Empowering MSMEs to Create Jobs

Small scale businesses deserve adequate attention

Across the globe, micro, small and medium‑scale enterprises (MSMEs) form the backbone of most national economies. As operators of small industries, they face and overcome numerous obstacles, creating and preserving jobs for local communities. Accordingly, the United Nations Industrial Development Organisation (UNIDO) chose the theme “Empowering MSMEs through Innovation and Sustainable Industrial Development” for 2026 MSME Day. It is essential that government bodies move beyond rhetoric and implement concrete measures to lift the majority of Nigerians out of poverty.

Typically, MSMEs account for 90 % of businesses, 60 % to 70 % of employment and 50 % of the gross domestic product worldwide, the World Bank reports. In Nigeria, the Small and Medium Enterprises Development of Nigeria (SMEDAN) indicates that MSMEs represent 96 % of all businesses and generate 75 % of national employment. Despite these figures, the sector remains neglected. Although SMEDAN has introduced a N500 million zero‑interest loan scheme for MSMEs, many similar programmes have been siphoned off as slush funds for political operatives.

During the MSME Day celebrations last Saturday, SMEDAN Director‑General Charles Odii announced an association‑based model designed to improve accountability, loan recovery and ensure that funds reach genuine business owners. “We visited traders at one of the markets today to engage directly with them because it is not enough to sit in offices and make policies without understanding their realities,” Odii said. “Many of the challenges they raised border on financing, which is why we are launching the Grow Fund for Small Businesses in Nigeria.” Experts also stress the need to strengthen regulatory frameworks and design effective support mechanisms.

Financing remains the core obstacle, as conventional banks are ill‑suited for the long‑term lending that MSMEs require. These banks typically prefer short‑term loans, whereas start‑ups need a longer gestation period to repay. Estimates show that fewer than five per cent of MSMEs can access any form of funding support from financial institutions.

The Central Bank of Nigeria (CBN) has launched several programmes to assist MSMEs, yet results have been limited. In August 2013, the CBN introduced the Micro, Small and Medium Enterprises Development Fund (MSMEDF) with a share capital of N220 billion. The fund aims to improve MSME access to finance by channeling single‑digit loans at a nine per cent interest rate through Primary Finance Institutions (PFIs). When intended beneficiaries could not access the facility, the National Collateral Registry (NCR) was established, but the problem persists.

The Nigeria Incentive‑Based Risk Sharing System for Agricultural Lending (NIRSAL Plc.) was created by the CBN to transform NIPOST into a microfinance bank with branches in all 774 local government areas. Incorporated in 2013 by the CBN, the Bankers Committee and the Federal Ministry of Agriculture and Rural Development, NIRSAL de‑risks the agricultural value chain and enables banks to lend to the sector at rates between 7.5 % and 10.5 %. Nonetheless, the vast potential for inclusive and sustainable growth that MSMEs could unlock remains largely untapped.

By sustaining livelihoods for the poorest among us, MSMEs are the backbone of society. They deserve robust support from the government at all levels.