About 80 per cent of Small and Medium Enterprises fail before their fifth anniversary due to harsh economic environments, lack of access to capital, and poor business practices, which have stunted growth and transition of micro-businesses, a new report has said.
According to the report titled “Perception Study: Efficiency and Impact of Regulatory Activities of Standard Organisation of Nigeria on SMEs”, numerous variables currently influence Nigeria’s economic climate and as a result, it is unfavourable and risky for foreign investments.
It further stated that there were obstacles in the Nigerian business environment that act as constraints to the survival of business in the nation, despite the economic expansion and the possibility for economic prospects.
It identified multiple taxations as a major constraint that has negatively impacted many businesses in the country.
The report read in part, “MAN (Manufacturers Association of Nigeria) has spoken out loudly that the Nigerian business environment is now under the oppressive weight of several taxes, which have the potential to bankrupt companies. In a recent survey, MAN discovered that only 39 of the 119 taxes and levies that were authorised under the taxes and levies (Approved list of collection) Act 1998 were really being levied by various levels of government across the three states.
“80 per cent of SMEs fail before their fifth anniversary due to harsh economic environments, lack of access to capital, and poor business practices, which have stunted the growth and transition of micro-businesses, according to the Small and Medium Scale Enterprises Development Agency of Nigeria in Nigeria.”
The report listed additional difficulties such as the cost of accessing adequate technology, the lack of facilities for research and development, the decline in demand for locally produced products and the increase in demand for imported goods.
“Low formal educational and technical competency of SME owners and staff as well as weak organisational framework, product/service marketing, low information technology utilisation, people management issues, insufficient accounting records, among others, are some significant challenges facing SMEs in Nigeria,” the report read further.