A new policy review has identified major structural barriers hindering the growth and sustainability of micro, small and medium enterprises (MSMEs).

The report, titled, ‘Reassessment of Nigeria’s National Policy on Micro, Small and Medium Enterprises (MSMEs), 2021–2025 and Strategic Directions for 2026–2030’, said despite the sector’s critical role in the Nigeria’s economy, it is still faced with persistent challenges such as limited access to affordable finance, weak infrastructure systems, high level of enterprise informality, low technological adoption and high business mortality rates.

These, it said, continued to undermine the performance of small businesses across the country.

The study was conducted by Africari Limited and led by its policy researcher, Onyinye Ozurumba.

According to the report, the Nigerian government introduced various financial interventions, entrepreneurship programmes and regulatory reforms during the 2021–2025 policy period, but the initiatives had not translated into sustained enterprise growth due to structural and institutional constraints.

One of the most critical issues highlighted in the report is the difficulty MSMEs face in accessing affordable and long-term financing.

While several credit interventions were introduced by financial institutions and policy actors, including the Central Bank of Nigeria (CBN), many small businesses still struggle to obtain loans that support expansion and long-term investment, the report said.

The report noted that most credit facilities available to MSMEs are short-term loans designed mainly to address liquidity challenges, rather than fund capital investments such as equipment acquisition, technology upgrades or production expansion.

Hence, it stated, many businesses use borrowed funds to manage operational expenses, including rent, inventory purchases, staff wages and rising energy costs.

Apart from financing, the report pointed to weak infrastructure, particularly unreliable electricity supply, poor logistics networks and rising energy costs as some of the major obstacles to MSME growth in the country.

The infrastructure gaps significantly increase operating costs for small businesses and reduce their competitiveness, it said.

The study also highlighted low levels of technological adoption among Nigerian MSMEs, noting that many small enterprises still rely on manual processes and lack the digital tools needed to improve productivity and access broader markets.

The report mentioned a high level of informality within Nigeria’s small business sector, stressing that many MSMEs operate outside the formal economy due to regulatory complexities, administrative costs and concerns over multiple taxation.

According to the study, businesses that formalise their operations often face numerous tax obligations, depending on their sector and location, including value-added tax (VAT), company income tax (CIT), stamp duties, import duties and personal income tax.

The report warned that the challenges contribute to high business mortality rates, with many small enterprises unable to survive beyond their early years of operation.