An increasing number of Nigerians are abandoning their entrepreneurial pursuits and returning to the job market.

According to the 2023 social statistics report by the National Bureau of Statistics (NBS), the number of individuals operating as small-scale industrialists across various economic sectors stood at 170,098 in 2022.

This represents a 45% decline from the 246,200 recorded in 2020 and a decrease from 213,402 in 2021.

The new data also indicates that 76,102 Nigerians decided to end their entrepreneurial pursuits within two years.

Other sectors' decline breakdown

Here is a sectoral analysis of SMEs' decline.

Education Sector

2020: 56,321

2021: 49,749

2022: 39,876

Real Estate Sector

2020: 19,956

2021: 12,720

2022: 8,313

Agriculture Sector

2020: 39,109

2021: 36,431

2022: 36,348

Information and Communication Technology (ICT) Sector

2020: 33,842

2021: 28,816

2022: 23,101

Manufacturing Sector

2020: 27,723

2021: 20,736

2022: 17,450

Mining Sector

2020: 24,852

2021: 22,721

2022: 22,522

Wholesale and Retail Trade Sector

2020: 44,397

2021: 42,229

2022: 22,488

Reasons for SMEs decline

Although NBS did not clearly state the reasons many SMEs are closing shops, it is not difficult to understand why, given the economic challenges exacerbating Nigerians' purchasing power.

The Central Bank of Nigeria's tightening monetary policies, rising inflation, depreciating naira, and production costs have created a challenging environment for small and medium-sized enterprises (SMEs).

Muda Yusuf Muda, the CEO of the Centre for the Promotion of Private Enterprise (CPPE), recently raised concerns about the CBN interest rate.

His words: "My prayer was for the MPC to pause the rate hikes for a number of reasons. First, previous rate hikes have been quite aggressive, hurting output and real sector investments.

"Most economic operators with credit exposures to the banks have not recovered from previous hikes. Interest rates were already around 30% threshold."