A recent study conducted by Small Firm Diaries and published by the National Bureau of Statistics (NBS) has revealed that 40% of Micro, Small, and Medium Enterprises (MSMEs) in the country are owned by women, indicating a significant milestone in gender inclusivity within Nigeria’s entrepreneurial landscape.
Titled ‘Country Data Overview,’ the report underlines the substantial progress towards gender diversity in entrepreneurship, as women’s ownership of 40% of MSMEs marks a positive step.
This statistic is particularly noteworthy when compared to global data from the World Bank, which states that firms with female representation in ownership stand at 32.9%. Nigeria’s achievement surpasses these expectations with a remarkable 16.8%.
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However, the study also reveals a concerning contrast within larger enterprises. Female representation in ownership drops significantly to a mere 12.2% for large firms, indicating the need for further advancement in promoting gender inclusivity within bigger enterprises.
Given the critical role MSMEs play in the Nigerian economy, constituting 96% of companies and employing 86% of the workforce, comprehending their operations and dynamics becomes of utmost importance.
The study draws insights from 161 firms across Lagos, Enugu, and Kaduna states, encompassing a range of sectors including light manufacturing, agri-processing, and services.
Key findings from the study delve into the financial performance and adoption of digital financial services by MSMEs. On average, Nigerian MSMEs generate an annual revenue of N2.3 million, with an operating margin of N768,000.
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However, the study also exposes a significant disparity in revenue, with 62% of MSMEs experiencing monthly earnings below N300,000, and 47% struggling with monthly revenue lower than N200,000.
These figures emphasize the need for support mechanisms to enhance the financial sustainability of these businesses.
Regarding the uptake of digital financial services, 97% of MSMEs possess a bank account, though less than half (50%) use it regularly. Interestingly, male-owned MSMEs show a greater reliance on loans, with 47% seeking credit facilities. On the other hand, 45% of female-owned MSMEs turn to loans to support their business operations.
A noteworthy aspect of the study pertains to the adoption of technology for business purposes. Over 80% of MSMEs report ownership of a debit card, with 65% utilizing mobile banking services and 56% engaging in transactions through POS machines.
However, the utilization of credit cards remains relatively low, with only 5% of MSME owners having utilized this mode of payment.
Challenges in adopting digital financial services also emerged from the study, with 60% of respondents identifying delayed money arrival as a major issue.
Approximately 30% highlighted loss of access and missing funds as their primary obstacles in using digital financial services. Interestingly, 63% of respondents cited receiving payments through digital financial services as the reason for their utilization.
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In the realm of technology adoption for business, more than 50% of MSME owners point to cost as the primary barrier. Additionally, 27% highlight a lack of necessary skills as a hindrance.
MSMEs, defined by SMEDAN, serve as the backbone of Nigeria’s economy, contributing more to employment than formal sectors.
These businesses are classified as micro, employing 1 to 10 workers with assets below NGN 5 million, and small, employing 10 to 49 workers with assets ranging from NGN 5 to 50 million.