Are you interested in the state of small businesses in Nigeria? Then take a look at our most recent small business statistics.
These statistics contain all the essential data about small business statistics in 2023 to assist you in staying current.
General Business Statistics for Nigeria
- Since February 2020, the Leisure and Hospitality industry has lost 633,000 jobs However, the industry now faces a tremendous opportunity to rebound following the pandemic
- There were over 41 million micro-enterprises in Nigeria in 2017, which represented over 99 % of the micro, small, and medium-sized enterprises (MSMEs) in the country
- Small and medium-sized enterprises, on the other hand, reached approximately 71,300 and 1,800, respectively and most of these companies were located in Lagos
- Micro enterprises (MEs) accounted for 38,413,420 million, while the total number of small and medium enterprises (SMEs) stood at 1,240,965 million representing 3.1 percent
- MSMEs in Nigeria contributed 46.31 percent to the country’s gross domestic product (GDP) and accounted for 96.7 % of businesses
- 67.1 % males mostly owned the MEs even as the COVID-19 pandemic affected MSMEs in the country such that 53.2% of SMEs and 37.3 percent of MEs were temporarily closed owing to lockdown
- Electricity happens to be the highest cost to operations followed by rent and the cost of capital
- Obtaining finance, finding customers and infrastructure deficits are the most pressing problems of SMEs
- Economic issues that are top include pressure to reduce prices, inflation, and low demand for goods and services
- MSMEs would prefer private equity over debt financing
Global Small Business Statistics
- According to the Small Business Administration, small companies create 1.5 million jobs annually and account for 64% of new jobs created in the US (Fundera, 2019)
- Over 90% of the business population represents small- and medium-sized businesses also known as SMEs (SalesForce, 2019)
- 29% of respondents said that they were opening their own business because they wanted to be their own boss (Guidant Financial, 2021)
- Over 70% of US small businesses shut down in March 2020 due to COVID-19. More than 60% of these small businesses that closed were due to the government or health authority orders
- More than half (51%) said they have increased the interactions they have with their clients over the internet. Additionally, 36% of personal businesses that use online tools are now also doing all their sales online
- 28% of these small business owners say cash flow will be their biggest challenge in the near future, followed by a lack of consumer demand
- Millennials and Gen Zers are 188% more likely to have the aim of creating a side business, compared to Baby Boomers or traditionalists (Salesforce, 2019)
- more than 20% of small enterprises fail in the very first year, and nearly 50% of small startups fail within the first five years (Bureau of Labor Statistics, 2021)
- 52% respondents stated that the most important problem for small businesses is labor quality (CNBC, 2019)
- 64% of surveyed small businesses use social media in their marketing strategy (The Manifest, 2019)
- After social media marketing, the next most popular method of advertising is online marketing (49 %), followed by print marketing (36 %) and TV (22 %)
- SMEs represent about 90% of businesses and more than 50% of employment worldwide
- Formal SMEs contribute up to 40% of national income (GDP) in emerging economies
- The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending
- East Asia And Pacific accounts for the largest share (46%) of the total global finance gap and is followed by Latin America and the Caribbean (23%) and Europe and Central Asia (15%)
Top 10 Small Business Statistics to Absolutely Know
1: Number of SMEs in Nigeria
According to the SMEDAN National Survey of 2017, there were approximately 41.5 million SMEs in Nigeria.
SMEs are businesses with less than N100 million in annual turnover and have less than 300 employees. The majority of these businesses are located in Lagos.
2: Common Reason for Starting SME
A study by Guidantfinancial in 2019 states that 55% of its respondents started their businesses to become their bosses. 39% of the respondents said that people want to chase after their passion, and this is the second most prominent reason.
Other reasons include coming across the opportunity, dissatisfaction with current jobs and a need for a retirement plan.
3: Number of Jobs Created by SMEs in Nigeria
SMEs in Nigeria have created up to 84% of jobs. Small businesses are actually the backbone of strong economies.
This sector makes a substantial contribution to reducing poverty and boosting employment development.
4: Number of SMEs in Nigeria that was Hindered by COVID-19
The pandemic resulted in lockdowns and movement restrictions intended to stop the spread of COVID-19.
This created enormous anxiety for the Nigerian business community and investors. About 94.3% of the businesses in Nigeria have been hindered by the pandemic. The percentage is high considering the number of small businesses in Nigeria.
5: Reasons why SMEs in Nigeria Fail
One of the most popular reason for failure among small businesses in Nigeria is a lack of planning.
Other causes of failure include reduced market demand, inaccessibility to quality staff, resource mismanagement, poor and unfavorable customer relations, poor pricing strategies, a disregard for new ideas and developments in products or services, and a failure to respond to the pressure and offers of competitors.
6: Percentage of SMEs that Fail
Research shows that over 50% of SMEs fail in their first year of operation and over 95% of SMEs fail in their first five years.
Despite having the greatest rate of entrepreneurship in the world, 80% of Micro, Small, and Medium Businesses (MSME) enterprises in Africa fail during the first five years of their existence, according to a 2022 Nigeria MSME research.
7: Channels for SMEs
Social media is one of the strongest channels for SMEs to reach their target audiences. Surprisingly, YouTube is the most popular social media platform in Nigeria, with around 33 million active users at the start of 2022.
Facebook comes in second with 26 million users, while Instagram comes in third, but considerably behind the other two, with only 9 million users. Other digital marketing channels for SMEs in Nigeria include but are not limited to websites, Pay Per Click (PPC) advertising, Search Engine Optimization (SEO), email marketing, content marketing, and video marketing.
8: Number of Individuals Using Social Media in Nigeria
Nigeria had over 24.5 million social network users as of 2019. By 2025, the number will almost double, reaching around 44.63 million users.
These figures shows that social media is a significant platform for digital marketing. There are numerous benefits to employing social media channels for advertising campaigns.
9: Advantage of SMEs
SMEs are likely to enjoy low or no serious regulatory requirements, unlike large enterprises. In fact, it is usually made up of 1-3 people, with even less than N50,000 initial capital outlay to operate.
This form of business structure mostly provides direct services to customers and enjoy quick patronage and easy payments. The administration of small business services is not cumbersome. The problem of communication and coordination which is a major setback to large firms can be easily solved in small businesses.
10: Major Driver to Entrepreneur
According to a survey of small business owners, independence is the primary motivator, giving entrepreneurs the advantage of being their own bosses and being self-reliant. Its unique characteristic results in the entrepreneur’s or business owner’s total financial gain (100%).
According to the opinions gained from the survey, the small business allows the operator absolute business control without any kind of dilution from external investors, which is a sort of prestige for the operators.
Conclusion
Due to the fact that small businesses are both the engine and the foundation of large developed economies throughout the world, the number of small businesses is continuously increasing in both the formal and informal sectors of the Nigerian economy. It plays an essential role throughout Nigeria and, if successfully exploited, it could contribute significantly to the expansion of the non-oil economy, job creation, and the formation of more sustainable entrepreneurship.
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