MSMEs (small and medium-scale enterprises) in Nigeria face the uphill battle of rising business costs. However, these resilient businesses are not backing down. They have turned to technology as a lifeline to navigate the challenging economic landscape.
According to Lynda Saint-Nwafor, Chief Enterprise Business Officer at MTN, technology is becoming the game-
changer for SMEs in Nigeria, helping them stay afloat and thrive in the face of adversity.
Challenges Faced by MSMEs
With Nigeria’s economic growth lagging behind the African average, SMEs are feeling the pinch. The number of businesses has decreased by 4.5% between 2017 and 2021, and the rising cost of doing business is seen as a major hurdle to their growth. Annual inflation reaching around 20%, the highest in years, adds further strain to their financial resources.
Embracing Digital Transformation:
To combat these challenges, SMEs are embracing digital transformation. Around 20% of formal businesses have already shifted to online channels to sell their products, providing alternative avenues for revenue generation. Additionally, Nigerian startups have emerged, offering digital services tailored to the needs of SMEs, such as quick credit, payment wallets, and bookkeeping services.
Informal Business Operations and Funding Gap in MSMEs
However, it is essential to note that many SMEs in Nigeria still operate informally. Out of approximately 40 million MSMEs in the country, a staggering 95% are not formally registered with the Corporate Affairs Commission (CAC). This lack of formal registration poses obstacles in terms of accessing funding and other support mechanisms crucial for business growth.
Limited Access to Funding
Limited access to funding remains a pressing concern for SMEs. Only 4% of MSMEs reported having access to commercial credit finance, with personal savings being the primary source of capital for 59% of businesses. Low awareness of funding opportunities and a lack of financial knowledge contribute to the funding gap.
Moreover, inconsistent power supply, cited by 20% of MSMEs as a top challenge, drives businesses to seek alternative power sources.
Leveraging Digital Marketing Strategies
To overcome these obstacles, SMEs are encouraged to leverage digital marketing techniques to expand their reach. SMEs can effectively target and engage a wider audience by utilizing social media advertising, search engine optimization (SEO), and other digital tools. Analyzing user data allows businesses to create targeted campaigns, increasing website traffic and conversions.
While the road ahead for Nigerian SMEs may appear challenging, their resilience and adaptation to technology show promise. Embracing digital solutions enables SMEs to navigate rising business costs and expand their market reach.
By leveraging the power of technology, these businesses can enhance their competitiveness and seize opportunities in an evolving economic landscape.
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