2017 REPORT Dr.Yemi Kale Statistician-General of the Federation/CEO - - PowerPoint PPT Presentation

MICRO, SMALL, AND MEDIUM ENTERPRISES (MSME) NATIONAL SURVEY 2017 REPORT

Dr.Yemi Kale Statistician-General of the Federation/CEO National Bureau of Statistics

LAGOS | JULY 11, 2019

“MSMEs are the bedrock of Nigeria’s industrialization and inclusive economic development; and the most important component of industrialization as set out in the Economic Recovery and Growth Plan”

• H.E. Prof. Yemi Osinbajo

Finances Labour Market Key Findings -Overview Survey Background and Methodology MSMEs and Economic Growth

O U TL IN E

1 2 3 4 5 Policy Recommendations Challenges 6 7

M S M E S –C R ITIC A L F O R E C O N O M IC G R O W TH

Micro, Small, and Medium Enterprises (MSMEs) play a significant role as the engine for economic transformation and industrialization for both developed and developing countries. Key benef efit its s include ude:

• Improved income re-distribution (low level capital required)
• Increased job creation & skills development (particularly for

youth, women, elderly)

• Increased adoption of technology & innovation (competitiveness)
• Industrial diversification
• Stimulates local economy (demand down the value chain)

Challeng nges: es:

• Vulnerable to economic shocks
• Stable and supportive policy environment
• Excessive regulation, complex & cumbersome tax process,
• Skills acquisition for youth population

B A C K G R O U N D O F S U R V E Y

Highlighted need for accurate and reliable data

• Established in 2003 to

facilitate promotion & development of MSMEs

2003 2010

• Strategic partnership with

NBS –apex agency for socio-economic statistics

Main in Object ectives ives of the Survey ey

• To establish a credible and reliable database for the MSMEs sub-sector in Nigeria and their

contribution to jobs and wealth creation.

• Memorandum of Understanding mandates review every three years, ensuring continuity & trackability

2010 –First Edition 2013 –2ndEdition 2017 –Third Edition

D E F IN IN G M S M E s

Source ce of Definit ition ions: s:

• Based on the SMEDAN National Policy on MSMEs definitions
• Adopts dual-criteria class limits: employment and assets (excl. land and buildings)
• It is possible under this criteria that a conflict of classification might arise. In such cases, the

employment based classifications takes precedence.

• e.g. if an enterprise has assets worth seven million naira (N7 million) but only employs 6

persons, that enterprise shall be classified as micro.

S A M P L IN G M E TH O D O L O G Y

The survey was conducted in all 36 states of the federation, including the Federal Capital Territory (FCT),

• Abuja. Both urban and rural enumeration areas (EAs) were covered.
• Canvassed through the

National Integrated Survey

• f Households (NISH)

module

• Frame of EAs determined by

National Population

• Commission. Housing &

Population Census used for household component

• Household Listing Exercise

used to update frame & determine households for survey. M icro E nterpris es S m all & M ediu m E nterpris es S u bject A reas

• Canvassed through the National

Integrated Survey of Establishment (NISE) module

• Frame for Small & Medium

Enterprises used for establishment component.

• Probability Proportional to Size

(PPS) used to allocate number of establishments to be covered in state, and within each sub- sector (within state) Owners rshi hip p Status us Employme yment nt Informa rmation ion Educatio tiona nal Qualifica ificatio ion Opera rating ing Cost Capa pacity ity Utiliza izatio ion Market rket Channel nel & Export rt Reven enue ue Establ blish ishme ment nt Growth Technica nical Support rt Servi rvice ces 4,000 S M E s vis ited acro s s all s tates , including F C T. S am ple: 22,200 ho us eho lds 600 ho us eho lds w ith enterpris es interview ed per s tate 15 ho us eho lds s elected per E A

Finances Labour Market Key Findings -Overview Survey Background and Methodology MSMEs and Economic Growth

O U TL IN E

1 2 3 4 5 Policy Recommendations Challenges 6 7

O V E R V IE W O F F IN D IN G S

5000 10000

ABIA ADAMAWA AKWA-IBOM ANAMBRA BAUCHI BAYELSA BENUE BORNO CROSS RIVER DELTA EBONYI EDO EKITI ENUGU GOMBE IMO JIGAWA KADUNA KANO KATSINA KEBBI KOGI KWARA LAGOS NASARAWA NIGER OGUN ONDO OSUN OYO PLATEAU RIVERS SOKOTO TARABA YOBE ZAMFARA FCT

STATE

Total Number er of Enterp rpris rises: es: 41,

, 543, 028

• Micro: 41,469,947 (99.8%)
• Small: 71,288 (0.17%)
• Medium: 1,793 (0.004%)

Top SME States: tes:

• Lagos: 8,395 (11.5%)
• Oyo: 6,131 (8.4%)
• Osun: 3,007 (4.1%)

Fewest west SME States tes:

• Yobe: 102 (0.1%)
• Bayelsa: 300 (0.4%)
• Borno: 538 (0.7%)

O V E R V IE W O F F IN D IN G S

• TR

E N D S

• 70.0%
• 60.0%
• 50.0%
• 40.0%
• 30.0%
• 20.0%
• 10.0%

0.0% 10.0% 20.0% Total MSMEs Micro Small Medium

Growth: 2013 to 2017

Key growth th trend nds: s:

• Micro enterprises, being 99% of MSMEs drives

the trend for the entire category

• Compared with 2013, both Total MSMEs and

Micro enterprises grew by 12.1%

• Small enterprises, grew 4.6% from 2013
• The number of medium-sized enterprises

decreased significantly from 4,670 in 2013 to 1,793 in 2017 (61% drop) Highest est Gaining ng -States tes (SME MEs): Bigg ggest t Decline ne -States tes (SME MEs): s):

• Kwara

ra(526.5 .5%) %)

• Nasarawa

sarawa (132.5%) .5%)

• Jiga

gawa (116%) %)

• Kano (-70.5

.5%) %)

• Rivers

rs (-45.1 5.1%) %)

• Plateau

teau (-27. 7.8%) 8%)

C O M P O S ITIO N O F M S M E s –B Y B U S IN E S S TY P E

S m all E nterpris es M edium E nterpris es

0% 0% 0% 1% 1% 1% 1% 1% 2% 3% 4% 8% 10% 18% 23% 27% WATER SUPPLY, SEWERAGE, WASTE… MINING & QUARRYING ARTS, ENTERTAINMENT AND… AGRICULTURE CONSTRUCTION INFORMATION AND COMMUNICATION TRANSPORT & STORAGE ADMINISTRATIVE AND SUPPORT… REAL ESTATE ACTIVITIES OTHERS SERVICES ACTIVITIES PROFESSIONAL, SCIENTIFIC AND… ACCOMODATION & FOOD SERVICES HUMAN HEALTH & SOCIAL WORKS WHOLESALE/RETAIL TRADE MANUFACTURING EDUCATION 0% 0% 0% 0% 0% 1% 2% 2% 3% 3% 5% 7% 9% 12% 13% 43% AGRICULTURE WATER SUPPLY, SEWERAGE, WASTE… REAL ESTATE ACTIVITIES ARTS, ENTERTAINMENT AND RECREATION PROFESSIONAL, SCIENTIFIC AND… ADMINISTRATIVE AND SUPPORT SERVICE… MINING & QUARRYING OTHERS SERVICES ACTIVITIES INFORMATION AND COMMUNICATION TRANSPORT & STORAGE CONSTRUCTION EDUCATION ACCOMODATION & FOOD SERVICES HUMAN HEALTH & SOCIAL WORKS WHOLESALE/RETAIL TRADE MANUFACTURING

Key Observ rvat ations: ions:

• Composition of sectors is different for each business type classification, primarily due to staff requirements of

more formal establishments. E.g. Education & Construction are low for small business but top 5 for medium-scale enterprises.

• Education, Manufacturing, and Wholesale/Retail Trade make up 68% of small enterprises.
• Manufacturing, Wholesale/Retail Trade, and Human Health & Social Works make up 68% of medium enterprises.

C O M P O S ITIO N O F M S M E s –B Y B U S IN E S S TY P E

M icro E nterpris es

Key Observ rvat ations: ions:

• Wholesale/Retail Trade, Agriculture, and other

services activities make up 76.3% of Micro enterprises.

• Sectors requiring high numbers of employers or

skilled labour –education, human health & social works, info. & communications have very low numbers of micro enterprises

• Accommodation & Food services is a preferred

sector (top 5) across all business classification types.

0.1% 0.1% 0.1% 0.2% 0.2% 0.3% 0.5% 0.6% 1.8% 2.2% 3.1% 5.7% 9.0% 13.1% 20.9% 42.3%

Real estate activities Administrative and support service… Education Mining & quarrying Water supply, sewerage, waste… Information and communication Arts, entertainment and recreation Human health & social works Professional, scientific and technical… Construction Transport & storage Accommodation & food services Manufacturing Others services activities Agriculture Wholesale/retail trade

O W N E R S H IP S TR U C TU R E

SOLE PROPRIETORSHIP 65% PARTNERSHIP 5% PRIVATE LIMITED LIABILITY COMPANY 21% COOPERATIVE 1% FAITH BASED ORGANISATION 6% OTHERS 2% 0.3% 0.6% 10.9% 40.1% 48.1% BELOW 20 20 - 25 26 - 35 36 - 50 51 ABOVE Sole Proprietorship 97% Partnership 2% Faith Based Organization 0% Others 1% 10% 7% 30% 40% 13% Below 20 20-25 26-35 36-50 51-60

M icro E nterpris es S m all & M ediu m E nterpris es

• Unsurprisingly, a large majority of micro businesses are sole proprietorships, SMEs however are more distributed

with 65% sole proprietorship, 21% private limited liability, 6% faith based, and 5% partnerships.

• Micro businesses are mostly younger people 26-50y.o., while SMEs skew older –88% are over 36 y.o.

Finances Labour Market Key Findings -Overview Survey Background and Methodology MSMEs and Economic Growth

O U TL IN E

1 2 3 4 5 Policy Recommendations Challenges 6 7

E M P L O Y M E N T –B Y G E N D E R /S TA TE /S E C TO R

Key gend ender er trend nds: s:

• MSMEs generated 59,647,954 jobs as of

December 2017, 5% or 2,889,715 of those jobs were created by SMEs.

• Males accounted for 57% of jobs created by

SMEs, compared to 43% for women

• More males are employed in total in both Micro

and Small/Medium enterprises. There is greater disparity amongst employees, and within SMEs.

• Notably, Education sector is the only sector with

gender parity in jobs (53% women). Manufacturing employs 3 times more males than females. Sectors tors with highest hest number er of employ ployme ment: t: States tes with highes hest t number er of jobs created ted:

• Educatio

tion n (1,065 65,7 ,755) 5)

• Human Health

th & Socia ial Works s (612,6 ,622) 22)

• Manufa

ufactu turing ring (607,4 ,498) 98)

• Lago

gos s (11.5%) 5%)

• Oyo (8.4

.4%) %)

• Kano (5.2%)

%)

5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 Male Female Male Female Employees Owners

Employment by Gender - Micro Enterprises

E D U C A TIO N O F O W N E R S

Key Observ rvat ations: ions:

• Owners of Micro enterprises are less educated –

76.4% have SSS certification or less.

• By contrast, 51% of SME owners have attained

either a Bachelors or Masters degree.

• Similarly, 78.2% of employees of Micro enterprises

have SSS certification or less.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SMEs MEs NO EDUCATION BELOW PRIMARY PRIMARY JSS VOCATIONAL/COMMERCIAL SSS NCE/ND/NURSING B.SC/B.A/HND M.SC/M.A/M.ADMIN DOCTORATE OTHERS (SPECIFY)

HIGHEST EDUCATIONAL LEVEL SMEs MEs NO EDUCATION 2.5% 23.8% BELOW PRIMARY 0.6% 3.7% PRIMARY 4.0% 21.7% JSS 2.4% 7.5% VOCATIONAL/COMMERCIAL 2.2% 0.9% SSS 15.8% 30.9% NCE/ND/NURSING 12.8% 5.5% B.SC/B.A/HND 37.0% 3.8% M.SC/M.A/M.ADMIN 14.3% 0.2% DOCTORATE 5.1% 0.0% OTHERS (SPECIFY) 3.4% 2.1% TOTAL 100% 100%

E M P L O Y M E N T S K IL L S G A P

Micro ro Enterpris prises es –Highes hest t Skills Short rtage SMEs s –Highes hest t Skills Shortag rtage Information & communication: 72.8% Other Services Activities: 36.2% Accommodation & Food Services : 71.1% Agriculture: 35% Wholesale/Retail Trade: 67.8% Arts, Entertainment & Recreation: 33.3% Other Services Activities: 67.3% Water Supply, Sewerage, Waste Management: 33% Manufacturing: 66.9% Accommodation & Food Services: 32.6% Only34%ofMicroenterprisessaidtheycouldfindreadyavailability of qualified personnel. In comparison 77.1% of Small and Medium enterprises say there is a ready availability of qualified personnel

Key Observ rvat ations: ions:

• For small and medium enterprises, sectors that require specialized skills and technical know-how suffer from

high skills shortage

• Micro enterprises find the highest skills shortage in sectors that are consumer facing, with the exception of

Manufacturing which also requires specialized skills.

• Accommodation & Food Services are both severely short skilled for both business classifications..

Finances Labour Market Key Findings -Overview Survey Background and Methodology MSMEs and Economic Growth

O U TL IN E

1 2 3 4 5 Policy Recommendations Challenges 6 7

S TA R TU P C A P ITA L

S m all&M ediu mE nterpris es M icroE nterpris es

63.8% 20.6% 7.9% 3.1% 4.7% Below 50k 50-100k 101-200k 201-300k Over 300k 74.9% 8.0% 2.0% 0.9% 5.2% 1.1% 7.9% Below 10 10 to 20 21 - 30 31 - 40 41 - 50 Above 50 Not Stated

• Majority of Micro businesses started with less

than N50,000 in initial startupcosts. Only 4.7% start with more than N300,000.

• Wholesale/Retail Trade, Transport & Storage, and

Agriculture arethemostcapitalintensivefor microenterprises

• Similarly, 75% of SMEs start up with less

than N10 million in capital. 6% of MSMEs however start with over N40m in capital.

S O U R C EO FC A P ITA L

Key Observ rvat ations: ions:

• Personal Savings is most common source of

capital –61.2% of MEs and 55.6% of SMEs

• Loans (17.5%) and Family (11.7%) round out

sources of capital for SMEs

• Family (23.6%) and Cooperative/Esusu

roundoutsourcesofcapital for Micro Enterprises.

• ForSMEs who had access to bank credit,

commercial banks were the main source of these funds (91.9%), while 4.7% accessed credit from Micro-Finance Institutions, and 1% from Development Institutions.

• SMEs in Oyo, Jigawa, Lagos, Kano, and FCT

reported having the most access to bank credit.

55.6 17.5 11.7 5.4 2.7 7.0 61.2 5.3 23.6 8.3 0.7 0.9 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70 70.0 Small a and Me Medium ium Mic Micro

For the majority of enterprises –both Micro and SMEs –personal savings was the most common source of

• capital. Nationally,only49.5%ofSMEs (that are sole proprietorships) reported having access to bank credit,

F IN A N C IA L & S U P P O R T S E R V IC E S

There’s a widespread lack of capital and poor integration into the financial markets, which may be due to low business planning incidence and low formalization. Most enterprises are operating without legal & financial protection. Business ness Plan:

• Micro:75.6%havenobusinessplan
• SME:65% have no business plan.

Lack of planning in MSME contribute to high rate of failure as well as a reluctance from investors in providing capital. Business ness Regi gist stra ration ion:

• Micro: 97.8% not registered

Unregisteredbusinesses are hard to track for development and policy planning, regulation, and revenue generation purposes. Business ness Regi gist stra ration ion:

• Micro: 96.61% uninsured
• SMEs:63.9%uninsured

MSMEsareparticularlyvulnerabletobusinessshocks,lackofintegrationintofinancialmarketsincrease risks.

Finances Labour Market Key Findings -Overview Survey Background and Methodology MSMEs and Economic Growth

O U TL IN E

1 2 3 4 5 Policy Recommendations Challenges 6 7

P R IO R ITY A R E A S F O R A S S IS TA N C E

AccesstoFinanceisaretop priorityareaforassistance for both SMEs (67.9%%) and MEs (90.5%) alike. For SMEs, the priority the most pressing area for assistance is in power & water supply (83.5%), as well as tax rate reduction (73.1%).

10 20 30 40 50 60 70 80 90 GOOD TRANSPORT FACILITIES ADEQUATE AND REGULAR POWER AND WATER SUPPLY REDUCES TAX RATE REDUCE INTEREST RATE REGULAR FUEL SUPPLY AT APPROVED RATE FINANCING/FINANCIAL ASSISTANCE PROVIDE FARM INPUTS(SPEED, SEEDLING, EQUIPMENT, FERTILIZER ETC) PROVISION OF INFRASTRUCTURE (ACCESS ROAD, MARKET ETC) PROVIDE SECURITY OTHERS SPECIFY 20 40 60 80 100 Lack of access to finance Lack of work space Weak infrastructure Lack of entrepreneurship/vo cational training Obsolete equipment Lack of access to research & development Inconsistent policies Others

M icro E nterpris es S m all & M ediu m E nterpris es

U N F A V O U R A B L EG O V E R N M E N TP O L IC IE S-IM P A C T

M icroE nterpris es S m allandM ediumE nterpris es

Key Observ rvat ations: ions:

• High fuel price, taxes, and power supply are the top unfavourable policies for Micro enterprises. These reflect

challenging operating environment for MEs and importance of policies that mitigate these challenges.

• High electricity tariff, high taxes, and high interest rate are top unfavourable policies for SMEs. Thesereflectthe

challengesofformalization,includingaccesstothefinancialmarkets, and the importance of financial market initiatives in mitigating these challenges for SMEs.

10,000,000 20,000,000 Power supply Demolition Taxes Traffic control Prohibition of sales of certain… Banning of importation of goods High fuel price Trade permit Withdrawal of subsidies Custom duties Banning of important of goods Interest rate Embargo on loan facilities Others

10,000 20,000 30,000 40,000 50,000 60,000 70,000

HIGH ELECTRICITY TARIFF DEMOLITION HIGH TAXES TRAFFIC LAWS TRADE PERMIT WITHDRAWAL OF SUBSIDIES PROHIBITION OF SALES OF CERTAIN GOODS CUSTOM DUTIES BANNING OF IMPORTATION OF GOODS HIGH INTEREST RATE EMBARGO ON LOAN FACILITIES OTHERS SPECIFY

Finances Labour Market Key Findings -Overview Survey Background and Methodology MSMEs and Economic Growth

O U TL IN E

1 2 3 4 5 Policy Recommendations Challenges 6 7

P

• licyR

eco m m endatio ns

Main policy recommendations proposed are a review of the system of classification of business –particularly from the MSME National Policy; and targeted policy implementation for each classification to address strengths and challenges of each business type. Re Re-cla classifi ssificat catio ion:

• Micro enterprises are the majority of businesses in Nigeria, however this

large sub-sector can still be further broken down based on pro- establishment behaviour (registration, turnover, etc.)

• Introduction of “one-man business”/freelancers whosemainobjectiveis

self-sustenance.

• Introduction of additional criterion in classification: employment, assets,

and formal registration. Targe rgeted ted policies cies by busines ess s type:

• Microbusinesses face challenges related to day-to-day running costs –

fuel, electricity, working capital

• SMEs face a more complex set of challenges related to access to capital

and industrial utilities.

• Policies aimed at both business types should not be generic or lumped

together.

Plot 762, Independence Avenue, Central Business District, Abuja. Email: ykale@nigerianstat.gov.ng Web: www.nigerianstat.gov.ng www.facebook.com/nigerianstatistics @nigerianstat

THANK YOU FOR YOUR ATTENTION!