High interest rates strangling small businesses, SMEs warn FG Nexovant

• Business owners complain that the high cost of operations and interest rates are choking business performance
• The Oyo state Chairman of NSME, John Karunwi, states that many small and medium businesses are yet to feel the impact of government interventions
• He calls on the government to introduce policies and programmes that will revive small businesses in Nigeria

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience and a deep understanding of Nigeria’s corporate sector and emerging trends in the fintech space.

Small, medium and micro business owners in Nigeria say that the high interest rates and high cost of operations are gradually choking their businesses.

Speaking under the umbrella of the National Association of Small and Medium Enterprises (NASME), they noted that these factors are toxic to any business growth.

He added that this, coupled with the low purchasing power among Nigerians, also worsened the situation in 2024, resulting in poor SME performance in 2024.

Karunmi called on the government to introduce programmes and policies that would improve access to energy and raw materials. Photo credit: Pius Utomi Ekpei
Source: Getty Images

John Karunwi, Chairman of the Oyo state chapter of NASME said this in an interview with News Agency of Nigeria.

Recall that several businesses have complained of the tough business environment in 2024.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) recently increased the monetary policy rate (MPR), the benchmark for interest rates, to 27.50%.

Yet to feel impact of govt policies

Karunwi noted that even though the Federal Government launched many efforts to improve the economy, and the lot of small businesses in 2024, the impacts are yet to be felt.

He cited the Bank of Industry’s (BoI) single-digit loans as one initiative that has not reached many SME owners in Nigeria.

Karunwi said;

The impact of the high monetary policy rate leading to high cost of funds along with outrageously high operation costs resulting from high cost of raw materials, high cost of energy, high logistics, and so on are toxic to sector performance

Also, regulatory bodies are still making the cost of doing business high. The low purchasing power of Nigerians also affects sales performance. In summary, the overall performance of the Micro, Small and Medium Enterprise sub-sector did not improve significantly in 2024.”

He expressed optimism that things would be different in 2025 and called on the government to introduce programmes and policies that would improve access to energy and raw materials and create a better business environment with lower operational costs.

According to TheCable, Karunwi said;

“We look forward to economic policies that will revive comatose MSMEs.”

Manufacturing sector faces crisis

In related news, Legit.ng reported the manufacturing sector crisis that led many countries to shut down operations over the years.

Established players in the sector, especially in Northern Nigeria, have closed their businesses and left the country within the last few years.

Some of the businesses mentioned in the report blame their exit on erratic government policies, poor infrastructure, and security issues.

These exits have impacted the economy sorely, leading to job losses and social instability.

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Source: Legit.ng

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