a sectoral analysis of SMEs' decline.

  • Education Sector

2020: 56,321

2021: 49,749

2022: 39,876

  • Real Estate Sector

2020: 19,956

2021: 12,720

2022: 8,313

  • Agriculture Sector

2020: 39,109

2021: 36,431

2022: 36,348

  • Information and Communication Technology (ICT) Sector

2020: 33,842

2021: 28,816

2022: 23,101

  • Manufacturing Sector

2020: 27,723

2021: 20,736

2022: 17,450

  • Mining Sector

2020: 24,852

2021: 22,721

2022: 22,522

  • Wholesale and Retail Trade Sector

2020: 44,397

2021: 42,229

2022: 22,488

Reasons for SMEs decline

Although NBS did not clearly state the reasons many SMEs are closing shops, it is not difficult to understand why, given the economic challenges exacerbating Nigerians' purchasing power.

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The Central Bank of Nigeria's tightening monetary policies, rising inflation, depreciating naira, and production costs have created a challenging environment for small and medium-sized enterprises (SMEs).

Muda Yusuf Muda, the CEO of the Centre for the Promotion of Private Enterprise (CPPE), recently raised concerns about the CBN interest rate.

His words:

"My prayer was for the MPC to pause the rate hikes for a number of reasons. First, previous rate hikes have been quite aggressive, hurting output and real sector investments.
"Most economic operators with credit exposures to the banks have not recovered from previous hikes. Interest rates were already around 30% threshold."

FG shares N200bn to small business owners

Earlier, Legit.ng reported that the Nigerian government announced plan to disburse loans to micro, small, and medium enterprises (MSMEs) under the N200 billion Presidential Intervention Fund initiative.

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The minister of industry, trade and investment, Doris Uzoka-Anite, said the decision was taken following the success of the ongoing disbursements targeted at supporting one million nano businesses nationwide.

Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng

Authors:
Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

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