Business

Why 51% of MSMEs in Nigeria are located in the South-West region – Report

A report by Nigerian fintech startup, Kippa has revealed that 51% of Medium and Small Business Enterprises (MSMEs) are located in the South West region of the country. By extension, the report shows that the majority of small businesses in Nigeria are in the Southern part of the country, while there is a fewer number in the North.

This, the report attributed to a number of factors, which include the fact that businesses in the South have more access to technology to manage their business. It also identifies insecurity as a major setback for businesses in the North.

According to the report, the other two southern regions, South-South and South East accounted 11.5% and 8.7% of the MSMEs in Nigeria respectively. In the Northern region, North Central accounted for 15.4%, North West 10.6%, and North East 5.6% of the MSMEs.

What they are saying

  • Kippa in the report said: “From the 23,618 MSMEs surveyed across the 36 states of the country, majority of Nigeria’s MSMEs are in the south, with Lagos, Oyo, and Ogun accounting for a significant portion of the total. Based on merchant activity on Kippa, the city of Lagos alone is home to 19% of all MSMEs in the country. As a result of Lagos’ population, urbanization, and some cultural variations at play, more economic activities are taking place in the state. Both men and women, as well as white-collar professionals, are in the business of selling something, generally referred to as a “side hustle.”
  • Highlighting possible reasons for the skewed distribution of the MSMEs in favour of the South, Kippa said: “One reason for this may be because the south is more urbanized, and has more internet connectivity, and smartphone usage than the north. The North also has a lesser rate of technological adoption and research reports has suggested this can be attributed to the insecurity, banditry, terrorism, and kidnapping in the region, that destabilised residents and their businesses.”

It, however, noted that besides the economic advantages that favour the adoption of digital technology by MSMEs in states like Lagos, FCT, Abia, Oyo Ogun, Rivers, and Delta, digital commerce is also increasing in states like Kaduna, Edo, Kano, Anambra, Akwa Ibom, and Enugu.

Kippa said this could also be linked to improved internet connectivity and more affordable smartphone access.

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