Electricity is responsible for the highest cost to operations of micro, small and medium enterprises (MSMEs) in Nigeria, a survey conducted by PricewaterhouseCoopers has reported.
The report titled ‘PwC’s MSME Survey 2020’ and released on Thursday noted that rent and cost of capital followed electricity in the hierarchy of operational impediment facing small enterprises in the Country.
The report, which presents findings of survey of 1629 key decision makers in the MSME sector with annual sales turnover ranging from N5 million and above, added that top economic issues are pressure to reduce prices, rising inflation and low demand for products and services.
The business survey, which had a geographical spread covering 29 states and across the 6 geopolitical zones in the country, reported infrastructure deficits as the most pressing problems of SMEs in Nigeria.
“Local government levies are the most difficult taxes to comply with. MSMEs would prefer private equity over debt financing,” the report noted.
The survey was conducted prior to the COVID-19 Pandemic (between August and December 2019).
“The MSME sector is the growth engine of any economy contributing to its development, job creation and export amongst others.
“According to the World Bank, MSMEs represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.
“The latest SMEDAN/NBS MSME Survey indicates Nigeria’s SMEs contribute nearly 50% of the country’s GDP and account for over 80% of employment in the country.
“No doubt, the sector is pivotal to Nigeria’s growth including reducing poverty levels. However, the sector continues to be weighed down with challenges which ultimately impact the nation’s growth.
“PwC’s MSME Survey 2020 is aimed at gauging experiences of sector players, assessing the underlying issues which MSMEs face and providing insights on this strategically important sector,” the report concluded.