2020: A Challenging Year For SMEs 

Needless to say that small and medium scale enterprises (SMEs) form the bulk of the businesses in Nigeria. It is a major contributor to the country’s Gross Domestic Product (GDP). The major attraction has been its less capital intensive and flexibility in satisfying the needs of majority of the citizenry.
SME’s contributions to the growth of the nation’s economy cannot be over emphasised. Since the development of MSME policy in Nigeria in 2006 in partnership with the United Nation Development Programme (UNDP) and later reviewed in 2010 and 2015, SME has become a major employer of labour and major contributor to the nation’s GDP.  In fact, the sector drives the economic and industrial transformation of the country.
According to the Organisation for Economic Co-operation and Development (OECD, 2005), SMEs are considered to be independent firms that employ less than a given number of employees. SMEs are classified in terms of size and financial assets.
The Central Bank of Nigeria report (2003) said SMEs are a very important economic catalyst in developing and industrialising countries of the world. This confirms the United Nations Industrial Development Organisation (UNIDO) report that posited that developing countries can conquer poverty and inequality by democratizing, deregulating and liberalising the integration of the global economy.
In spite of its significance to the well-being of the citizenry and the growth of the nat-ion’s economy, the operations of SMEs suffered major setbacks in 2020 due to the outbreak of COVID-19 pandemic and the #EndSARS protests across the country.
During the pandemic, which lasted for over four months, many operators of the SMEs in the country closed shops, with many resorting to online transaction. This arose from low patronage and the total lockdown of the economy occasioned by COVID-19.
The effects of the lockdown on SMEs were exacerbated by the #EndSARS protests that destroyed businesses worth millions of Naira across the country. Till date, SME operators are counting their losses as many of them are finding it difficult to come back to business.
There are, however, a number of other factors that limited the growth and expansion of SMEs in the country in 2020. Such factors include unavailability of loans from financial institutions, high cost of credit facilities, high interest rates, high maintenance cost and the demand for duly registered collateral obligations.
Inconsistency in government policies, bureaucratic bottlenecks experienced in the administration of incentives and support facilities from all levels of government, as well as multiple taxation arising from various levies imposed by the federal, state and local governments, also play a great role in slowing down the growth of SMEs in the country.
Meanwhile, inadequate or decrepit infrastructures like good roads, power supply, high cost of raw materials and export constraints further tighten the noose against SMEs in the country.
These and many more served as major setbacks for SMEs in Nigeria in the year 2020.
Notwithstanding these setbacks and challenges, there is a ray of optimism am-ong SME operators that the year 2021 will usher in good prospects for the sector. Majority of business owners say they cannot wait for 2021 to come, to see if there will be added value to their businesses.
This prospect is, however, dependent on a number of factors, including an enabling environment that encourages healthy competition among SMEs and attracts local and foreign investments. How soon will that be is a question only time will tell.