Micro, Small, and Medium, Scale Enterprises Policy
Micro, Small and Medium Scale Enterprises (MSMEs) are recognized worldwide as the backbone of economic growth. This is especially true for developing nations like Nigeria where provide up to 80% of private sector jobs. In recognition of this, the government has formulated and implemented a raft of policies since the return of democracy in order to scale the sector so that it can increasingly play a crucial role in in job creation, poverty reduction, and economic diversification. In this article we shall be looking at how the policy landscape has evolved to achieve these goals.
Between 1999 and 2007, several milestones were achieved by then president, Olusegun Obasanjo’s government, as regards policy making to enable growth in the MSME sector. Some of those milestones include:
- The introduction of the Small and Medium Industries Equity Investment Scheme (SMIEIS) by the Central Bank of Nigeria (CBN) in 2001. The scheme required all banks to set aside 10% of their pre-tax profit for equity investment in the SME fund.
- Also in 2001, the Obasanjo administration restructured the Bank of industry (BOI), tilting its focus to providing long-term financing to MSMEs.
- In 2003, government enacted the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) Act. This Act established SMEDAN, a government parastatal responsible for the coordination of MSME development.
- In 2004, government unveiled the National Economic Empowerment and Development Strategy (NEEDS), an economic blueprint designed to address Nigeria’s deep-rooted structural challenges and lay the foundation for sustainable economic growth, poverty reduction, and private sector-led development. Promotion of entrepreneurship and MSMEs was a core objective of NEEDS.
The Goodluck Jonathan administration would build on the foundation laid by the Obasanjo administration b carrying out programs of expansion and institutional strengthening. Some of these programs include:
- The National Policy on MSMEs in 2010. This provided a framework for MSME development across sectors, emphasizing access to finance, infrastructure, and capacity building.
- The YouWin! Program in 2011. A competitive grant initiative to fund youth-led MSMEs.
- The introduction of the Information and Communications Technology for Development (ICT4D) Policy in 2012. The policy promoted digital inclusion and supported tech startups and MSMEs in software development, e-commerce, and mobile services.
- The establishment of the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending in 2013 (NIRSAL). NIRSAL was established by the Central Bank of Nigeria (CBN) in partnership with the Federal Ministry of Agriculture and the Bankers’ Committee. It was meant to de-risk agricultural lending and stimulate private sector investment in Nigeria’s agribusiness value chain.
- The rollout of Bank of Industry’s (BOI) Tech Fund initiative, also in 2013. The fund provided targeted financing for ICT startups, engineering MSMEs, and digital service providers, often in partnership with incubators and accelerators.
- The launch of the Micro, Small and Medium Enterprises Development Fund (MSMEDF) by CBN, yet again in 2013. MSMEDF was designed to address the financing gap faced by MSMEs and promote inclusive growth, especially for women, youth, and underserved entrepreneurs.
- The launch of the National Enterprise Development Program (NEDEP) in 2014. This program aimed to scale up the establishment of Enterprise Development Centres (EDCs) across Nigeria’s six geopolitical zones. EDCs had been set up in partnership with universities to offer training and mentorship to MSMEs. The program was also meant to help MSMEs gain access to finance.
The Buhari administration would not be left out in trying to grow the MSME sector. The period saw a raft of new initiatives including:
- Significant implementation and expansion of MSMEDF programs
- The launch of the Government Enterprise and Empowerment Program (GEEP) in 2016. A flagship social intervention initiative of the government under the National Social Investment Programme (NSIP). The program’s aim was to promote financial inclusion and provide interest-free microcredit to Nigerians at the bottom of the economic pyramid—especially traders, artisans, farmers, and youth entrepreneurs. Popular microcredit schemes launched under its banner include TraderMoni & MarketMoni, launched in 2016 and 2018 respectively.
- The establishment of the Presidential Enabling Business Environment Council (PEBEC) in 2016. The council’s mission is to remove bureaucratic and regulatory constraints to doing business in Nigeria and to make the country a progressively easier place to start and grow a business. A major initiative under its banner was the setting up of the National MSME Clinics. These were set up to provide solutions to business problems on the spot and to provide an avenue for regulatory agencies, state governments, and MSME operators to rub shoulders.
- Scaling up of BOI’s Matching Fund Schemes. These schemes were officially launched in 2006 (but scaled up between 2016 and 2023) and were designed as collaborative funding partnerships between BOI and state governments, private institutions, and development agencies to support MSMEs across Nigeria.
- Revision of the National Science, Technology and Innovation Policy. Revised in 2018. The revision explicitly recognized MSMEs as drivers of innovation, with goals to commercialize research and support tech entrepreneurship.
- The launch of the Survival Fund. The fund offered payroll support, free CAC registration, and grants for MSMEs affected by the Covid-19 pandemic.
- Expansion of the Technology Incubation Program (TIP). It expanded to over 27 centers nationwide, offering workspace, mentorship, and funding to science-based MSMEs.
The Tinubu administration already has some notable achievements as regards MSME sector policy initiatives. They include:
- A revised MSME Policy in 2023. It was updated to reflect digital transformation, green economy, and export readiness
- The launching of the Digital MSME Academy by SMEDAN. The academy’s aim is to equip Nigerian MSMEs with digital skills in order to enhance their competitiveness, to access funding, and to scale their businesses.
- Expansion of the National MSME Clinics program.
- Implementation of the Startup Act. The Act made some provision for scaling innovative MSMEs
- Expansion of the BOI-SMEDAN matching grants. They were expanded to support cooperatives and clusters in biotech, renewable energy, and ICT.
While efforts to grow the MSME sector are laudable, persistent problems remain, including:
- Limited access to affordable credit
- Poor infrastructure
- Regulatory bottlenecks
- Low digital adoption
