How SMEs in Nigeria Can Benefit from Government Policies and Incentives
Dear 386konsult konnect,
Small and Medium Enterprises (SMEs) are the beating heart of Nigeria’s economy, powering job creation, sparking innovation, and pushing forward economic growth. Yet, let’s be real! Navigating the challenging Nigerian business industry can be tough for many of these enterprises.
Whether it’s the struggle to access finance, the limitations of infrastructure, or breaking into larger markets, many SMEs face uphill battles daily.
So here's the good news! The Nigerian government knows the importance of these businesses and has rolled out several policies, incentives, and programs aimed at supporting SME growth. Although many Small and Medium Enterprises know a few but not certain how their businesses can leverage government initiatives to thrive.
Let's dive into some of these policies and how they can make a world of difference.
1. Access to Finance—Breaking the Barrier
One of the biggest hurdles for Nigerian SMEs is access to finance. Without capital, it’s hard to grow, invest, or even stay afloat. But, the government has introduced some great initiatives in partnership with financial institutions to ease this challenge.
CBN Intervention Funds: Through the Central Bank of Nigeria (CBN), SMEs can access financing at way lower interest rates than what’s typically available from traditional banks. Programs like the SME Credit Guarantee Scheme offer collateral-free loans and guarantee up to 80% of the credit, an absolute game-changer. Plus, the Agribusiness Small and Medium Enterprise Investment Scheme (AGSMEIS) provides single-digit interest rate loans for agriculture-related businesses. This kind of support makes it easier for SMEs to grow their businesses without drowning in debt. Read more about CBN SME funding programs
Development Bank of Nigeria (DBN) Loans: The DBN works to provide long-term funding for SMEs, partnering with commercial banks and microfinance institutions to make loans more accessible. The flexibility of these loans, coupled with competitive interest rates, means businesses can scale without the fear of unsustainable repayment terms. Find out more about DBN loans
Bank of Industry (BOI) SME Fund: For businesses in manufacturing, agriculture, or tech, the BOI is a key player. They offer advisory services alongside their loans, ensuring that SMEs not only get funds but also grow smarter and more efficiently. Discover more on BOI loans
2. Policies That Support SME Development
SMEs need more than money. they need an environment that helps them thrive. Here’s where some forward-thinking government policies come in.
National MSME Policy: This framework is designed to reduce the regulatory headaches SMEs often face. By working with local and state governments, the policy ensures that businesses have better access to local resources and support systems, helping them grow without getting bogged down by red tape. Learn more about MSME policies in Nigeria
Ease of Doing Business Reforms: In recent years, Nigeria has made significant strides in improving the ease of doing business, thanks to the Presidential Enabling Business Environment Council (PEBEC). From simplifying business registration to reducing tax complexities, these reforms are geared toward making life easier for SMEs. For example, with the Corporate Affairs Commission’s online system, registering a business can now be done in 24-48 hours! This allows entrepreneurs to focus on running their business instead of jumping through bureaucratic hoops. Read more about PEBEC reforms
Tax Breaks for SMEs: The Finance Act of 2020 brought about some great news for smaller businesses—those earning less than ?25 million annually are exempt from paying Company Income Tax (CIT). This means more money stays in the business, allowing entrepreneurs to reinvest in their growth. Additionally, businesses in agriculture can enjoy up to five years of tax-free operation through the Pioneer Status Incentive (PSI). Explore Nigeria's tax incentives for SMEs
3. Building Capacity—Empowering Entrepreneurs for Success
Financial support is one thing, but building business capacity is just as crucial for long-term sustainability. The government has set up programs to equip entrepreneurs with the knowledge, skills, and support needed to thrive.
SMEDAN: The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) provides training and advisory services to help entrepreneurs master areas like business planning, marketing, financial management, and compliance. Having a brilliant idea is just the start—this agency helps you sharpen the tools to succeed. Check out SMEDAN’s support programs
YES Program: Aimed at reducing youth unemployment, the Youth Entrepreneurship Support (YES) Program provides training, mentorship, and funding to aspiring entrepreneurs aged 18-35. For young Nigerians looking to break into the business world, this initiative offers a solid springboard. Read about the YES Program
NYSC SAED Program: The Skill Acquisition and Entrepreneurship Development (SAED) program is built into the NYSC service year. It gives Nigerian graduates the skills and entrepreneurial know-how they need to start and run businesses after their service, contributing to a generation of job creators, not just job seekers. Learn more about the SAED program
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4. Infrastructure and Market Access—Unlocking New Opportunities
Without the right infrastructure, it’s hard for businesses to reach their full potential. That’s why the government has introduced policies to ensure SMEs have access to the tools and markets they need.
Shared Facilities Scheme: Imagine having access to power, workspace, and machinery without needing to own it all yourself! The government’s Shared Facilities Scheme provides common infrastructure for SMEs to use, reducing operational costs while increasing efficiency. The National MSME Clinics identify the specific needs of small businesses and work to provide these facilities in different regions. Discover the Shared Facilities Scheme
Export Expansion Grant (EEG): If your SME operates in sectors like agriculture, textiles, or processed foods and you’re thinking of expanding into global markets, the Export Expansion Grant is for you. It provides financial incentives to help Nigerian businesses compete internationally, diversify their revenue streams, and reduce dependence on the local economy. Find out more about the EEG
The Road to Growth Is Paved with Opportunity
The Nigerian government is laying the groundwork for SMEs to grow and succeed with an array of supportive policies, incentives, and funding options. For SMEs, it’s not just about getting access to finance but also about tapping into tax breaks, capacity-building programs, and infrastructure support that can set them on the path to long-term success.
We hope this is insightful enough to help SMEs on this space stay informed and take advantage of these government initiatives. SMEs can power through the challenges of today and position themselves as the driving force behind Nigeria’s economic future.
Entrepreneurs, the ball is in your court. Feel free to leverage these opportunities and watch your business soar!
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Dolapo Ayeni
Head of Communications & Media