By Despite the stability of the naira and FX transactions in Q1 2025, Nigeria’s micro, small, and medium enterprises (MSMEs) continue to battle dwindling purchasing power, double-digit price hikes, high production costs, and low disposable incomes. LEADERSHIP investigations revealed that while FX stability helped MSME performance metrics, consumer erosion of purchasing power severely impacted sales and inventories.
The Association of Small Business Owners of Nigeria (ASBON) in its Q1 report highlighted improvements in SMEs’ FX operations but pointed to crushing pressures from high energy costs, interest rates, and shrinking consumer demand. Analysts and stakeholders urged for urgent economic realignment, strategic collaboration, and policy reforms to reposition SMEs for growth and survival amid persistent supply chain disruptions.
Speaking with LEADERSHIP, ASBON President Dr. Femi Egbesola stated that stability in FX and inflation will eventually boost investor confidence. “The tax reform bill starting up in second quarter of the year will bring downfall to energy price and bring relief to the MSMEs ecosystem,” he said. However, he warned that SMEs remain disadvantaged as they often resort to black market FX while larger corporations enjoy easier access through banks.
Dr. Egbesola disclosed that more than 7.8 million MSMEs have collapsed over the last two years due to inflation, over-taxation, and limited access to finance. He advocated for low-interest credit, grants, tax reliefs, and export opportunities under AfCFTA to help SMEs survive and thrive. “High borrowing costs have created near-death experiences for MSMEs, making it almost impossible to continue production,” he added.
Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria (MAN), highlighted the spike in electricity tariffs by over 200 percent and an increase in borrowing rates to 35.5 percent as major challenges for manufacturers and SMEs. He stressed the urgent need for energy reforms, forex liquidity, and policy stability to drive the sector’s recovery and encourage investments.
Meanwhile, Charles Odi, director-general of NASME, echoed frustrations over persistent high inflation despite a slight drop to 23.18 percent. He pointed out that surging product prices have crippled consumer spending and weakened retailers’ ability to restock. He supported better compliance and certification standards in retail, noting that boosting product quality could help restore consumer trust and loyalty.
