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The Alliance for Economic Research and Ethics Ltd/GTE (AERE) has raised concerns over the worsening conditions facing Nigeria’s small and medium-sized enterprises (SMEs), warning that the sector is under severe pressure and requires urgent government intervention.
Chairman of AERE, Dele Kelvin-Oye, made the call in a policy brief titled “The Broken Windows of Nigeria’s Industrial Dream: Why NIP2025 Cannot Succeed Without Fixing the Foundation First.”
Oye said the Nigeria Industrial Policy 2025 (NIP2025) is ambitious and well aligned with Nigeria’s industrialisation objectives and continental frameworks such as the African Continental Free Trade Area (AfCFTA), but warned that its success would depend largely on effective implementation.
According to him, Nigerian businesses need more than policy documents, stressing that “they need implementation fidelity.”
He said NIP2025 could become “a distant, perhaps unattainable, promise” if government fails to address the institutional and economic constraints confronting businesses.
Oye noted that NIP2025 appropriately places Micro, Small and Medium Enterprises (MSMEs) at the centre of Nigeria’s industrial development agenda. Figures from the NBS/SMEDAN 2021 MSME survey, reproduced in PwC’s 2024 survey, put MSMEs at 46.32 per cent of GDP, 87.9 per cent of employment and 96.9 per cent of businesses.
He, however, argued that the gap between policy commitments and the realities faced by businesses remains significant.
The AERE chairman identified macroeconomic instability, limited access to finance and unreliable electricity as major structural constraints affecting SMEs.
He noted that high inflation, exchange-rate pressures, rising transportation costs, imported input costs and dependence on self-generated electricity have increased operating expenses for businesses, particularly smaller firms that lack the pricing power and financial capacity of larger companies.
On access to finance, Oye said formal credit remains limited for MSMEs despite various government financing initiatives. He stressed that the challenge was not merely the availability of funds but whether financing products were designed around the cash-flow patterns, collateral limitations and investment periods of SMEs.
He said NIP2025’s proposals for long-term financing, credit guarantees, development-finance support and other intervention mechanisms would only make a meaningful difference if they translated into affordable and accessible credit for businesses.
Oye also highlighted the impact of unreliable electricity on industrial productivity, noting that businesses are often forced to provide their own power, water, security and other basic services.
He described this private self-provision as a survival mechanism rather than evidence of a functioning industrial ecosystem.
According to him, infrastructure development must therefore form a central part of NIP2025 implementation, particularly through the development of industrial and SME clusters with reliable electricity, water, roads and security.
He further warned that weak institutional delivery could undermine the impact of industrial policies even where significant funding is made available.
“MSME underperformance is driven not only by the absence of policy instruments but also by constraints in institutional delivery,” he said.
Oye argued that when businesses operate in an unstable environment, available financing is often diverted to working capital, rent, transportation, energy and other immediate expenses rather than machinery, technology and capacity expansion.
He therefore called for financing structures that reflect the actual investment cycles of businesses, including longer loan tenors, grace periods and revenue-based financing.
The AERE chairman also identified human-capital losses as another major challenge to Nigeria’s industrial ambitions, noting that the migration of skilled professionals, particularly in critical sectors, places additional pressure on the country’s productive capacity.
To address the challenges, Oye proposed that the government declare an SME emergency and introduce a 90-day national intervention programme focused on affordable credit, energy support and the reduction of overlapping taxes and levies imposed by different levels of government.
He also called for the immediate development of five priority SME clusters across the country, with the government committing to reliable power, water, security and road infrastructure within 12 months.
He urged the government to strengthen the National Industrial Development Monitoring System (NIDMS) by publishing quarterly data on SME financing, effective interest rates, beneficiaries, sectors, locations and employment outcomes.
Oye further proposed a “Great Return” initiative to encourage Nigerians in the diaspora to invest in industrial infrastructure, clusters and growth-oriented businesses.
He said NIP2025 could bridge the gap between Nigeria’s industrial ambitions and the realities faced by businesses, but only if implementation becomes measurable, transparent and consistent.
“ SMEs do not need more policy documents alone. They need implementation fidelity,” Oye said, adding that the government must move from being “an absent architect” to a genuine partner to businesses.
He concluded that Nigeria’s industrial ambition remained achievable, but the country must first address the institutional, infrastructure and economic weaknesses threatening the survival of its businesses.
