Nigeria’s ambitious Industrial Policy 2025 faces implementation concerns as millions of small businesses struggle to survive harsh operating conditions.
The Chairman of the Alliance for Economic Research and Ethics, Dele Kelvin Oye, raised the concern.
According to him, Nigeria’s Industrial Policy 2025 (NIP2025) risks failing to achieve its objectives unless the government closes the gap between policy promises and the realities facing small businesses.
Oye expressed this in an analysis titled The Gap: Nigeria’s Industrial Policy 2025 vs. The Lived Reality of SMEs.
He noted that the policy sets ambitious targets to raise manufacturing’s contribution to gross domestic product (GDP) to 15 per cent by 2030 and 25 per cent by 2035 while diversifying exports, creating jobs and positioning Nigeria as Africa’s leading industrial hub.
He stressed that the policy rightly identifies Micro, Small and Medium Enterprises (MSMEs) as the backbone of the economy, noting that they contribute 46.32 per cent to GDP and account for 87.9 per cent of national employment.
Oye added that the policy promises single-digit loans, industrial clusters, technology incubators, skills development and fiscal and monetary incentives aimed at supporting the sector.
He, however, argued that the experience of millions of entrepreneurs tells a different story.
“The NIP2025 reads less like a roadmap and more like a distant, perhaps unattainable, promise,” Oye said.
SMEs Battle High Failure Rate, Rising Costs
Oye described Nigeria’s SME sector as facing an existential crisis, citing research showing that up to 95 per cent of SMEs fail within their first five years of operation.
He said about eight million of Nigeria’s estimated 40 million MSMEs shut down between January 2023 and June 2024, representing a 20 per cent decline in the country’s SME base within just 18 months.
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Quoting the National President of the Association of Small Business Owners of Nigeria (ASBON), Femi Egbesola, Oye said, “Many businesses simply cannot cope with the harsh economic environment. Owners are closing their shops, unable to meet loan obligations or manage skyrocketing operational costs… Several people have died under the pressure; others are in the hospital. It’s a humanitarian crisis.”
He attributed the situation to persistent inflation, currency depreciation, rising production costs following fuel subsidy removal, limited access to affordable financing and worsening electricity shortages.
According to him, only 15 to 20 per cent of small businesses have access to bank loans, while commercial lending rates have climbed above 35 per cent following the Central Bank of Nigeria’s Monetary Policy Rate of 26.5 per cent.
He also noted that businesses connected to the national grid experience about 160 days of blackout annually, forcing many SMEs to rely on generators, with diesel costs consuming up to 30 per cent of revenue.
Implementation, Not New Policies, Holds the Key
Oye argued that Nigeria’s challenge is not the absence of industrial policies but weak implementation.
He said previous intervention programmes expanded access to credit but failed to help businesses grow from micro to small or from small to medium-sized enterprises because most borrowed funds were used to meet immediate operating expenses rather than expand production.
“The NIP2025 proposes dedicating up to 5 per cent of GDP for industrial financing. However, without addressing the macroeconomic instability that forces SMEs into short-term survival mode, much of this funding will once again be absorbed by operational costs rather than productive investment,” Oye said.
He also noted that infrastructure investments have historically favoured large companies, leaving small businesses to provide their own electricity, water, security and waste management at higher costs.
While describing the policy’s industrial cluster initiative as a step in the right direction, he warned that it would remain aspirational unless infrastructure is delivered with the same urgency as major national projects.
To bridge the gap, Oye called for emergency support for SMEs, including genuine single-digit loans, energy support for productive businesses and an end to multiple taxation by state and local governments.
He also urged the government to align loan repayment structures with business cash flows, prioritise infrastructure in SME clusters and ensure transparent monitoring of policy implementation through regular public reporting.
“The ambition is right. The execution must now match it,” he said, adding that Nigerian SMEs need implementation rather than more policy documents.
He added that the success of the Industrial Policy 2025 will ultimately depend on whether it improves the daily realities of entrepreneurs whose businesses continue to sustain the Nigerian economy despite difficult operating conditions.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X