PwC MSME Survey 2024- Building resilience: Strategies for MSME success in a changing landscape

Price Water Cooper (PwC) recently released its 2024 Micro, Small, and Medium Enterprises (MSMEs) Survey: Building resilience Strategies for MSME success in a changing landscape, which was administered online in 2022 to 557 MSME operators across 13 sectors and 29 states in Nigeria. The survey provides insights into the challenges, trends, and strategies required to build resilient small businesses in Nigeria.

Some highlights of the PwC MSME Survey 2024 include:

• Decreased demand: Over half of MSMEs reported falling sales due to high prices and low consumer spending power.
• Financing constraints: MSMEs primarily rely on family, friends, and bank loans, but face high interest rates, complex processes, and collateral requirements.
• Tax burden: Most MSMEs pay multiple taxes, with VAT being the most common.
• Operational challenges: Inadequate financing, unreliable electricity, and excessive taxes hinder MSME growth.
• High energy costs: Over 60% of MSMEs struggle with high electricity expenses due to grid reliance.

MSME stunted growth: funding gaps, power outages, and overtaxation

Funding is a critical enabler of the growth and development of small and medium enterprises, with 35% of the businesses surveyed citing inadequate access to finance as their number one challenge.

Infrastructure challenges, particularly electricity, account for the biggest costs to the daily operations of MSMEs. Unreliable power supply is a major challenge for 21% of businesses. Nigeria’s power sector faces numerous issues, including deteriorating plant capacities, poor maintenance, inadequate gas supply, limited distribution networks, and the commercial viability of DisCos operations. 

These challenges have had an adverse impact on the business environment, contributing to significant economic costs for MSMEs and the broader economy. Other structural challenges include multiple taxation (12%), inadequate skilled labour (11%), and insecurity (10%).

MSMEs face  $32.2 billion (₦13 trillion) in financing gap

Nigerian MSMEs require an estimated $32.2 billion (₦13 trillion) in financing. Micro and small enterprises, particularly in agriculture and retail, need loans under $20,000. However, limited private sector lending, poor infrastructure, and lack of documentation hinder access to credit. While digital finance is emerging, innovation is crucial to bridge the gap and serve MSMEs effectively.

For More Info: Download PwC’s MSME Survey 2024