Almost every commercial endeavor of note began as a small business in some form. By definition alone there are always significantly more small companies in any country than there are large ones. This means there are more people working in a small business than they are in large corporations. In the United States of America (USA), small businesses created 64% of new jobs between 1993 and 2011. From data collected by the Organization for Economic Co-operation and Development (OECD) nations, small businesses account for 60–70% of jobs created every year. In countries considered “emerging markets”, 7 out of 10 new jobs are created by small businesses. The employment creation potentials of small businesses in Sub-Saharan Africa have also been acknowledged. In Kenya, Zambia, Ivory Coast, South Africa, and Cameroon, small businesses account for 38%, 37%, 33%, 21% and 19% of the new jobs created, respectively. In Nigeria small businesses have provided over 3 million recorded jobs in the last few years.
Small businesses are the bedrock of a healthy economy. The combination of an effective and fair regulatory regime, skilled and employable labour, robust markets for goods and services broad enough to create a spectrum of interests and influences, and entrepreneurial knowledge and learning, will create macro-economic value. In Nigeria 48.5 percent of the gross domestic product, GDP, as well as about 7.27 percent of goods and services exported out of the country are from what are termed Micro, Small or Medium Scale Enterprises. The Ministry of Industry, Trade and Investment estimates there are 37.07 million of these MSMEs in Nigeria today.
That, however, is only the good news. According to a report from 2020, studies conducted at the United Nations Industrial Development Organisation’s Investment and Technology Promotion Office state that 80% of all small businesses fail. The top reason: cash flow problems arising from poor financial management practices. The access to capital as well as lack of financial literacy is a recognizable problem in this ecosystem, but it is not the only one. The cost of doing business in itself remains high due to infrastructural deficits, multiple taxation regimes (federal, state and local government taxes, permits, and levies), skill deficits, knowledge deficits, market saturation, low spending power of consumers, and a host of other problems.
Yet, the number one trait ever entrepreneur needs is resilience. Most small businesses fail, and a good entrepreneur will learn from mistakes. Learning is as important as knowledge. It is of course important, from a governance standpoint, to reduce how resilient a business or businessperson has to be. Government policy must match the dynamism and innovation that is at the core of growth, both for companies and for nations. A small business is the first unit of the economy. They are the readiest indicator of a healthy jobs market, skills market, and market as a whole. The recently launched National Development Plan (2021-2025) seeks to address the infrastructural deficit as well as the capacity deficit in allowing growth in the economy as a whole, but this has special resonance with small businesses. The knowing and learning and resilience will only go so far without an economy that allows the unit thrive and grow and become more vital to the whole.