Given the harsh economic situation in the country, exacerbated by inflation, unemployment and lack of infrastructure, and erratic power supply, among others micro, small and medium enterprises are closing shop, further worsening the economic fortunes of low income Nigerians
By Dafe Favour
In the vibrant, yet struggling communities in Lagos State and other states of the federation, small and micro businesses, particularly provision stores, restaurants and bars are fighting a losing battle against a barrage of economic and infrastructure challenges.
From skyrocketing costs exacerbated by inflation and erratic power supply to fierce competition from larger retailers, these enterprises, once the backbones of local commerce, are teetering on the edge of collapse. The stories of local shopkeepers paint a stark picture of resilience tested by forces beyond their control, threatening livelihoods in this bustling corner of Lagos.
For instance, in Ije-Ododo, Ijegun, Igando and Ikotun communities, over 50 percent of provision stores that used to sell essential items like rice, soaps and beverages and even frozen food like fish, chicken and turkey have closed shop in the last couple of years.
Specifically, a shop owner in Ije-Ododo, Mrs. Funke Adebayo, a 42-year-old mother of three who ran a small shop on a dusty street was once a reliable source of income, but today, she struggles to keep it afloat.
In a voice heavy with frustration, she said, “A bag of rice that used to cost less than N25,000 a couple of years ago now goes for between N80,000 and N100,000. My customers, who are mostly daily wage earners, can’t afford to buy as much and I can’t afford to stock up. I barely make enough to pay the rent.”
Her plight reflects a broader trend identified in a 2025 report by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), which notes that over 40 percent of small businesses fail due to falling demand, compounded by inflation that has eroded purchasing power in most communities like Ije-Ododo and Ijegun.
Competition from modern supermarkets and shopping centres in parts of Lagos further squeezes these small enterprises. Larger retailers, with their ability to buy in bulk and offer lower prices, are drawing customers away from most provision stores.
Reacting to the trend, another shop owner, Mr. Chidiebere Okeke who had to close his provision and medicine store due to shrinking margin, lamented, “There’s a big supermarket close by. They sell provisions, oil, detergent and other essential items cheaper than I do. My customers now only buy small sachets from me, but it’s not enough to keep the business going.”
Also, Theresa Anthony lamented that she had to close her restaurant because customers no longer patronize her as they used to do, adding that even the few constant one used to owe her, which made her divert to selling cement, but even that has to stop as there are several cement sellers in the neighbourhood competing for fewer customers.
A recent study on the impact of proliferation of shopping centres in Lagos, revealed that informal traders, like those in Ije-Ododo and Ijegun, struggle daily to compete with well-stocked, air-conditioned stores that offer convenience, variety and sometimes lower prices. This shift has left local shopkeepers grappling with dwindling customer base and shrinking revenues.
Another major challenge remains access to finance. Adebayo, Okeke and Theresa told Tentacle that they tried at different times to secure loans to bolster their businesses, but high interest rates and stringent collateral requirements of microfinance banks make borrowing nearly impossible.
“I approached a microfinance bank last year, but they asked for property documents I don’t have and the interest was too high. How can I grow or even restock? Mrs. Adebayo asked.
The International Finance Corporation (IFC) had estimated that micro and small enterprises face an annual financing gap of $5.2 trillion globally, a reality that stifles the growth of small businesses in Ije=Ododo and Ijegun and by extension, Nigeria. Without affordable credit, many shopkeepers are trapped in a cycle of survival rather than expansion.
Local government levies and unofficial demands exacerbate the strain. Mr. Okeke describes frequent visits from officials seeking payments for sanitation, signboards, or vague “market fees.” “If you don’t pay, they lock your shop or take your goods,” he says. “It’s like they want us to fail.” A 2025 SMEDAN report highlights such levies as a major compliance burden for small businesses, draining resources that could be used to restock or improve operations. In Ijeododo and Ijegun, where many traders operate on razor-thin margins, these costs can be the difference between staying open and shutting down.
Despite the challenges, some entrepreneurs are finding ways to adapt to the situation. Mrs. Adebayo has turned to social media, joining a WhatsApp group for Ije-Ododo residents to advertise her products and offer home deliveries. “It’s not much, but it brings in a few extra sales,” she says, showing her phone with a list of customer orders.
A spare parts dealer, Godwin Okpor, who stated that he veered into importation of motor spare parts when he resigned from a well-paid job in 2020, said the business was good when he started in Ladipo before relocating to Iwaya area in Yaba, but lamented that high Naira to Dollar exchange rate has ‘spoilt’ business.
“When I started, I used to spend about N2 million to clear a 40FT container of spare parts, but now, N20 million can’t deliver that kind of container. The incumbent government just destroyed what was left by the immediate past administration. Things are just so bad. I’m thinking of doing my sales and delivery online to save cost and remain in business at least,” he said.
Doing business online makes a lot of sense. With 31.6 million social media users in Nigeria as of 2023, such platforms now offer a low-cost way to reach customers, but they are no panacea. Meanwhile, Okeke is considering diversifying into selling phone accessories, hoping to attract younger customers. Yet, all small business owners admit that these are just stopgap measures in the face of systemic challenges.
The SMEDAN report paints a grim picture, noting that over 95 percent of small and micro enterprises in Nigeria fail within the first five years. In Ije-Ododo and Ijegun, this statistic looms larger with empty storefronts and locked kiosks daily becoming a common sight.
Without targeted interventions-such as affordable loans, reliable electricity and policies to shield small traders from unfair competition-the future of small and medium businesses remains precarious. Local entrepreneurs are calling for action.
“We need help from the government. Lower taxes, better power and loans we can actually pay back would make a difference,” Okeke said
For now, the shopkeepers keep pressing on with sheer determination and resilience. As Mrs. Adebayo puts it, “This shop is my family’s hope. I can’t give up, no matter how hard it gets.” But hope alone may not be enough to save these vital community lifelines from unforgiving economic challenges.
