Friday, 09 August 2024 04:50

Small businesses in Nigeria plagued by high energy costs, multiple taxes, others - PwC

Rate this item
(0 votes)

The PricewaterhouseCoopers (PwC) says high energy costs, interest rates, and excessive taxes, are major challenges faced by micro, small and medium enterprises (MSMEs) in Nigeria.

The PwC highlighted the challenges in its 2024 MSME survey, titled, ‘Building Resilience: Strategies for MSME Success in a Changing Landscape’.

According to the financial services firm, the survey included 567 MSMEs across 13 sectors and 29 states.

PwC said over 50 percent of MSMEs reported falling sales due to high prices and low consumer spending power.

“When asked about the reasons for this decline, 38% of respondents pointed to the high cost of their products, while 36% cited the low purchasing power of consumers,” the report reads.

“Additionally, 12% noted that consumers were switching to alternative products, and 10% attributed the decline to changing consumer preferences.

“These challenges are compounded by macroeconomic headwinds such as inflationary pressures, currency depreciation, and slow economic growth.

“Headline inflation in December 2023 was reported at 28.92%, driven by increased food prices, naira devaluation, high import bills, and rising energy and logistics costs.

“Inflation is projected to decline marginally to 21% in 2024, but MSMEs may continue to face sustained inflationary pressure due to the pass-through effect of rising international oil prices on domestic energy costs and exchange rate pressures.

“This is likely to increase the cost of inputs for MSMEs, which will, in turn, raise the prices of final goods and services, further impacting demand.”

The report also pointed out that MSMEs’ growth potential was stunted by funding gaps, power outages, and over-taxation.

The firm said the business owners surveyed reported that the top factors hindering their growth include inadequate access to finance, poor electricity, multiple taxes and levies, inadequate skilled labour, insecurity, and government policies.

“Funding is a critical enabler of the growth and development of small and medium enterprises, with 35% of the businesses surveyed citing inadequate access to finance as their number one challenge,” the report said.

“Infrastructure challenges, particularly electricity, account for the biggest costs to the daily operations of MSMEs. 

“Unreliable power supply is a major challenge for 21% of businesses. Nigeria’s power sector faces numerous issues, including deteriorating plant capacities, poor maintenance, inadequate gas supply, limited distribution networks, and the commercial viability of DisCos operations.

“These challenges have had an adverse impact on the business environment, contributing to significant economic costs for MSMEs and the broader economy.

“Other structural challenges include multiple taxation (12%), inadequate skilled labour (11%), and insecurity (10%).”

PwC also said Nigerian MSMEs require an estimated $32.2 billion (₦13 trillion) in financing.

The organisation said micro and small enterprises, particularly in agriculture and retail, need loans under $20,000.

The report, however, said limited private sector lending, poor infrastructure, and lack of documentation hinder access to credit.

Commenting on the survey, Sam Abu, country senior partner at PwC Nigeria, said MSMEs continue to contribute significantly to the global economy — creating jobs, generating income, and fostering skills development.

“These contributions make the sector pivotal to Nigeria’s growth, especially now given our country’s current challenges,” Abu said.

“However, the sector’s full potential remains untapped due to persistent challenges that hinder its ability to lift people out of poverty and drive the economy forward. 

“Despite these challenges, Nigerian MSMEs have demonstrated remarkable adaptability in navigating a complex business environment characterised by challenging macroeconomy and government policies, highlighting their potential to drive economic growth.”

 

The Cable

June 30, 2025

Nigerian Bond Market extends gains as yields fall to 18.38%

Nigeria’s sovereign debt market maintained its upward trajectory last week, with continued investor interest driving…
June 26, 2025

Peter Obi decries ‘coordinated lawlessness’ after brother’s property is demolished in Lagos without court order

Former presidential candidate Peter Obi has condemned what he described as a brazen act of…
June 28, 2025

7 genius responses to ‘put rude people in their place,’ according to communication experts

Kathy & Ross Petras Rude people are, sadly, all around us. We deal with them…
June 21, 2025

Man convicted of posing as flight attendant to fly for free 120 times

A 35-year-old American man has been found guilty of impersonating a flight attendant at least…
June 30, 2025

Bandits strike again in Benue, kill four policemen in fresh attacks

Armed bandits on Sunday launched another deadly assault on Benue State, killing at least four…
June 30, 2025

What to know after Day 1222 of Russia-Ukraine war

WESTERN PERSPECTIVE Ukraine F-16 pilot killed in large-scale Russian attack, Zelenskiy calls for US help…
June 30, 2025

The computer-science bubble is bursting

Rose Horowitch The job of the future might already be past its prime. For years,…
May 13, 2025

Nigeria's Flying Eagles qualify for World Cup after dramatic win over Senegal

Nigeria's U-20 national football team, the Flying Eagles, have secured their place at the 2025…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2025 NewsScroll. All rights reserved.