Nigeria’s small business sector sits at the centre of the economy, yet a large share of its operators are still not engaging with support systems designed to keep them alive.

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has raised concern over what it describes as persistently low participation of Micro, Small and Medium Enterprises (MSMEs) in available government support programmes, despite years of funding interventions aimed at strengthening the sector.

Director General of SMEDAN, Charles Odii, made the observation during a working visit to Falcon Chemicals Ltd in Ogun State, where he assessed the company’s operations and broader challenges facing manufacturers.

But beneath the concern is a bigger economic reality: Nigeria’s MSME sector is not a small part of the economy; it is the economy.

According to data widely referenced by development agencies and policymakers, MSMEs account for about 96 percent of businesses in Nigeria and contribute roughly 48 percent of the country’s GDP. They also provide the majority of employment outside the public sector, making them the backbone of household income and informal job creation across the country.

Yet participation in formal support schemes remains low.

Odii pointed to infrastructure improvements and business-environment reforms under the current administration, including road rehabilitation and port expansion, which he said are aimed at reducing the cost of doing business. He also disclosed that over ₦200 billion has been disbursed in recent years as grants and support packages to nano, small, and medium-scale businesses.

Despite this, he said uptake remains weak.

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“People lack faith and trust in the system. There are funds available for businesses, but people do not come to access them,” he said.

That trust gap, he noted, is becoming a structural problem. Even beneficiaries of government-backed interventions, according to him, often avoid publicly sharing their experiences, which deepens scepticism among other business owners who remain outside the system.

Odii explained that formal registration with SMEDAN is a key entry point for accessing support programmes, adding that registered businesses become eligible for multiple intervention schemes once properly captured in the national database.

He also noted that the agency is strengthening collaboration with security agencies to improve operating conditions for businesses, particularly manufacturers facing rising costs and security pressures.

During the visit, Managing Director of Falcon Chemicals Ltd, Babatunde Adefarati, said the engagement was encouraging but acknowledged that the company is still operating below its full production capacity.

He revealed that about 70 percent of the company’s raw materials are currently imported, underscoring ongoing structural challenges in local sourcing within Nigeria’s manufacturing ecosystem.

Adefarati added that only a fraction of the company’s potential output is currently being utilised, though expansion plans are underway to meet rising domestic demand and eventually move into export markets.

The broader picture reflects a familiar tension in Nigeria’s MSME landscape: funding exists, programmes exist, but confidence in the system remains weak. For many small businesses, the barrier is no longer just access to capital, it is the belief that the system will deliver consistently, transparently, and without friction.

And in an economy where MSMEs drive nearly half of GDP, that trust deficit is becoming just as important as financing itself.

Meiza Nigeria