- New report by The Economist Intelligence Unit says increasing the productivity of Nigeria’s SMEs will be essential for long term development
- Report calls for root-and-branch reform of tax and customs systems
- Technology is helping SMEs to overcome physical infrastructure constraints. ‘Digital deepening’ could unleash the next wave of growth
- Energy costs account for up to 40% of overheads for some SMEs
- Nigerian SMEs need to improve bookkeeping and corporate structures to access finance. Banks need more SME experts to identify and nurture home grown businesses
The Economist Intelligence Unit has today released a new report that analyses Nigerian small and medium sized enterprises and their role in the nation’s economy.
Enabling a productive Nigeria: Powering SMEs, sponsored by IHS Towers, analyses SME productivity across five categories—policy, transport, technology, energy and finance. It combines SME interviews from across the country, with expert insights from the likes of Cisco, Standard Bank and Lagos Business School.
Adam Green, the editor of the report, said:
“SMEs make up over 90% of businesses in Nigeria yet little research exists about their day-to-day life—the enablers helping them grow, or the obstacles holding them back. While Nigerian SMEs span a dizzying array of products and services, their success is often despite, rather than because of, their environment. They face daunting daily challenges, from poor power supplies to congested roads. Some of these will take years to fix but SMEs are finding innovative workarounds. Other challenges, like burdensome tax rules and opaque customs charges, can be fixed by the new government and would have far-reaching benefits.”
The report finds that Nigeria’s government has supported SMEs by reducing the costs of registering a business and launching targeted funds. Attention should now turn to the tax system—Nigerian SMEs are subject to complex and overlapping rules which need to be streamlined and simplified. Secondly, import and customs charges are unpredictable and costly. The government should publish a transparent website which companies can use to calculate the charges they owe, the report argues.
On infrastructure, SMEs are being affected by transport and power deficits. While transport projects and power privatisation are underway, these will take time to deliver benefits. In the interim, SMEs are adopting technologies—from solar panels to cloud computing. ICTs in particular are being used for remote work, mobile marketing and new product development such as apps and mobile services. The next technology productivity boost will come from strengthening ICT network quality across Nigeria’s territory.
Lastly, access to finance is a long-standing problem for SMEs, who rely on angel investors, personal networks, or savings. To increase financial access, SMEs need to strengthen accountancy practices and corporate structures. Banks should hire more SME business experts, as they are frequently missing opportunities to participate in home-grown success stories.
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Notes to editors
Enabling a productive Nigeria: Powering SMEs is an Economist Intelligence Unit report based on interviews, fieldwork and desk research, conducted independently by the Economist Intelligence Unit. The research was commissioned by IHS Towers. The research team interviewed SMEs across industries from gaming and fashion to agriculture and publishing, and harnessed the insight of experts from institutions including Lagos Business School, Cisco, Standard Bank, United Capital, Grey Group and the Nigerian National Bureau of Statistics.
About The Economist Intelligence Unit
The Economist Intelligence Unit is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper. The Economist Intelligence Unit helps executives make better decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies. More information can be found at www.eiu.com or www.twitter.com/theeiu.
About IHS Towers
IHS Towers is the largest mobile telecommunications infrastructure provider in Africa. Founded in 2001, IHS provides services across the full tower value chain – colocation on owned towers, deployment and managed services. IHS Towers has operations in Nigeria, Cameroon, Côte d’Ivoire, Zambia and Rwanda. Following the recent acquisitions of MTN and Etisalat’s tower portfolios in Nigeria, IHS will own over 22,000 towers in Africa. For more information, visit: www.ihstowers.com.