In Nigeria, over 80 percent of micro, small, and medium enterprises (MSMEs) shut down within five years. The numbers are troubling, but not surprising. While we loudly celebrate entrepreneurship, we often fail to build the structures that help it succeed.
MSMEs are rightly called the engine of the economy. They account for over 96 percent of businesses, employ more than 60 million Nigerians, and contribute nearly half of the nation’s GDP. Yet despite their importance, many MSMEs are left to operate in an environment that’s quietly stacked against them.
Why so many MSMEs don’t make it
The reasons are not always about poor business ideas or lack of dedication. More often, it’s a buildup of systemic issues that slowly chokes the business:
• Power and infrastructure challenges: Daily costs from diesel, bad roads, and internet downtime consume profits.
• Limited financing options: Many MSMEs can’t access credit. When they do, it comes with high interest or rigid terms.
• Poor recordkeeping: Without financial structure or documentation, small businesses are invisible to lenders, investors, and even themselves.
• Heavy regulatory pressure: Local levies and overlapping taxes create added strain. For a small business, one extra bill can be the tipping point.
Even the most resilient entrepreneurs are forced to close shop when the business environment makes consistency unsustainable.
What makes the difference
Some MSMEs do succeed — and often, the difference comes down to three things: access to capital, access to training, and some form of structure.
When businesses receive early-stage support — whether from public schemes, donor programmes, or accelerator hubs — they are far more likely to survive and scale. But the majority still operate without this safety net.
The key isn’t just about giving money — it’s about giving the tools, knowledge, and structure that build long-term business sense.
Read also: Nigeria showcases $1.3trn MSMEs interventions, eyes global investment partnerships
What needs to change
If Nigeria wants to see more MSMEs succeed, we need to stop placing all the pressure on the entrepreneurs themselves. The system needs to be fixed around them.
Here’s where to start:
1. Early-stage capital access: MSMEs need micro-grants, not just loans. Most aren’t debt-ready and should be supported, not burdened.
2. Business structure support: Simple tools like record-keeping templates or bookkeeping apps can make a huge difference.
3. Training and mentorship: Especially for new founders. Hustle is not enough — it must be paired with strategic thinking and basic financial literacy.
4. Better infrastructure: Roads, power, logistics — these basic elements are the hidden cost drivers behind many failed businesses.
5. Policy that works: Pro-MSME policies need to move from press releases to actual implementation — with reduced taxes, simpler processes, and more transparent access to funding.
The bigger picture
MSMEs are not just a “social good”. They’re a strategic pillar for national development. Each one that stays open contributes to employment, value chains, and GDP growth.
If even half of Nigeria’s MSMEs lasted beyond five years, the economic impact would be transformational. But that won’t happen without intentional systems and real support.
It’s time we moved beyond celebrating entrepreneurship — and started building the ecosystem that helps it survive.
Seyi Asagun is a finance executive and inclusive lending advocate committed to transforming access to capital for Nigeria’s underserved businesses. He is driven by one mission: to make finance work better — and fairer — for Nigeria’s small business economy.
