Nigeria’s GDP: SMEs contribute 48% in 5 years

By Salamatu Ejembi.


Small and medium scale enterprises (SMEs) in Nigeria have contributed about 48% of the national GDP in the last five years.

The CEO of The Nigerian Stock Exchange (NSE), Mr. Oscar O. Onyema, revealed this at the launch of the Growth Board, which aims to encourage companies with high growth potential to seize the opportunity of raising long term capital and promote liquidity in the trading of their shares.

Quoting the Nigerian Bureau of Statistics, Onyema read, “This segment of the economy also accounts for 96% of operational businesses and 84% of employment.

“With a total number of about 41.5 million enterprises, the SME segment accounts for nearly 90% of companies operating in the manufacturing sector and 50% of industrial jobs.”

L – R shows Haruna Jalo-Waziri, Managing Director/CEO, Central Securities Clearing System (CSCS) Plc; Oscar N. Onyema, OON, Chief Executive Officer, The Nigerian Stock Exchange (NSE); Olumide Bolumole, Head, Listings Business Division, NSE; and Tony Ibeziako, Head, Primary Markets, NSE during the Launch of NSE Growth Board at The Exchange, Lagos, Nigeria.

The Growth Board also presents an avenue for companies in their growth phase to leverage on the NSE’s platform and varied products and services to achieve their long term business objectives.

The NSE boss explained: “This platform is pivotal to our efforts in catering to a segment of the economy that hitherto has been neglected and perceived as a high risk and low reward venture by most service providers, especially in relation to access to capital from financial institutions.”

Onyema pointed out that the economic landscape in recent years has been quite challenging for corporates with small and medium scale enterprises experiencing some of the difficulties observed in the Nigerian macro landscape.

He said these companies have seen declining productivity rates largely caused by deficiencies in power supply; substandard trade facilitation infrastructure; lack of right-sized and right-priced financing, multiplicity of taxes/levies/fees; lack of innovation; and limited availability of requisite talent.

“This is further compounded with an absence of needed corporate governance to ensure maximised capacity utilization and profitability for the companies.”

“However, in spite of the challenges faced by operators in the SME space, this segment of the economy continues to show progress and innovation.

“It is noteworthy to mention that the African tech space has seen a significant increase in the funding of start-ups in recent years. 

“In 2019, the number of investors, largely institutional, increased from the previous year by 61% to 261 and funding rose by 47% to $491.6 million which was received by 311 companies. Nigeria remains one of the lead markets in terms of total funding, securing $122 million.

“We have also witnessed increased support from multilateral organisations and government agencies. For instance, to promote funding for African SMEs, The African Export-Import Bank (Afreximbank) signed an agreement with the African Guarantee Fund (AGF) for a $30 million re-guarantee facility to support African Small and Medium Enterprises (SMEs) in December 2018. 

“Additionally, The Central Bank of Nigeria in collaboration with the Bankers’ Committee also commenced the disbursement of ₦26 billion to MSMEs under the Agribusiness Small and Medium Enterprise Investment Scheme (AGMEIS) in 2018,” Onyema said.

From a growth perspective, Nigeria also had the single largest representation with 97 companies featured in the 2019 Companies to Inspire Africa (CTIA) report jointly produced by the London Stock Exchange and PWC Africa.

This report featured 360 growth companies across 32 countries in Africa with 7 major sectors represented. The high representation by Nigerian growth companies clearly emphasizes the enormous opportunities present in the segment and the nation at large.

The Growth Board is designed to offer relaxed entry criteria as well as less stringent ongoing listing requirements and allows for greater accessibility to capital flows, global visibility and credibility through corporate disclosures.

The Growth Board also restructures current market segments to better meet needs along company’s entire lifecycle i.e. Entry Segment – for companies with a Market Capitalization from ₦50million and Standard Market for institutions with a Market Capitalization from ₦500million.

The segmentation of the boards also provides alternative options for interested investors to participate in each company’s growth journey.

The NSE boss also rang the closing gong in commemoration of the landmark event.

Amaka E. Nliam