By Monisade Ogunlana

Small and medium-sized enterprises (SMEs) are the backbone of economies worldwide, driving innovation, creating jobs, and contributing significantly to GDP. In Nigeria, SMEs account for nearly 50% of the country’s GDP and employ over 80% of the workforce. 

Yet, despite their importance, many SMEs struggle to survive, including those in Nigeria, due to challenges such as limited access to finance, poor infrastructure, and a tough business environment. By examining global markets, Nigeria can unlock the potential of its SMEs, particularly in terms of sustainability and growth.

The Global Perspective on SMEs and Sustainability

In developed and emerging markets, SMEs are increasingly seen as key players in achieving sustainable development. Countries like the United States, Germany, Sweden, and South Korea have integrated sustainability into their SME strategies, recognizing that long-term growth is tied to environmental and social responsibility. 

For instance, The US offer Programmes like the SBA’s Green Business Certification which provides resources and recognition for SMEs that prioritize sustainability.  Germany’s Mittelstand—a network of small and medium-sized businesses—has embraced green technologies and energy efficiency, not just as ethical choices but as competitive advantages. These businesses benefit from government-backed incentives, research institutions, and a culture that values innovation.

Similarly, South Korea supports SMEs through policies that encourage eco-friendly practices, offering grants, tax breaks, and technical assistance to reduce carbon footprints. This approach has improved environmental outcomes while enhancing the global competitiveness of Korean SMEs. In the European Union, initiatives like the Green Deal promote sustainable production methods, providing incentives for SMEs to adopt environmentally friendly operations.

Opportunities Nigeria Can Explore

Nigeria’s SME sector faces unique challenges, but global examples offer valuable insights. Access to finance remains a critical barrier. In developed economies, SMEs benefit from structured financing options, including government-backed loans and low-interest credit facilities. For example, the US Small Business Administration provides funding and mentorship, while the UK’s British Business Bank supports SMEs through loan guarantees and venture capital schemes.

Nigeria could adopt similar measures, leveraging its growing fintech sector to provide accessible and affordable funding for small businesses. Expanding microfinance initiatives and creating risk-sharing mechanisms between financial institutions and the government could also ease this burden.

Nigeria should further prioritize infrastructure development, particularly in renewable energy, to create an enabling environment for SMEs. With SMEs contributing about 50% to GDP, there is a key opportunity to leverage insights from global markets. Countries like Sweden and Germany show that strong infrastructure drives business growth, efficiency, and economic resilience.

Sustainability is often seen as a luxury in Nigeria, reserved for large corporations with ample resources. However, global trends show that SMEs can benefit from adopting sustainable practices. Businesses that use renewable energy or recycle materials often reduce costs in the long run. Nigeria’s government and private sector can collaborate to raise awareness about the economic benefits of sustainability and provide education and support to help SMEs implement these practices. Introducing incentives such as tax breaks for eco-friendly businesses could further encourage this shift.

Artificial Intelligence (AI) is another sphere which Nigerian SMEs can draw lessons from, In countries like the United States and China, SMEs are increasingly leveraging AI to improve efficiency, reduce costs, and enhance customer experiences. For instance, AI tools are utilized in most business operations including inventory management, customer service automation, and data-driven decision-making. In Nigeria, AI adoption among SMEs is still in its early stages, largely due to limited awareness, costs, and a lack of technical expertise. 

However, with the right support, AI could revolutionize the SME sector. The government and private sector can collaborate and continually support SMEs to integrate AI into their operations by providing affordable AI tools, training programs, and funding for SMEs to integrate AI into their operations. Additionally, partnerships with tech hubs and universities could help bridge the knowledge gap and foster innovation.

The Role of Policy, Collaboration, and Digital Transformation

Government policy plays a crucial role in shaping the SME landscape. In Nigeria, initiatives like the Bank of Industry’s SME loans and the Central Bank’s intervention funds exist, but more can be done to align these efforts with global best practices. Policies could focus more on creating a supportive ecosystem that includes education, sponsorship, access to finance, infrastructure development, and capacity building. Simplifying business registration processes and implementing SME-friendly tax policies, as seen in Singapore, could encourage more business formation and formalization.

Collaboration is equally important. In Germany, SMEs benefit from strong partnerships with research institutions and larger corporations, fostering innovation and providing resources to scale. Nigeria’s SME sector could benefit from similar partnerships, particularly in sectors like agriculture, manufacturing, and technology. Strengthening SME associations and creating digital networking platforms could also bridge gaps in knowledge sharing and innovation.

Additionally, digital transformation is another focal point where Nigeria could gain insights from global markets. For instance, in China, the integration of e-commerce and digital payments has accelerated the expansion of small businesses, with platforms like Alibaba connecting businesses to global markets seam. In Nigeria, digital adoption is progressing, but many SMEs still operate offline due to limited access to digital tools burdened by inconsistent and increasingly costly internet connectivity, which strains Nigerian SMEs financially. Encouraging digital adoption through training and incentives could improve market reach and efficiency.

The Path Forward

The potential of Nigeria’s SME sector is similar to the United States. With a young, entrepreneurial population and a growing consumer market, the country has the ingredients for economic transformation. However, unlocking this potential requires a shift in mindset and approach. Playing for longevity should not be seen as an added cost but as a driver of growth and resilience.

Global markets have shown that SMEs can thrive when given the right support and incentives. Nigeria must learn from these examples, adapting them to its unique context. By investing in infrastructure, promoting sustainable practices, fostering collaboration, embracing digital transformation, and integrating AI, the country can create a vibrant SME sector that drives economic growth and improves livelihoods.

The journey will not be easy, but the rewards will be worth the effort. As Nigeria looks to the future, its SMEs can become a model for other developing nations, just as it has in sectors like entertainment, fintech, and telecommunications, proving that sustainability and growth are mutually reinforcing.

Monisade Ogunlana is a seasoned Marketer, CEO and Co-Founder of Mode Media Ltd, a strategic agency she established to help Small and Medium Enterprises recover and thrive in the post-pandemic economy. An MBA graduate from Rice University’s Jones Graduate School of Business, where she was honored as a Forte Fellow, Ogunlana combines academic excellence with proven business acumen.

Her impact on Africa’s digital landscape was first demonstrated at Red for Africa, where in her role as Senior Associate she pioneered the firm’s digital division and achieved a N60M billing target while managing accounts for global brands including Suzuki Motors, Zenith Bank and Pladis Global. Her expertise spans international markets, having led projects across the Americas in sectors ranging from Energy to Real Estate.

A certified member of the Chartered Institute of Marketing (UK), Ogunlana’s leadership at Mode Media Ltd exemplifies her commitment to transforming businesses through strategic digital solutions. Together with her business partner, she continues to shape the future of digital marketing in Africa, combining technical expertise with visionary leadership to help businesses thrive in an increasingly digital marketplace.