The Divisional Head, Large Enterprises, Bank of Industry, Mr. Joseph Babatunde, has said that more than 17 million small businesses in Nigeria are in the informal sector and not registered with the Corporate Affairs Commission. He added that the number constitutes 99.87 per cent of all small businesses in the country. Babatunde said this while presenting a paper during the 16th annual lecture of the Catholic Brothers United in Lagos recently.
Drawing from the 2012 data of Micro, Small and Medium Enterprises published by the National Bureau of Statistics, he said, “The number of MSMEs in the country, according to NBS, is 17,286,671. “Out of this number, there are approximately 17,261,753 or 99.87 per cent micro-enterprises, 21,264 or 0.12 per cent small enterprises, while approximately 1, 654 or 0.01 per cent are medium enterprises, “Micro enterprises form majority of the enterprises in the country, but they are all in the informal sector. “This could be a reflection of the possibility that certain economic conditions may have either forced small enterprises to go informal or that more unemployed persons are engaged in informal activities.”
While explaining the legal framework for the SME sector in a recent MSME forum, the State Coordinator, Small and Medium Enterprise Development Agency of Nigeria, Yinka Fisher, explained that businesses not registered with the CAC have no legal framework and therefore, lack protection under the law. He said, “Most MSMEs operate in the informal sector and are outside the official framework of regulation and support.”
“The reason why people can go to the market and buy things and not be able to sue the owners of the products when things go wrong is because most of the companies are not registered and so are not bound by the laws of the land. “But once an institution has been formally registered, you have power to sue and be sued. This will create a right for both customer and the business owner.”
The Chairman, Nigerian Association of Small and Medium Enterprises, Lagos Chapter, Ladi Jemi-Alade, told our correspondent that most MSMEs remained in the informal sector because their operators were trying to avoid payment of taxes. Jemi-Alade added that multiple taxation in the Nigerian business environment contributed to the large volume of unregistered businesses in the country. He said, “Taxation is one of the key challenges facing the sector.
“If you want to start a business now, by the time you go through all the processes, you will discover that you have spent almost all the capital you want to invest in the business on various taxes. “In Nigeria you have various forms of taxation. When you are going on the road, you are being stopped by the police and made to pay tax. “That is why over 17 million small businesses in the country are in the informal sector.