The Impact of the Covid-19 Pandemic on Small and                      Medium Enterprises in Nigeria


The Covid-19 virus knows no borders, as nations worldwide have been directly impacted by it through many avenues, including in major economic sectors (Ameji et. al 41). Regardless of the progress of their economic development, the Covid-19 epidemic has negatively impacted business sectors globally (Ameji et. al 41). Nigeria, a country in Sub-Saharan Africa, with the most populated Black nation of approximately 200 million people, is indeed included by the impartation of the pandemic (Ameji et. al 41).

Statistically-speaking, 94 percent of global and local businesses in Nigeria have been affected in one form or another by the COVID-19 virus, according to a 2020 study by KPMG (Oyewale et. al 1).

Indeed, small and medium enterprises (SMEs) are no exception. SMEs are a larger portion of the foundation of major developed economies as they provide significant employment, and even increase export services (PWC). In Nigeria, for instance, SMEs provide 84% of employment and contain 48% of the national GDP (PWC). Although defined by the World Bank as compromising approximately 300 employees, in Nigeria, they constitute a smaller scale of an estimate of 50 employees (Aderemi et al. 251). As 90% of businesses in Nigeria are SMEs (Gbandi and Amissa 329) and comprise approximately 41.4 million businesses according to the National Bureau of Statistics (Aderemi et al. 252), the impact of SMEs by the Covid-19 affliction of critical concern. Existing issues by SMES in Africa, including Nigeria, such as poor electricity from a micro-level, and lack of regulatory framework from a macro- perspective, have been further amplified by the pandemic. Yet, novel issues have also immediately or progressively emerged among SMEs due to the Covid-19 contagion in Nigeria (Gerald et. al 42).            


            In grappling with the Covid-19 pandemic, the Nigerian government has used measures to reduce the spread of the virus (Oyewale et. al 2). One method was the closure of essential services, ranging from schools to worship centers, and even including some businesses (Oyewale et. al 2). The closure of SME essential services proved to decrease productivity among employed staff members. That is, the supply of labor was reduced as either many were unwell due to contracting the Covid-19 virus, or were forced to not attend work due to having dependents at home because of the Government mandate of restriction of activities, school, etc. (Ameji et. al, 2020 42). As a result of workers being absent from work, they could be laid off or on the other hand could be unable to receive proper pay for their work due to decreased business activities (Ameji et. al, 2020, p. 42).  Other SMEs had no choice but to reduce the working hours of their employees as well (Edgecliffe in Bulurafa and Adamu 77).

            In Nigeria, SMEs employees were very largely negatively affected, as they constitute 70% of the working population (Ademeri et. Alm 253). The unemployment percentage, including individuals employed by SMEs, has significantly increased from 23.1% to 33.5% between 2019-2020, according to the National Bureau of Statistics (2020) (Bulurafa and Adamu 77). It can thus be said that because of the upward trend of unemployment in Nigeria, it put individuals at a greater risk of poverty (Bulurafa and Adamu 77).


            SMEs in Nigeria have also faced financial setbacks as a result of the Covid-19 outbreak. In a recent study, 94% of business interviewees revealed that they experienced a downfall in finances in terms of cashflow, sales, and revenue (Oyewale et. al 3). They even face the risk of closing their businesses since they were unable to manage their accruals (Schrank et. al in Bulurafa and Adamu 77). In a different study by (Ameji, 2020 49), that took place in Lokoja, Kogi State of Nigeria, it demonstrated that the monthly earnings of the SME business owners significantly reduced, and they even had issues getting loans and other forms of credit since they were only offered at very high interest rates.

As mentioned, the Nigerian government closed businesses that provided essential services to minimize the spread of the Covid-19 virus among the population. One study by Ademeri et. al (259) aimed to explore the impact of Covid-19 on 100 SMEs engaging in three types of essential needs, in terms of food/consumables, pharmaceuticals, and oil gas. This study was particularly located in the Sango-Ota industrial neighborhood in Ogun State, Nigeria. Based on the results of questionnaire data, the results indicated that the SMEs only experienced a medium-sized decrease in production and sales during Nigerian mandate lockdown closures. In comparison to the substantial reduction from SMEs overall, as indicated in other studies noted above, the moderate decrease in production and sales is likely due to the provision of mandatory services by the SMEs. Yet, interestingly, they did experience a significant decrease in their contracts and deliveries.

Youth Owners and Employees

            Another angle that has been examined on the Covid-19 pandemic’s impact on SMEs is that which related to youth or young individuals being employed by SMEs, either as owners or workers. Largely taken from the study by Ogar et. al (24) which analyzed this specific topic, they found that due to the closure of businesses and therefore the loss of employment and entrepreneurial income by youth in Nigeria, that unfortunately youth often went into a different direction of earning income. For instance, they quote that “most youths are now engaged in antisocial vices and crimes like kidnapping, armed robbery, rape, drug addictions, ritual killings, violence and cybercrimes” (Ogar et al 24). While this may be an extreme statement, we see that there was a sense of desperation to earn income because of their loss of legitimate income by the young population employed either as staff or as entrepreneurs in Nigeria.

            In addition, in a different study, they found due to business closures and losses, youth proprietors and workers were forced to move from the urban city centers where their business was normally doing well, to the rural areas to conduct their business activities (Ogar et. al 25). This was since they found that the pandemic did not hit hard in the rural areas in comparison to the urban centers (Ogar et. al 25). Altogether, we can see that youth attempted to provide as many solutions as possible to re-earning their income, whether that was moving from the urban to the rural centers for better business opportunities, or even to turn to crime-related activities, simply to sustain themselves financially as prior business owners or workers of SMEs.

Concluding thoughts/Recommendations

            Essentially, we see that the Covid-19 outbreak has had a negative effect on SMEs in Nigeria through the factors of productivity, finances, and among youth proprietors and workers of SMEs. Based on these three criteria of impact, it is clear the Covid-19 pandemic knew no boundaries in the business sector of Nigeria, particularly among SMEs. Some authors have provided recommendations in their scholarly articles on how these unfavorable dilemmas could be alleviated going forward. For instance, the authors Aderemi et. al (259) recommend that “the government should set aside emergency fund targeting SMEs in the country. Deferment of taxes or waiver of taxes, lower interest rate could also be embarked on by the appropriate policy makers to make SMEs remain afloat during and after COVID-19 pandemic”. In addition, Ameji et. al (50) state an interesting point in terms of modifying the mode of business activities among SMEs in Nigeria: “SMEs could also improve on its performance by participating on online-based platforms and visual services in order to sustain their business activities during lockdown and movement restrictions”. As such, it can be said with the application of these types of recommendations, among others, the negative impact of the Covid-19 public health problem on SMEs in Nigeria could indeed be improved over time.

Journal Articles
Ameji, Enemona Negedu, Usio Uchechi Taiga, and Muhammed Amade. Covid-19 Pandemic and Performance of Small and Medium Scale Enterprises (Smes) in Lokoja, Kogi State, Nigeria.
Bularafa, Bukar Ali, and Umar Garba Adamu. Effect of Covid-19 Pandemic on Sme Performance in Nigeria. 3 Vol. Global Academic Excellence (M) Sdn Bhd, 2021.
Chris-Valentine Ogar, Eneji, et al. “Assessment of the Socioeconomic Impact of Covid-19 Pandemic on Small and Medium Scale Business Enterprises: Nigerian Youths in Perspective.” Journal of world economic research (Print) 10.1 (2021): 18.
Gbandi, E. C. and G. Amissah. “Financing Options Available to Small and Medium Scale Enterprises (SMEs) in Nigeria: A Critique.” The business & management review (Harrow) 3.1 (2012): 278. ProQuest Entrepreneurship.
Gerald, Emejulu, Agbasi Obianuju, and Nosike Chukwunonso. “Strategic Agility and Performance of Small and Medium Enterprises in the Phase of Covid-19 Pandemic.” International Journal of Financial, Accounting, and Management 2.1 (2020): 41.
Oyewale, Abioye, Ogunniyi Adebayo, and Olagunju Kehinde. Estimating the Impact of COVID-19 on Small and Medium Scale Enterprise: Evidence from Nigeria.
Schrank, Holly L., Maria I. Marshall, Adrienne Hall-Phillips, Renee F. Wiatt, and Nicole E. Jones. “Small-Business Demise and Recovery After Katrina: Rate of Survival and Demise.” Natural hazards (Dordrecht) 65.3 (2012): 2353-2374.
Timothy Ayomitunde Aderemi, et al. “Impact of Corona Virus (COVID-19) Pandemic on Small and Medium Scale Enterprises (SMEs) in Nigeria: A Critical Case Study.” Acta Universitatis Danubius. Œconomica 16.4 (2020): 251-61.
Newspaper Articles
Edgecliffe-Johnson, A. “Coronavirus Lay-offs Split Corporate America”. Financial Times, New     York, 2020. Accessed from .
Azeez, Omobayo. “Figure 1.” Business A.M. 16, July 2020. Accessed from:
Website Articles
PWC. “Nigeria SME Survey”. PWC. Accessed from:    sme-survey.html


 Fenan Kenan Nkusi has completed her Master of Arts in Sociology and an Honours, Bachelor of Arts in Psychology both at the University of Ottawa. Her master's thesis examined the identities and experiences of African immigrant youth in Canada through a qualitative literature review. She previously worked for several years at a children’s hospital in program and human resources coordination. She recently worked at UNDP in supporting their program's initiatives related to climate change from a partnerships angle.

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