Dele Oye: New Industrial Policy Must Rescue Struggling SMEs
• Says sector needs action, not more policies to drive industrial growth; document alone won’t save businesses
•Urges CBN to impose interest rate caps on digital lending platforms, claims digital lenders charging over 300% annual interest, trapping borrowers in debt
James Emejo in Abuja
Chairman, Alliance for Economic Research and Ethics (AERE), Hon. Dele Oye, has warned that Nigeria’s ambitious Industrial Policy (NIP2025) may fail to achieve its desired objectives unless government shifts its focus from policy formulation to disciplined implementation.
In a statement yesterday, Oye commended the federal government’s renewed industrialisation drive, but said what Nigerian businesses urgently required was not another comprehensive policy document, but faithful execution of existing commitments capable of addressing the daily realities confronting millions of small businesses.
The industrial policy framework, the brainchild of Minister of State for Industry, Senator John Owan Enoh, was launched by President Bola Tinubu in February.
It offered a comprehensive framework that reaffirmed national resolve to diversify the economy, create inclusive prosperity, and secure Nigeria’s rightful place as a leading industrial hub in Africa and the wider global economy.
In the statement, Oye said although NIP2025 was well-designed, evidence-driven, and aligned with continental initiatives, such as the African Continental Free Trade Area (AfCFTA), its success will ultimately depend on whether it reached entrepreneurs struggling to keep their businesses afloat.
The advice came as Oye separately urged the Central Bank of Nigeria (CBN) to impose interest rate caps on digital lending platforms, warning that many Nigerians are being trapped in a vicious cycle of debt by loan applications charging annualised interest rates exceeding 300 per cent.
Oye said the country’s economic structure had evolved into one that disproportionately punished low-income households, forcing millions of Nigerians to pay significantly more than wealthier citizens for basic necessities, including food, healthcare, accommodation, and access to credit.
In a policy paper titled, “The Mathematics of Marginalisation: Decoding Nigeria’s Poverty Premium,” Oye described the situation as an economic distortion where poverty itself had become an additional financial burden rather than merely a social condition.
Nevertheless, on the NIP2025, Oye said, “Senator John Owan Enoh’s advocacy for the NIP2025 is commendable. The policy itself is comprehensive, evidence-based and aligned with continental frameworks such as the AfCFTA. But Nigerian SMEs do not need more policy documents. They need implementation fidelity.”
Oye stated that Micro, Small and Medium Enterprises (MSMEs), which accounted for over 46 per cent of the country’s Gross Domestic Product (GDP) and about 88 per cent of employment, remained the backbone of the economy, despite operating under extremely harsh conditions.
He stated that unless government bridged the gap between policy intentions and practical delivery, the country’s industrialisation targets would remain largely aspirational.
Among other things, NIP2025 seeks to raise manufacturing’s contribution to GDP to 15 per cent by 2030 and 25 per cent by 2035 through increased industrial financing, export diversification, technology development, industrial clusters, and job creation.
However, Oye stressed that the everyday experience of Nigerian entrepreneurs painted a completely different picture.
He pointed to alarming business mortality rates, saying research indicates that as many as 95 per cent of SMEs fail within their first five years, while about eight million businesses reportedly shut down between January 2023 and June 2024.
He described the situation as an existential threat not only to entrepreneurs but also to Nigeria’s long-term economic resilience.
According to him, persistent inflation, exchange rate volatility, high energy costs, and limited access to affordable finance have combined to push thousands of businesses to the brink.
Although government interventions had continued to promise single-digit loans, he observed that only a small proportion of SMEs could actually access formal credit, while lending rates from commercial banks remained far beyond what small businesses could sustain.
He said with CBN’s Monetary Policy Rate (MPR) currently at 26.5 per cent, commercial lending rates had climbed above 35 per cent, making productive investment almost impossible for many entrepreneurs.
Rather than investing in expansion, he said businesses were forced to channel available funds into paying rent, buying fuel, replacing inventory, and meeting other operating expenses simply to survive.
Oye also identified Nigeria’s electricity challenge as another major obstacle undermining industrial competitiveness, stating that businesses have continued to rely heavily on private power generators because of unreliable public power supply, with energy expenses consuming significant portions of operating revenues.
According to him, the structural bottlenecks have continued to weaken productivity despite successive government interventions.
Oye pointed out that Nigeria’s industrial challenge was no longer the absence of policies but the inability to implement them consistently and transparently.
Drawing from previous industrial programmes, Oye maintained that many interventions failed not because of poor policy design but because delivery mechanisms were weak, monitoring was inadequate, and promised incentives rarely reached intended beneficiaries.
He urged the federal government to treat the collapse of small businesses as a national economic emergency requiring immediate intervention.
Oye recommended emergency credit facilities at genuine single-digit interest rates, targeted energy support for productive enterprises, longer loan repayment periods aligned with business cash flows, and a moratorium on multiple taxation imposed by different tiers of government.
He also called for accelerated development of industrial clusters with guaranteed electricity, water supply, security and road infrastructure, stating that such facilities should be delivered with the same urgency accorded to major national infrastructure projects.
Beyond infrastructure, Oye emphasised the need for greater accountability in policy implementation, proposing that the National Industrial Development Monitoring System should publish quarterly reports showing how many businesses benefited from government programmes, the sectors covered, lending rates, locations, and jobs created.
According to him, transparent performance tracking would help restore confidence among businesses and ensure that implementation remains measurable.
He said the policy must deliver tangible relief to business owners battling rising production costs, shrinking consumer demand, and declining profitability.
Oye stated, “The lived reality is undeniable,” pointing to struggling bakery operators, transport businesses, and artisans whose survival has become increasingly uncertain under current economic conditions.
He maintained that the resilience of Nigerian entrepreneurs had kept the economy functioning despite years of structural challenges, adding that government now has a responsibility to match that resilience with effective policy execution.
According to him, NIP2025 has the potential to become the bridge between industrial ambition and economic reality, provided implementation is pursued with urgency, consistency and accountability.
He said, “The ambition is right. The execution must now match it.”
On the 300 per cent interest on digital loan apps, Oye urged CBN and other financial regulators to strengthen oversight of digital lenders, enforce consumer protection laws, and introduce interest rate ceilings to curb exploitative lending practices.
According to him, millions of financially excluded Nigerians who are unable to secure affordable bank loans due to lack of collateral, formal employment, or credit history have increasingly turned to digital loan applications, only to face exorbitant charges and punitive penalties.
He cited documented cases in which borrowers collected loans of N65,000 but were required to repay N93,000 within just seven days, while defaults attracted penalties that pushed total repayment obligations to as much as N158,000.
Oye said such practices had institutionalised the “poverty premium”, where those with the least resources ultimately bear the highest financial costs.
He expalined, “Perhaps, the most aggressive manifestation of the poverty premium occurs in the credit markets. The formal banking sector largely excludes low-income earners who lack collateral, formal salary slips or credit histories.
“Consequently, vulnerable populations turn to digital loan applications where interest rates frequently exceed 300 per cent annually.”
He maintained that the problem extended beyond access to credit, stating that poor Nigerians also pay more for food because they lack the purchasing power to buy in bulk.
According to him, while wealthier households purchase commodities in large quantities at lower unit prices, poorer families are compelled to buy food in small daily portions from roadside vendors, paying substantially higher prices over time.
He said, “The fundamental disadvantage of low income is the inability to access economies of scale.
“Poor households purchase micro-units daily, paying considerably more for exactly the same products than wealthier consumers who buy in bulk.”
Oye also blamed poverty for worsening health outcomes across the country, stating that many families postpone medical treatment because they cannot afford preventive healthcare, only to incur much higher costs when illnesses become severe.
He explained that relatively inexpensive medical conditions, such as malaria or typhoid, often developed into major financial crises because treatment was delayed, leaving households with hospital bills they could scarcely afford, while simultaneously losing income during prolonged illness.
Beyond healthcare, he pointed out that housing had become another major channel through which poverty deepened. He said many tenants now spent between 40 per cent and 50 per cent of their earnings on rent, while advance rent requirements of one or two years continued to place decent accommodation beyond the reach of millions.
Oye advocated a broad package of reforms, including tighter regulation of digital lenders, expansion of financial inclusion initiatives, affordable housing programmes, improved access to formal banking services, and stronger social protection targeted at vulnerable households.
He warned that unless structural reforms were implemented, poverty would continue to increase the cost of living for those least able to bear it.
In a separate paper titled, “The Unquestioned Pain: How Nigeria’s Lived Realities Are Becoming a Culture of Trauma and Why We Refuse to Accept It,” Oye linked widespread poverty to deteriorating social indicators, particularly child survival.
He said more than 115 out of every 1,000 Nigerian children died before reaching the age of five, stating that the country’s persistently high under-five mortality rate is closely associated with poor nutrition, inadequate healthcare, poor sanitation, and widespread deprivation.
According to him, poverty is creating an intergenerational crisis in which children raised in deprived households face higher risks of malnutrition, poor educational outcomes, and limited economic opportunities later in life.
He stated that about 133 million Nigerians were living in multidimensional poverty, insisting that the country’s development challenge is rooted more in systemic failures than individual shortcomings.
“Nigeria is not a poor country; it is a wealthy country with poor people,” Oye said.
He stated that despite abundant natural resources and a vibrant entrepreneurial population, weak economic structures had continued to perpetuate inequality and social exclusion.
He warned that unless policymakers addressed the underlying causes of poverty, rather than merely managing its consequences, millions of Nigerians would remain locked in a cycle of hardship that grew more expensive with each passing year.
