Small and medium-sized enterprises (SMEs) in Nigeria face major obstacles that prevent them from growing into strong, sustainable businesses. Experts say that unless key issues like electricity, access to funding, and skill development are properly addressed, many of these businesses will continue to struggle just to survive.
This was the focus of discussions at the Nigeria Business Summit 2026 during a session titled “The SME Economy: Advancing Trends and Opportunities.” The event brought together business owners, government officials, and development organisations to explore why many SMEs remain stuck at a basic level and what needs to change to help them expand.
One of the major concerns raised was the high cost of running a business in Nigeria. Mr. Innocent Egwuonwu, Managing Director of Ojay’s International, explained that SMEs, especially those in manufacturing, face severe challenges. According to him, the two biggest problems are access to finance and unreliable power supply.
He pointed out that interest rates above 30 percent make borrowing extremely difficult for small businesses. In addition, many lenders require collateral that young or growing businesses simply cannot provide. As a result, many SMEs are unable to secure the funds they need to expand.
Power supply is another serious issue. Due to unreliable electricity, businesses often rely on generators, which significantly increases their operating costs. Egwuonwu revealed that diesel prices have risen sharply, forcing his company to spend over one million naira every week just to generate electricity. These high costs reduce profits and limit the ability of businesses to grow or hire more workers.
In addition to these challenges, SMEs also struggle with multiple taxes from different authorities. This creates confusion and makes it harder for businesses to plan effectively. Experts suggest that simplifying and harmonising tax systems would ease this burden.
From a policy standpoint, the Director-General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Mr. Charles Odii, highlighted another key issue—lack of business registration. He noted that although Nigeria has about 40 million SMEs, many operate informally and are not officially registered.
According to him, unregistered businesses are “invisible,” meaning they cannot access loans, government incentives, or support programmes. He explained that formalising businesses is often the first step toward securing funding and benefiting from structured assistance.
To address this, SMEDAN is promoting cluster-based models. These allow groups of SMEs to access funding together, reducing the need for individual collateral. Some of these financing options also come with little or no interest, making them more accessible.
At the state level, Anambra’s Commissioner for Trade and Industry, Mr. Christian Udechukwu, stressed the importance of government support in reducing business costs. He explained that partnerships between governments, financial institutions, and development agencies are helping SMEs access loans of up to N10 million without traditional collateral requirements.
Experts at the session agreed that improving skills and business knowledge is also crucial. With better training and support, SMEs can become more resilient and attractive to investors. They also highlighted the importance of collaboration between banks, government bodies, and development organisations.
