2m MSMEs Collapsed In 3 Years Despite Federal Govt’s N200bn Intervention Promise – Business Owners

Three years after the federal government pledged a N200 billion intervention fund to cushion the impact of economic reforms on manufacturers and small businesses, stakeholders say that much of the promised support remains beyond the reach of the intended beneficiaries. In contrast, millions of micro, small, and medium enterprises (MSMEs) have shut down their operations.

The Association of Small Business Owners of Nigeria (ASBON) estimates that about two million small businesses collapsed within the first three years of President Bola Tinubu’s administration, citing the combined effects of fuel subsidy removal, exchange rate reforms, rising inflation, escalating operating costs and weakening consumer purchasing power.

As the administration marks its third anniversary, business groups are increasingly questioning the status of the intervention package announced in 2023 to help businesses navigate the economic disruptions triggered by the reforms.

In a nationwide broadcast on July 31, 2023, President Tinubu announced a N75 billion support package for manufacturers and N125 billion for MSMEs as part of measures to ease the burden of economic reforms.

The package was expected to provide low-interest financing, with manufacturers eligible to access up to N1 billion at nine per cent interest and MSMEs qualifying for loans of up to N1 million.

The President had indicated that the funds would be disbursed between July 2023 and March 2024. However, the programme did not commence as scheduled.

It was not until April 22, 2024, that the then minister of Industry, Trade and Investment, Doris Uzoka-Anite, announced the commencement of disbursements.

Stakeholders subsequently observed that the MSME allocation appeared to have been reduced from the initially announced N125 billion to N75 billion, a development that was never publicly explained.

ASBON national president, Dr Femi Egbesola, told LEADERSHIP that numerous members of the association who applied for the MSME loan scheme have yet to receive any support.

According to him, while some beneficiaries reportedly received the N50,000 nano-business grants introduced under the programme, the larger credit facilities intended to provide meaningful support for business expansion and survival have largely remained inaccessible.

“Some of our members were able to get the N50,000 grant, but in today’s economic environment, that amount offers very limited relief to businesses struggling with rising costs,” Egbesola said.

He noted that many business owners who applied for loans under the scheme have been waiting since 2024 without any indication of when the funds would be released.

Egbesola argued that the prolonged delay in disbursing the intervention may have significantly reduced its effectiveness, as many of the businesses it was designed to support have already ceased operations.

According to ASBON, approximately two million MSMEs have shut down since the beginning of the Tinubu administration, reflecting the severe strain on the sector.

The association attributed the closures to rising energy costs, exchange rate volatility, high inflation, declining demand and limited access to affordable financing.

Industry stakeholders warn that the collapse of such a large number of small businesses has implications for employment generation, household incomes and economic growth, given the critical role MSMEs play in Nigeria’s economy.

The Manufacturers Association of Nigeria (MAN) has also expressed concerns about the challenges facing businesses, maintaining that access to affordable and sustainable financing remains essential for industrial growth.

MAN director-general, Segun Ajayi-Kadir, had previously argued that even the full N200 billion intervention would not be sufficient to address the financing constraints confronting manufacturers, stressing that long-term access to low-cost credit is more important than one-off support programmes.

Manufacturers continue to grapple with high borrowing costs, foreign exchange challenges, energy expenses and declining consumer demand, factors that have affected productivity and investment across the sector.

Beyond the intervention fund, ASBON is urging the government to implement broader reforms aimed at improving the operating environment for small businesses.

Egbesola said reducing business registration costs, granting tax incentives for MSMEs and improving electricity supply would provide more sustainable support than temporary intervention programmes.

According to him, addressing structural challenges would help lower the cost of doing business and improve the competitiveness and survival rate of Nigerian enterprises.

He warned that without meaningful reforms, intervention funds alone would have a limited impact on the long-term sustainability of the MSME sector.

For many entrepreneurs, the promised N200 billion support package remains an unfulfilled commitment, while businesses continue to struggle under one of the most challenging economic environments in recent years.