By Umar Ismaila Isa
Its saddening, psychologically, and traumatically worrying that in today’s Nigeria, the major employers of labor are not just falling, but also wobbling, humbling, crumbling, and collapsing like packs of cards much to the chagrin of other African countries that have long been venerating and reverencing and referencing Nigeria’s economy as the giant of the continent.
How the mighty have fallen?
Some of the factors responsible for these colossal falls are partisan political influence, interest as well as corruption which had brought businesses in Nigeria to their humble knees, specifically the micro, small and medium enterprises, while also not staking claims for even common macroeconomic factors like recessions, insecurity, government debt, exchange rate, and high-interest rates.
As we speak, there were over 41 million Micro, Small, and Medium Enterprises (MSMEs) in Nigeria in 2017. Which has as of 2022 dropped to about 35 million.
No doubt, failure to provide value money can make customers disgruntled and avoid patronage, so also poor inventory management, failure to differentiate products and services in a highly competitive environment, and strong bargaining power of buyers can as well cause business failure, not to mention a weak economy, tax burden, high exchange rate, lower purchasing power, high inflation, money running out being in the wrong market, lack of research, bad partnerships and wrong allocation. All these undoubtedly in no small measure can cause business failure.
Also, Challenges like rising costs and reduced revenue, poor power supply, restrictive economic policies, foreign exchange hike, high cost of production, insecurity, and high inflation rate have drastically reduced the number of MSMEs which were over a 41million in 2017 and now are about 35million in the just last year 2022.
The data from the bureau of labor statistics isn’t encouraging at all, as it shows that approximately 20 percent of new businesses fail during the first two years of operation, 45percent during the first five years, and 65percent during the first ten years, while only 25percent makes it to 15 years or more.
In Nigeria, MSMEs account for 48percent of the Gross Domestic Product, (GDP), 96percent of businesses, 84percent of employment in the country, according to a PriceWaterhouseCoopers report, and also the three CCCs which are concept, capability, and capital. So it’s worthwhile to make sure that before engaging in any business that you make sure you have the basic concept, and capability before investing your capital.
As a matter of fact and emergency, beyond the rhetorics, there are practical ways government can create the right environment for businesses to thrive increase, the ease of doing business, eliminate multiple taxations of MSMEs, encourage public-private partnerships, improve power supply, tackle the issue of foreign exchange hike because with the rate of inflation in the country many businesses can’t survive.
The government and other necessary authorities have to take measures to save the country before it’s too late, and the time is now especially as we prepare to elect another president in less than 40 days from now that will take the baton of leadership from President Buhari.
Isa is a business writer and analyst. He writes from Kano and can be reached via email@example.com