More than 7.2 million small businesses in Nigeria shut down between 2023 and 2024 due to harsh economic conditions, according to the Nigerian Economic Summit Group (NESG). This represents about 30% of the country’s estimated 24 million Micro, Small, and Medium Enterprises (MSMEs).
Chief Economist and Director of Research at NESG, Dr. Segun Omisakin, disclosed this alarming trend during the launch of the 2025 Private Sector Outlook. He highlighted key economic challenges and their impact on businesses, warning that the situation reflects Nigeria’s economic vulnerability.
Omisakin said, “Between 2023 and 2024, multinational divestments and business closures led to an estimated N94 trillion economic loss. Additionally, 30% of Nigeria’s 24 million registered MSMEs shut down during this period, underscoring the country’s economic vulnerability.”
He explained that while some reforms improved the availability of foreign exchange, the naira depreciated significantly, with the official exchange rate averaging N1,479.9 to the US dollar in 2024. Public debt also surged to N142.3 trillion as of September 2024, adding to fiscal pressures.
Looking ahead to 2025, Omisakin urged businesses to adapt to economic uncertainties and adopt strategic measures to survive and grow.
Nigeria’s Economic Growth and Challenges
Despite these challenges, NESG Board Director, Mrs. Wonu Adetayo, pointed out that Nigeria’s economy showed some improvement in 2024. She credited reform efforts for driving investment and economic expansion.
Adetayo said, “Nigeria’s economy expanded by 3.4% in 2024, the highest growth since 2021. The number of expanding activity sectors increased from 32 in 2023 to 38 in 2024.”
However, she cautioned that stagnant productivity and persistent macroeconomic imbalances continue to cause economic distress, leading to a decline in living standards.
During a panel discussion at the event, experts stressed that foreign investors prioritize policy stability over exchange rate fluctuations. They argued that consistent policies attract investments, regardless of the naira’s value.
The panelists also called for stronger collaboration between the public and private sectors. They emphasized that business associations such as the Nigerian Association of Small and Medium Enterprises (NASME), the Nigerian Association of Small-Scale Industrialists (NASSI), and the Nigeria Employers’ Consultative Association (NECA) must be actively involved in economic policymaking.
President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Oye, warned against excessive government interference in private sector activities.
Oye stated, “Government must act as a facilitator, not a competitor, in economic affairs. Business organisations should always be in the room when key negotiations take place to ensure broad-based economic benefits.”
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AfDB to Provide $230 Million for Nigerian SMEs
In a move to support struggling businesses, the African Development Bank (AfDB) is facilitating a $230 million trade finance package for Access Bank Plc. The funding aims to help small and medium-sized enterprises (SMEs) in Nigeria access foreign exchange, strengthen trade, and improve financial stability.
The package consists of two key components: a $170 million Trade Finance Line of Credit (TFLoC) and a $60 million Transaction Guarantee (TG).
The TFLoC is a three-and-a-half-year loan designed to provide forex liquidity, allowing Nigerian SMEs to pay for essential imports and sustain operations. The TG is a three-year guarantee that will protect confirming banks from the risk of non-payment on trade finance transactions. This means Access Bank can offer more trade finance options without worrying about defaults.
Before the funds are disbursed, the Central Bank of Nigeria (CBN) must approve the project to ensure compliance with local forex regulations.
The AfDB funding is expected to drive economic benefits, including SME growth, improved access to imports, and support for women entrepreneurs.