11 March 2014

Nigeria: 34 Million Enterprises Employ 39 Million People - Survey

Nigeria's estimated 34 million household enterprises employ 49 million people, meaning that, on average, an enterprise engages 1.4 people, a survey by the National Bureau of Statistics (NBS) has found. Nearly eight enterprises among 10 have only one person engaged in the activity, and less than 3 per cent of enterprises have five staff or more. Enterprises operating around or inside the home comprise more than half of household enterprises in the country, and these are mostly providing work to household members (as opposed to generating wage/salary employment).

According to the nationwide survey, the 34 million household enterprises are associated with a low level of capital stock defined by an average capital stock of N137,000 (US $915). However, more than 50 per cent of the enterprises work with capital that is less than N13,000 ($87). The survey reports that many of the enterprises are micro production units created for survival while a few are small businesses with growth potential.

It is not surprising that these very small enterprises are not associated with large incomes. According to NBS, a household enterprise on the average creates an annual value added of N1.42 million and a net annual income of N1.35 million. The median net income is estimated to be N92,000, demonstrating the low level of income earned by the majority of the enterprises.

By sector, three activities -- services, construction and trade -- offer higher incomes than those earned by household businesses in the manufacturing and mining sectors.

"As a reflection of their limited capital, few of these businesses seek or have credit," the report stated, adding that during the 12 months preceding the survey, only 9 per cent of the enterprises had asked for credit, and most of these used informal means (friends and relatives) rather than formal channels such as banks or microfinance institutions.

This finding corroborates more recent NBS data showing that only 38 per cent of Nigerians own bank accounts. The new survey defined a formal bank account to include both a commercial bank account (34 per cent of households) and other financial institutions such as microfinance institutions (MFIs), cooperatives and savings associations.

Another link between the enterprise and the bank account ownership surveys is that bank account ownership is strongly related to poverty with the wealthiest 20 per cent of households being at least eight times more likely to have a bank account than the poorest household. This helps to explain the high incidence of poverty in the country.

Poverty incidence increased from 54.4 per cent in 2004 to 69 per cent in 2012 (relative poverty measure), indicating that 112,518,507 Nigerians are in poverty.

The NBS collected the data reported here as part of its Living Standards Measurement Study - Integrated Surveys on Agriculture (LSMS-ISA) project.

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