Nigeria small businesses face N617.3bn funding gaps annually — PWC


By Nkiruka Nnorom

Following the age-long problem of acquiring funding confronted by small companies, PricewaterHouse Coopers (PwC) has mentioned that Small and Medium Enterprises (SMEs) in Nigeria face an estimated N617.three billion in funding hole yearly and accounted for lower than one p.c of banks’ credit score in 2018.

Mr. Esiri Agbeyi, Partner and Lead, Private Wealth Services, PwC Nigeria, acknowledged this whereas presenting the results of a survey of Micro, Small and Medium scale Enterprises (MSMEs) in Nigeria carried out by the corporate.

The report titled “PwC’s MSME Survey 2020- Building to last” revealed that aside from acquiring finance, discovering prospects and infrastructure deficits additionally accounted for high of essentially the most urgent issues for small companies, whereas producing electrical energy constituted the most important value to the MSMEs.

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Presenting the outcomes of the discovering at a webinar hosted by the agency for MSMEs on Managing the Impact of COVID-19 and Repositioning Your Business for Growth, Agbeyi famous that getting finance (22%), discovering prospects (16%) and infrastructure deficits (15%) had been recognized by respondents as their most urgent issues.

He mentioned that 21 p.c of the respondents recognized electrical energy as being liable for the best value to their each day operations, adopted by lease (17%) and price of capital and worker value at 15 p.c and 14 p.c respectively.

He mentioned:  “Access to finance, particularly credit score, is a vital enabler for the expansion and improvement of small and medium enterprises. The SME credit score market, nonetheless, is notoriously characterised by market failures and imperfections. We estimate the financing hole for Nigerian MSMEs to be about N617.three billion yearly (pre-COVID-19 pandemic). More so, based mostly on our evaluation of information from the CBN annual statistical bulletin, small companies accounted for lower than 1% of whole industrial banking credit score in 2018.

We additionally see that electrical energy accounts for the most important prices to each day operations of MSMEs. Nigeria’s energy sector is overwhelmed by a myriad of challenges which have culminated in insufficient electrical energy provide. This has an opposed affect on the enterprise atmosphere in Nigeria; consequently, contributing to vital financial prices to SME and financial development.

The International Monetary Fund (IMF) states that lack of entry to dependable electrical energy prices the Nigerian economic system an estimated USD29 billion a 12 months.”

The survey additionally discovered that the foremost financial difficulty affecting small companies is the strain to scale back costs (22%). This is adopted by rising inflation (19%) and low demand for merchandise/providers. (16%). The financial restoration in Nigeria has been tepid.

On tax issues, MSMEs discover native authorities levies (28%) essentially the most troublesome tax to adjust to. This is intently adopted by Company Income Tax (CIT) at 26% and Value Added Tax (VAT) at 25%.

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