Nigeria’s economy runs on small and medium-sized enterprises (SMEs). They make up nearly all businesses in the country and provide jobs for most of the workforce. Yet, despite this dominance, their economic impact falls short — contributing less than half to the nation’s GDP. By comparison, SMEs in South Africa generate over 50 percent of their country’s output. The problem is not creativity or ambition; it is the absence of structure.
The Hidden Weakness No One Talks About
From the bustling streets of Lagos to the entrepreneurial hubs of Abuja, Nigeria brims with energetic founders, bold ideas, and an endless supply of hustle. But there is a catch: most of these businesses will never grow beyond a certain point.
Not because their markets are too small or their products lack demand, but because they are built on shaky foundations. Hype often outweighs systems. Visibility is celebrated, but back-end organisation is ignored. In the end, many SMEs collapse under pressure, not for lack of opportunity, but because they were never designed to scale.
I once met a fashion entrepreneur whose brand was buzzing on Instagram, with thousands of followers and constant orders. Yet when her lead tailor resigned, production halted and her reputation crumbled. Her reflection was telling: “The business looks strong on the outside, but it all rests on me.” Popularity could not protect her. Proper structures could have.
What Growth Actually Requires
Expansion is not about working harder; it’s about working smarter. True growth demands systems that can function without the founder’s daily firefighting. It means creating clear workflows, tracking margins instead of only chasing revenue, and building teams that execute without micromanagement.
A tough but essential question every Nigerian founder must ask is: “If I disappeared for a month, would my business survive?”
At The Hook, where I serve as CEO, we had to confront this reality too. We started as a four-person hustle in Lagos and are now a 90-member team across six African countries. That leap was not driven by hype or luck; it came from re-engineering how the business ran. Moving from chaos to clarity was painful but ultimately transformative.
Policy and Ecosystem Gaps
The challenge is not only with entrepreneurs — Nigeria’s broader ecosystem is also tilted against growth. Bank loans prioritize collateral over management capacity. Compliance is tangled in bureaucracy. Incentives are advertised but rarely accessible.
Compare this with South Africa, where SMEs enjoy stronger financial access, or Malaysia, which has crafted SME-specific programmes offering training, tax relief, and operational support. Nigeria must follow suit — not with lofty policy statements but with action-oriented frameworks that reward structure and efficiency.
Why Getting This Right Matters
SMEs already power Nigeria’s employment base. But without the ability to withstand inflation, supply disruptions, and rising costs, they remain vulnerable. If Nigeria truly intends to diversify beyond oil, the future rests on SMEs that can scale, compete globally, and attract investment.
This means less obsession with hustling harder and more focus on disciplined operations.
The Way Forward
Change requires shared responsibility. Entrepreneurs must embrace structure, not just visibility. Investors and banks should channel funds toward businesses with strong systems rather than flashy branding. And government must simplify compliance, tie tax breaks to proper bookkeeping, and design funding schemes that value organisation over collateral.
Until SMEs are equipped to survive shocks and grow sustainably, Nigeria’s dream of economic diversification will remain out of reach. Fixing them is not a side issue — it is the country’s growth blueprint.
