Nigeria’s economic woes force 7.2 million small businesses to shut

Nigeria’s challenging economic conditions have led to the closure of approximately 7.2 million small businesses between 2023 and 2024, according to the Nigerian Economic Summit Group (NESG). The figure represents 30% of the country’s 24 million micro, small, and medium enterprises (MSMEs), highlighting the severity of the economic downturn.

Speaking at the launch of the 2025 Private Sector Outlook last week, NESG’s chief economist and director of research, Segun Omisakin, detailed the economic fragility that contributed to widespread business closures. He also revealed that Nigeria suffered an estimated N94 trillion economic loss due to multinational divestments and business shutdowns during the period.

Additionally, 30% of Nigeria’s 24 million registered MSMEs shut down during this period, underscoring the country’s economic vulnerability, Omisakin stated.

Despite improvements in foreign exchange availability following policy reforms, the naira experienced sharp depreciation, with the official exchange rate averaging N1,479.9 per US dollar in 2024.

While trade surpluses and increased foreign capital inflows were recorded, fiscal constraints persisted, and Nigeria’s public debt surged to N142.3 trillion as of September 2024.

AfDB’s $230 Million Boost for SMEs

The African Development Bank (AfDB) is extending a $230 million trade finance package to Access Bank Plc to support small and medium-sized enterprises (SMEs). The initiative aims to enhance SMEs’ access to foreign exchange, facilitate trade, and promote financial stability.

The funding package comprises two key components:

• $170 million Trade Finance Line of Credit (TFLoC): A three-and-a-half-year loan designed to increase forex liquidity for SMEs, enabling them to pay for essential imports and sustain their operations.
• $60 million Transaction Guarantee (TG): A three-year facility that protects confirming banks from payment risks, ensuring that more businesses can access trade finance without concerns over defaults.

To ensure transparency, separate agreements will govern the fund’s management, detailing usage terms, repayment structures, and environmental and social responsibility guidelines. The Central Bank of Nigeria (CBN) must approve the project before disbursement, ensuring compliance with local foreign exchange regulations.

The financial injection is expected to spur SME growth, empower women entrepreneurs, and improve access to essential imports, helping businesses withstand economic pressures and rebuild resilience in 2025.