Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 28)

Nigeria’s Micro, Small and Medium Enterprises (MSME) sector showed noteworthy growth potentials between 2013 and 2017. A total number of 4.4 million MSMEs were established within the time period, increasing the sector’s economic participation to 41.5 million MSMEs1. As an important backbone of economic growth and development, the MSMEs contribute to employment and job creation. About 18.1 million jobs were created in the time period, increasing the sector’s share of the labour force from 84% to 86.3% within the same time period. In addition, the sector’s contribution to GDP increased marginally to 49.8% in 2017. While a large MSME sector is characteristic of a growing economy, the slow/insufficient transition of MSMEs into large firms implies that the quality jobs available remains static. As such, there is a stagnation in wages paid and wage growth, which in turn deters high-skilled workers and limits the productivity growth of MSMEs. While pro-business policies are being put in place such as the recent (July 2019) CBN directive to banks to increase lending to the real sector, structural issues that hinder lending such as information asymmetries between banks and business owners will need to be addressed to encourage the implementation of these policies

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