A new report by the FATE Institute has revealed a striking contrast in Nigeria’s small business sector, showing that while 91 percent of entrepreneurs remain confident about their business prospects, the Micro, Small and Medium Enterprises (MSME) sector recorded a net job loss of about 2,300 jobs in one year.
The finding, contained in the 2025 State of Entrepreneurship in Nigeria Report, highlights the resilience of Nigerian entrepreneurs amid an increasingly difficult operating environment. The study, which surveyed 10,882 businesses across all 36 states and the Federal Capital Territory, tracked performance, job creation, and confidence levels among nano, micro, small and medium-sized enterprises.
According to the report, “Out of 10,882 firms surveyed, one in four hired new full-time staff and about one in five added part-time workers, mostly at the micro scale. In total, 14,269 jobs were created (9,083 full-time and 5,186 part-time), while 16,571 were lost, resulting in a net figure of about 2,300 jobs.”
The report noted that while many businesses continue to generate employment, high operating costs, weak demand, and limited access to finance have forced others to cut down their workforce. “This pattern shows a sector marked by resilience but also fragility. Most new hires were limited to one to three employees per business, suggesting that firms are adapting to survive rather than expanding significantly,” it said.
Despite the job losses, business optimism remains remarkably high. About 91 percent of entrepreneurs expressed confidence in their business prospects for the coming year, while more than half (54 percent) rated the overall business environment as “good” or “very good.” The report linked this optimism to early signs of macroeconomic stability, wider adoption of digital tools, and growing innovation among youth and female-led businesses.
“The optimism among entrepreneurs reflects a strong belief in their ability to adapt and recover despite the prevailing challenges,” the FATE Institute stated. It added that the steady growth in digital adoption and improved perception of business opportunities contributed to a marginal rise in the State of Entrepreneurship Index, which stood at 0.47 out of 1.0 in 2025, up from 0.46 the previous year.
The report pointed out that entrepreneurs have continued to rely on innovation, cost control, and community support to stay afloat. However, it warned that persistent challenges such as access to affordable finance, policy uncertainty, and weak infrastructure could limit growth and job creation if not addressed.
Access to credit was ranked as the top constraint for the fourth consecutive year, followed by limited market access, poor business support, and high energy costs. While power supply issues dropped in ranking, 51 percent of surveyed businesses said they still spend the most on electricity.
The FATE Institute emphasised that the data provides an important message for policymakers. “Nigeria’s entrepreneurs continue to show resilience in a high-cost environment, but the fragility of job creation underscores the need for targeted interventions,” the report said.
It recommended urgent government attention to improve access to finance, enhance infrastructure, and stabilise policies to sustain entrepreneurial confidence and translate it into sustainable job growth.
