Small and medium enterprises (SMEs) account for 96 percent of Nigerian businesses and employ 84 percent of the workforce. Yet their contribution to GDP is just about 46 percent, far below potential. By contrast, SMEs contribute over 50 percent of GDP in South Africa. The gap is not about talent; it is about structure. Until Nigerian SMEs are built to scale, our much-discussed diversification agenda will remain aspirational.
The hidden weakness
Nigeria does not lack entrepreneurs. Across Lagos, Abuja, and beyond, energy pulses through side hustles, start-ups, and fast-growing small businesses. But here is the uncomfortable truth: most will stay small.
Not because their ideas are poor or markets unready, but because their businesses are structurally fragile. We celebrate hustle but ignore systems. Branding gets attention while backend operations are neglected. SMEs remain tiny by design, not by destiny.
In my two decades of running businesses across Africa, and now as CEO of The Hook and co-founder of The Shelf, the same cracks appear. Businesses that look polished online collapse when pressure comes. Founders price by guesswork, burn out from micromanagement, struggle to meet demand, and remain unsure how to grow without chaos.
I once sat with the owner of a promising Nigerian fashion label. She had 50,000 Instagram followers and orders pouring in. But when her lead tailor resigned, delivery stalled. Customers fled. She told me, “People know the brand, but I feel like the whole business rests on my shoulders.” Hype could not save her. Structure could have.
The reality is that many SMEs do not need more followers or even more funding. They need management, structure, and processes that make scale possible.
What getting ahead really means
Growth is not just harder work; it is disciplined work. It means building workflows, not just burning more hours. It means structuring a business so it can operate without the founder. It means seeing beyond top-line revenue to margins and efficiencies. It means delegating with clarity, not blind hope.
The hard question every founder should ask is this: “If I stepped away for 30 days, would this business still function?”
At The Hook, we had to learn this lesson ourselves. We began as a four-person hustle in Lagos. Today, we are 90 team members across six African countries. That growth did not come from hype. It came from rewiring how we operate. The shift from chaos to clarity is never easy, but it is the difference between a fad and a lasting enterprise.
Policy and ecosystem gaps
These weaknesses are not only about founders; they reflect an ecosystem that does not reward backbone. SMEs in Nigeria face a fractured policy and finance environment. Bank credit often depends on collateral rather than management capacity. Compliance is complex. Incentives exist on paper but are inaccessible to many.
By comparison, South Africa’s SMEs, which contribute more than half of GDP, benefit from stronger formalisation and deeper access to finance. Malaysia has built structured SME programmes that provide training, efficiency incentives, and targeted tax breaks. Nigeria needs the same: not policy announcements, but policy execution.
Why it matters for Nigeria
Small and medium enterprises already employ most Nigerians. But too many remain hand-to-mouth operations, unable to withstand rising inflation, unstable costs, or supply chain shocks. If Nigeria is serious about moving beyond oil, the path runs through SMEs that scale.
Not hustles that hustle harder, but businesses that are disciplined, organised, and attractive to investors.
The choice ahead
Founders must take responsibility. But banks and investors also have a role to play. Credit should reward good management, not just branding. Capital should flow to businesses that can prove organisation, not just visibility.
The government, too, must create policies that incentivise structure: tax relief tied to bookkeeping, simplified compliance processes, and financing linked to business systems, not collateral alone.
Until Nigerian SMEs are built to survive shocks, attract capital, and compete globally, diversification will remain lip service. Fixing our SMEs is not a side issue. It is the growth strategy.
About the author:
Akinwale Muse is a strategist, builder, and CEO of The Hook Group, a pan-African creative and innovation company with operations across six African countries. He is the creator of Fix Your Sh!t, a diagnostic tool for small businesses with big ambitions.
