In a bid to stimulate Nigeria’s small-scale business sector, the federal government has launched a N50 billion financial lifeline through the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
The initiative, spearheaded by President Bola Tinubu, is aimed at supporting approximately one million small businesses across the country, each of which will receive N50,000 under the SMEDAN programme.
The Director-General of SMEDAN, Mr. Charles Odii, unveiled the initiative during the flag-off ceremony for the Delta North zone in Asaba. Speaking to small business owners, Odii explained that the programme is designed to provide immediate financial relief to “NANO businesses”—enterprises with fewer than three employees and an annual turnover of less than N3 million.
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The goal, according to him, is to give these businesses a chance to unlock more significant sources of income, build wealth, and ultimately contribute to national economic growth.
Odii highlighted that the N50,000 grants are intended to help small businesses access much-needed funds and navigate the current economic difficulties.
“The NANO businesses of SMEDAN are those businesses that have at least three employees with a turnover of less than three million naira,” he said.
“Poverty does not know political party, sex, or age; a hungry man is an angry man. Yes!
“There is often this undesirable triangle that I’d like to illustrate: hunger leads to anger and anger leads to violence. This is the reason why we have a lot of youth unrest.
“One of the things we are doing as a long-term solution is to help improve the capacity of our people while the short-term solution is to give them grants as we are doing now.”
Economic Realities Undermine the Gesture
While this initiative has been applauded for its intent to boost small businesses and alleviate poverty, many business leaders have voiced concerns about its effectiveness in the face of Nigeria’s current economic challenges. With the naira suffering significant devaluation, the removal of fuel subsidies, and inflation rates skyrocketing, N50,000 may not be enough to make a meaningful impact on most businesses, they note.
Economists have pointed out that, in the face of rising operational costs and fluctuating currency, N50,000 may barely cover the daily operational expenses of many small businesses, let alone foster significant growth or expansion.
Nigeria has been grappling with multiple economic challenges since the removal of the fuel subsidy last year, which has led to a surge in transportation costs and a general rise in the price of goods and services. Additionally, the naira’s ongoing devaluation has further compounded the financial strain on businesses, particularly small-scale enterprises that rely on imported goods or materials.
Against this backdrop, many business leaders feel that N50,000 is a drop in the ocean, advocating the need for a broader, more comprehensive approach that addresses the real financial needs of small businesses in today’s economy.
Experts suggest that a multifaceted approach that includes grants, low-interest loans, and capacity-building programs would offer more sustainable relief to small businesses.
However, Odii expressed optimism about the potential impact of the programme, during the flag-off event in Asaba, where some beneficiaries confirmed receiving the N50,000 alerts. The SMEDAN boss also promised that further financial support would be based on the effective use of the initial grants, urging beneficiaries to invest wisely.
The beneficiaries were selected through a rigorous scrutinizing process via a technology-based system that was not biased or based on “who you know,” but purely on merit.
Odii highlighted that the agency has so far covered 14 states and plans to reach all 36 states and the Federal Capital Territory (FCT), soliciting cooperation from state governments and stakeholders. He reiterated that SMEDAN cannot do it alone, calling on state governments to support the initiative in order to ensure its success.
“We need the support of the state governments to grow the small businesses in the country,” he said.
“When a small business grows, a family grows. You feed one small business owner, you have fed at least 10 people.”