Experts at the Nigeria Business Summit 2026 have identified deep structural challenges—particularly unreliable power supply, limited access to finance, and weak business formalisation—as the main barriers preventing small and medium-sized enterprises (SMEs) in Nigeria from scaling sustainably.
During a session titled “The SME Economy: Advancing Trends and Opportunities,” stakeholders from the private sector, government agencies, and development institutions examined why many businesses remain stuck in survival mode despite Nigeria’s large entrepreneurial base.
High Cost of Operations and Finance Constraints
Business operators highlighted the harsh operating environment facing SMEs, especially in manufacturing. Innocent Egwuonwu, Managing Director of Ojay’s International, noted that access to affordable credit and reliable electricity remain the most pressing issues.
He pointed out that interest rates above 30% make borrowing difficult for small businesses, while collateral requirements exclude many young entrepreneurs from formal financing systems. He also stressed that energy costs severely impact profitability, with some businesses spending over ₦1 million weekly on diesel due to unreliable electricity supply.
Formalisation as a Major Growth Barrier
From a policy perspective, Charles Odii, Director-General of Small and Medium Enterprises Development Agency of Nigeria, identified informal business structures as a major constraint.
He explained that although Nigeria has an estimated 40 million MSMEs, many remain unregistered and therefore excluded from financial systems, government incentives, and structured support programmes.
According to him, formalisation is a key step toward unlocking access to funding and enabling long-term business growth. He added that SMEDAN is addressing this gap through cluster-based financing models that reduce collateral requirements and improve access to zero-interest or blended funding schemes.
Policy and State-Level Interventions
Providing a state-level perspective, Christian Udechukwu, Commissioner for Trade and Industry in Anambra State, noted that targeted government interventions can significantly reduce cost pressures on SMEs.
He explained that partnerships between state governments, development finance institutions, and agencies like SMEDAN are enabling SMEs to access loans of up to ₦10 million without traditional collateral, using cooperative and guarantee-based financing structures.
Role of Skills and Financial Ecosystems
Panel discussions also emphasized that beyond funding, skills development and advisory support are critical for business sustainability. Experts noted that improved financial literacy and structured mentorship can strengthen SME resilience and make them more attractive to lenders.
Financial institutions, including Stanbic IBTC Bank, highlighted ongoing efforts to provide SMEs with financing options, advisory services, and partnership-driven solutions aimed at helping businesses move from survival to scalable growth.
Overall Outlook
Stakeholders agreed that Nigeria’s SME sector holds significant potential but requires coordinated action across infrastructure, policy, and financial systems. Without addressing these foundational challenges, experts warned that many businesses will continue to struggle to grow beyond small-scale operations.
