Economic challenges have almost halved the number of small-scale industrialists in Nigeria in two years

The number of small scale entrepreneurs in Nigeria has plummeted over the past two years as businesses struggle to cope with economic challenges in the country.

The 2023 Social Statistics Report from the National Bureau of Statistics (NBS) highlights a 45% decline in the total number of small-scale individuals across economic sectors, from 246,200 in 2020 to 170,098 in 2022.

Sector analysis

• The education sector has consistently seen the highest number of small-scale entrepreneurs over the years, although these numbers have been on a downward trend. In 2020, there were 56,321 small-scale industrialists operating in the sector, a figure that dropped to 49,749 in 2021 and further to 39,876 in 2022. This represents a decline of 29% over a two-year period, highlighting serious challenges in the sector . Factors such as reduced funding, policy changes and the impact of the Covid-19 pandemic may have contributed to this decline.
• The real estate sector also saw a significant reduction in the number of small entrepreneurs. There were 19,956 small traders in the sector in 2020, a figure that fell to 12,720 in 2021 and further to 8,313 in 2022. The sector saw a decline of 58%, reflecting wider economic challenges and the potential impact of policy changes or market conditions.
• The agriculture sector saw a relatively moderate decline. In 2020, 39,109 small-scale entrepreneurs worked in agriculture, a number that dropped to 36,431 in 2021 and decreased slightly to 36,348 in 2022. This 7% decline suggests that while the sector faces challenges, it remains somewhat resilient, probably due to efforts to promote agricultural activities and support from government policies.
• The information and communications technology (ICT) sector has seen a more pronounced decline. The number of small-scale ICT entrepreneurs in 2020 was 33,842, falling to 28,816 in 2021 and then to 23,101 in 2022. The sector experienced a reduction of 32%, highlighting the potential impact of technological and market changes.
• There were 27,723 small entrepreneurs in the manufacturing sector in 2020, a number that dropped to 20,736 in 2021 and further to 17,450 in 2022. With a decline of 37%, the manufacturing sector shows significant vulnerability, likely due to disruptions in supply chain, economic policy and increased production costs.
• The mining sector saw a slight decline compared to other sectors. In 2020, 24,852 small-scale industrialists worked in mining, a number that decreased to 22,721 in 2021 and decreased slightly to 22,522 in 2022. The 9% decline indicates some level of stability in the mining sector, which can be attributed to increased activity mining and investments in mining activities. However, challenges such as regulatory changes and commodity price fluctuations may still impact the sector.
• There has been a significant decline in the number of small entrepreneurs in the wholesale and retail sector. In 2020, there were 44,397 small traders in the sector, a number that dropped to 42,229 in 2021, before falling sharply to 22,488 in 2022. This 49% decline reflects the severe impact of economic conditions on consumer behavior and business activity. Factors such as reduced consumer spending, market competition and economic uncertainty may have contributed to this decline.

More insights

Aggregate data shows a sharp overall decline in the number of small entrepreneurs across sectors. In 2020, there were a total of 246,200 small-scale industrialists, this number decreased to 213,402 in 2021 and further to 170,098 in 2022.

Several factors are likely contributing to the decline in the number of small scale entrepreneurs in Nigeria. These include economic instability, political and regulatory challenges, access to finance, infrastructure gaps and the impact of the Covid-19 pandemic.

The significant decline in the number of small scale entrepreneurs in Nigeria has far-reaching consequences for the country’s economy. Small-scale industries are a key part of Nigeria’s economic structure, providing employment opportunities, contributing to GDP growth and supporting innovation and entrepreneurship.

A 45% reduction in this sector could lead to higher unemployment rates, less economic diversification and reduced economic resilience.

This decline further confirms the need for targeted interventions to support small businesses, which are key to economic growth and jobs.