Recently, more than 10% of the 40 million micro, small, and medium-sized firms (MSMEs) in the nation have closed their doors since May, according to Abdulrasid Yarima, President of the Governing Council of the Nigerian Association of Small and Medium firms (NASME).
He noted that the elimination of subsidies, rising energy prices, the weakening of the naira, growing inflation, operational costs, and diminished purchasing power are driving even more businesses out of business. He was concerned that Nigeria will become even more de-industrialized if nothing was done to solve the myriad issues that manufacturers and business owners face.
According to a recent poll by the Small and Medium Enterprises Agency of Nigeria (SMEDAN), the greatest obstacles facing small firms are high energy costs, high electricity prices, various taxes, limited access to capital, and high funding costs. Other factors include the weakening of the naira, expensive logistics, and rising insecurity.
The rising tide of de-industrialization in the economy must therefore be urgently stopped, according to Dr. Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE). He regretted that many factory buildings had been transformed into event venues, shops, places of worship, warehouses for imported completed goods, restaurants, and sports arenas as a result of the failure of several manufacturing companies, the majority of which are SMEs.
According to Yusuf, the FX crisis, insufficient electricity, high energy costs (particularly for fuel and gas), various taxes, low domestic patronage, inconsistent policies, and a weak infrastructure basis are some of the causes contributing to de-industrialization. Other issues, according to him, include excessive funding costs, a lack of long-term financing, difficult credit availability, weak institutions, insufficient industrial space, and a lack of innovation.
Frank Onyebu, a former MAN chairperson for the Apapa branch, noted that it would be a marvel if industries survived this time because the majority of entrepreneurs are just hanging on. He pointed out that local businesses are struggling with too many issues and that the government is doing little to help.
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