From unfavourable government policies, currency devaluation, inflation, political instability, and overdependence on crude oil, Nigeria’s small and medium enterprises, despite these hurdles, have struggled to remain consistent and resilient in the delivery of value to consumers.
These odds have created a disturbing economic climate where businesses live in uncertainty and volatility. However, these businesses remain determined to succeed, and their efforts have proven that continuous innovation and adaptability are key pillars for business sustenance and relevance. In view of this, Success Ajilore, a seasoned business analyst and founder of the Success Transformation Network (STN), with a long-standing passion for the growth of SMEs; offers valuable insights on the strategies these businesses adopt to succeed amid the economic crisis.
According to the National Bureau of Statistics (NBS), SMEs are literally the backbone of the economy, where they contribute about 48% to the national GDP, with 96% of active businesses and 84% of employment from these said businesses. The role of SMEs towards Nigeria’s economic stability can no longer be understated. Having to provide employment opportunities, reducing the unemployment burden of the country and easing the standard of living for many, all amidst the economic downturn. This form of remarkable resilience is what Success Ajilore cleverly describes as a power-packed force of entrepreneurial agility, creative problem-solving, and an unwavering commitment to seizing opportunities in adversity.
Impressively, SMEs have turned economic challenges into catalysts for innovation, change, and opportunity. Ajilore emphasized that large corporations usually depend on stable and good economic conditions for effective operation, but for SMEs, it’s their quick response to adapt despite any circumstances. “They know that when they fail, there’s no support out there, so in times of crisis, SMEs have no choice but to be flexible; that’s why they constantly explore creative solutions that meet the needs of consumers,” Ajilore notes.
Prior to the COVID-19 pandemic, a lot of SMEs were operational in their physical stations and mostly rely on walk-in consumers to generate sales. However, when the pandemic struck, business owners had to be swift and change according to the demands of the era. They pivoted to digital platforms in order to serve their consumers since physical outlets were shut down. SMEs had to embrace e-commerce that processes digital payments alongside the active utilization of social media to attract, sustain, and retain consumer engagement and gather a more diverse customer base. This was practiced in nearly all sectors of the economy, from retail to hospitality, manufacturing, health, education, and a list of other professional industries.
Ajilore posits that ever since the pandemic, digital transformation in SMEs has blossomed and has quickly become a permanent shift. While a lot of businesses were forced to operate digitally, in the heat of that desperate time, they ended up being more creative, competitive, and innovative than they would have under normal conditions. “Digital transformation for businesses is now an entire leverage on technology to streamline operations, expand reach, and deliver services at a fast and easy pace,” she adds.
Collaboration and networking are another element SMEs utilize to drive success. It’s a deliberate and strategic meeting with like minded individuals within the business community. These networks help in knowledge and resource sharing, particularly on more cutting-edge techniques to scale up businesses and stay ahead of the fluctuating economic wave. “You see collaboration? The power that it holds should never be underestimated,” says Ajilore. “From resource contribution to settling funding issues to jointly owning and controlling projects, SMEs constantly leverage the power of collaboration, and the results always yield positively. When the economy is difficult, it makes sense that achieving collectively becomes a prioritized approach to staying afloat.”
The formation of unions and associations at the grassroot level has also contributed to fostering a more collaborative space. Organizations such as the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and other commerce groups give rise to more collaborations between SMEs as they equip business owners with veritable tools needed to not only navigate the hardship but to harness the opportunities it presents.
One of the persistent hurdles for SMEs is the access to finance. Businesses are faced with high interest rates and strict collateral requirements, especially when they have low credit scores. In response, Ajilore suggests that organizational contributions should be encouraged and more efforts should be poured into that course to help struggling SMEs. “Local contributions and peer-to-peer funding should not be ceased; it goes a long way. However, SMEs should try crowdfunding, venture capital, and angel investment as they are gradually gaining traction in Nigeria. Not to forget utilizing government-sponsored programs like the SME loan schemes from the Central Bank of Nigeria, as this has been a lifeline for many.”
In the same light, Ajilore implores the need for traditional financial institutions to reshape their lending policies. That when their policies are easy to navigate, SMEs would not fall victim to illegal internet lenders. She also pointed out the brilliant strategies of fintech companies: “Fintech simplifies the process. Loans are accessed based on cash flow and transaction history rather than unnecessary collateral, and I’m happy they are on the rise to helping small businesses with the right capital that they need for growth,” Ajilore adds.
SMEs have tried to stay relevant despite the ugly economy; however, part of their success is owed to the government and its policies. While the Nigerian government has tried in the implementation of several initiatives that reduce the burden of business owners, Ajilore believes that more could be done and that some of its policies are still heavy, particularly tax on imported goods.
“The Nigerian Government, through grant aids and tax incentives, has been supportive, but this support should be consistent and well-targeted, as most times the beneficiaries of this support go to top businesses that are already doing well. Policies regarding business registration should be reformed; access to funding should be constantly visited; importation dues, taxes, and levies are rather too much and contribute to market inflation; hence, they should be managed. If these areas are addressed, it would be less of a challenge for SMEs, and the economy might stand a chance to once again float in the pink,” Ajilore explains.
Ajilore also points the government to the need for digital literacy. Since a lot of businesses have adopted digital technology for business operations, it’s important they are schooled on ethical and regulatory demands to minimize embezzlement, fraud, and consumer exploitation.
The economy of Nigeria is unpredictable, and as it continues to battle challenges, the future of SMEs remains uncertain. However, Ajilore is optimistic because SMEs have already played towards the right gallery, and she believes that the future will only get better with the rise of new innovations. She particularly notes that, “Even if external influence overwhelms business owners, I’m certain that the internal resilience of SMEs would always make them pull through.”
“The operational shift in SMEs now, is amazing. The economy presented goldmines in the form of making them more proactive, innovative, and collaborative. This approach, alongside constant government support, would just position Nigerian SMEs to a strong advantage in the future,” Ajilore observes.
Highlighting the importance of continuous learning, Ajilore explains that the market and its trends would always evolve, inclusive of consumer behaviour and their reaction to new relations such as technology. It’s very important that business owners bask in education to continually keep themselves informed in order to easily wave off challenges in this regard. A more informed business model attracts and reflects potentials for consumer investment.
A typical Nigerian SME, characterised by resilience, innovation and determination, strives to thrive amidst the economic downturn. With the clever insights from Success Ajilore, it’s clear that the entrepreneurial spirit of Nigerian business owners cannot be tamed, this is the reason challenges such as inadequate access to funding, unfavourable government policies, infrastructural and a litany of others cannot detract businesses from reaching desired goals. SMEs should shoot at the stars and continue to find innovative ways to adapt using an all encompassing formula of different strategies to remain poised in the face of uncertainty. As ajilore puts it, “Nigerian SMEs are strong-willed. Not surviving, but thriving. Their drive offers a blueprint for businesses to succeed, regardless of the circumstances”
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