Despite the stability of Naira and FX interactions in Q1, 2025, the micro, small and medium enterprises(MSMEs) in the country continues to glitch on dwindling purchasing power, double-digits price hike, low disposable incomes of consumers, high production cost and harsh business fundamentals that put strains on household budgets.
LEADERSHIP Checks revealed that MSMEs experienced a steep growth in the first quarter of 2025 with the stability of FX transactions even though the purchasing power of consumers was completely eroded and sidestepped by double digits price hike and low disposable income.
ASBON Q1 report revealed that the performance metrics of the Small and Medium Enterprises(SMEs) improved with the stability of FX interactions but declared that dwindling purchasing power of consumers, low disposable income, high interest loans, high production cost, and hike in energy expenditures heavily impacted the inventories of the SMEs.
Analyst and SMEs stakeholders have prompted the need for SMEs economic realignment to improve performance metrics, profit margins, peak of sales and capacity utilization to achieve steep growth and economic relief amid the drivers of supply chain disruptions which renders nullity to economic growth.
The SMEs stakeholders equally agreed that collaboration, strategic innovation, and policy reforms are critical to restore Nigeria’s purchasing power, supply chain and help SMEs and local businesses to survive.
Speaking in a telephone conversation, the National President of Association of Small Business Owners of Nigeria(ASBON), Dr. Femi Egbesola said, stability in Fx and inflation rate will gradually ease investors confidence even as he stated that, the tax reform bill starting up in second quarter of the year will bring downfall to energy price and bring relief to the MSMEs ecosystem.
He said, despite the stability of FX, the SMEs still revert to the black market while hinting that larger corporations have access to FX from the commercial banks as this creates hurdles and reduces the competitiveness of the SMEs to become vibrant as it should be.
He further disclosed that, manufacturers, industrialists and particularly, the SMEs, were finding it difficult to operate due to limited access to raw materials, which are mostly imported.
Reeling out figures of businesses on death’s knees, ASBON boss said, over 7.8 million MSMEs had died in the last two years, primarily due to harsh business environmentals, inflationary pressures, over-taxation, and lack of access to finance and funding.
ASBON president emphasised the need for the government to provide support to SMEs, including credits with low-interest rates, grants, tax reliefs, and moratorium.
He alluded that the struggle to obtain dollars through commercial banks forces many SMEs to buy foreign exchange from the black market at higher rates, making their products less competitive compared to those from bigger companies with easier access to official FX channels.
Continuing, he encouraged the MSMEs to shift their focus to exports, especially, to other African countries with friendly tariffs under the African Continental Free Trade Area agreement (AfCFTA) while, he noted that, the move would allow them to earn in foreign currency, offering better value when converted back to naira.
He decried that, while some businesses pivot upward, Nigeria’s domestic manufacturing base and SMEs continues to shrink due to absence of reform policy to revive the sector.
He also stressed the importance of effective monitoring and implementation of government policies to ensure that palliatives reach the intended beneficiaries.
He hinted that ASBON will continue advocating for a more favorable business environment and increased support for SMEs while stating that the association may also focus on addressing the challenges faced by its members, such as access to finance, regulatory requirements, and infrastructure constraints”.
He pointed out that the high cost of borrowing and difficult repayment terms have huge barriers for the SMEs as the high interest rates on loans pushed MSMEs to a near death experience while making it impossible to keep production going under such conditions.
Reacting further, the director-general of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir highlighted that manufacturers and SMEs face steep electricity costs.
He alluded that the band A tariffs increased by over 200 per cent, significantly raising operational cost and total expenditures.
He also stated that the finance cost and credit challenges of Manufacturers also grappled with a surge in borrowing costs adding that the average lending rate from commercial banks to manufacturers spiked to 35.5 per cent in 2024, up from 28.06 per cent in 2023. He said this pushed total finance costs to N1.3 trillion, limiting capital expansion and investment opportunities for many firms.
Ajayi-Kadir emphasised the need for policy stability, forex liquidity, energy cost reforms, and interest rate moderation to sustain manufacturing growth, urging the government to accelerate the implementation of manufacturing-friendly reforms and create a more predictable business environment.
The director-general of the Nigerian Association of Small and Medium Enterprises, (NASMEs), Charles Odi echoed similar frustrations, acknowledging that, while Nigeria’s inflation rate has dropped slightly to 23.18 per cent, high prices continue to cripple consumer spending and stall restocking.
According to him, many small businesses are unable to replace goods due to skyrocketing prices. He explained that beyond inflation figures, the real cost of goods has gone far beyond the reach of average buyers, reducing demand and weakening retailers’ ability to stock up.
He also backed the SON certification policy, saying safety and quality assurance are important. However, he advised shopping malls to implement proper internal compliance systems to ensure only certified and quality goods are stocked. This, he said, could boost customer trust and loyalty.
