By Zara Maisango
Nigeria’s business landscape is reeling after the collapse of over 7 million small enterprises in just two years, according to the Nigerian Economic Summit Group (NESG). This alarming figure represents roughly 30% of the nation’s estimated 24 million micro, small, and medium enterprises, underscoring a deepening economic crisis that threatens the livelihoods of millions.
NESG, a private sector-led think tank established in 1996 and a key driver of economic policy dialogue in Nigeria, attributes the mass business closures to a perfect storm of economic challenges. Chief among these are an adverse economic environment marked by soaring inflation, unstable exchange rates, and high interest rates that have squeezed the operating margins of small businesses.
Adding to the burden are multiple taxation policies levied at various levels of government, which have increased operational costs and stifled growth. The situation is further exacerbated by the removal of fuel subsidies and escalating energy costs—factors that have not only disrupted business operations but also strained the already erratic power supply.
The depreciating naira has intensified a foreign exchange crisis, making the importation of essential raw materials prohibitively expensive for many businesses. This has been compounded by the exit of multinational companies from the market, a move that has precipitated significant job losses and disrupted supply chains, deepening the overall economic malaise.
Security concerns also play a crucial role. Reports of banditry, kidnappings, and other violent disruptions have made it increasingly unsafe for business owners to operate, further discouraging investment and dampening consumer confidence. With declining purchasing power among Nigerians due to rising unemployment and inflation, demand for goods and services has plummeted, leaving many entrepreneurs with no viable path forward.
Dr. Segun Omisakin, NESG’s Chief Economist, has warned that these factors have culminated in an estimated economic loss of N94 trillion. He stressed that urgent government intervention is necessary to stabilize the economy and implement policies that provide relief and support to the beleaguered small business sector.
As Nigeria grapples with these challenges, the future of its economic recovery hangs in the balance. Without swift and decisive action to address these systemic issues, experts warn that the collapse of small businesses could trigger a broader economic downturn, with far-reaching consequences for the nation’s development and prosperity.