In a transformative move aimed at bolstering Nigeria’s economic growth and empowering its entrepreneurial ecosystem, the Corporate Affairs Commission (CAC) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) have joined forces to launch an unprecedented nationwide initiative. This ambitious campaign seeks to provide free business registration for 250,000 nano, micro, and small enterprises (NMSEs) across the country, marking a significant step toward formalizing Nigeria’s vast informal sector. The announcement was made in Abuja during the signing of a Memorandum of Understanding (MoU) between the two agencies, signaling a shared commitment to fostering a more inclusive and structured business environment.
The initiative, unveiled on Friday, is not only a practical intervention but also a symbolic milestone, coinciding with the second anniversary of the appointments of CAC Registrar-General Hussaini Magaji and SMEDAN Director-General Charles Odii, both of whom assumed office in October 2023. The partnership underscores the federal government’s recognition of the pivotal role that small businesses play in driving economic development, creating jobs, and reducing poverty in Nigeria, Africa’s most populous nation.
A Bold Step Toward Formalization
For decades, the informal sector has been a defining feature of Nigeria’s economy. Estimates suggest that over 80% of businesses in Nigeria operate informally, a reality driven by a combination of high registration costs, bureaucratic red tape, and limited awareness of the benefits of formalization. This informality has far-reaching consequences, locking millions of entrepreneurs out of critical opportunities such as access to bank loans, government grants, export markets, and other forms of institutional support. Informal businesses also face challenges in scaling operations, attracting investment, or competing in structured markets, perpetuating a cycle of limited growth and economic vulnerability.
The CAC-SMEDAN initiative directly addresses these challenges by removing the financial and procedural barriers to formalization. Under the scheme, the cost of business registration—a significant hurdle for many small entrepreneurs—will be fully covered for the 250,000 selected enterprises. Additionally, beneficiaries will be seamlessly integrated into SMEDAN’s comprehensive Micro, Small, and Medium Enterprises (MSME) database, which serves as a gateway to a wide range of support services, including training, funding opportunities, and market linkages.
In a joint statement issued by the two agencies, the initiative was described as a “game-changer” for Nigeria’s MSME sector, which is widely regarded as the backbone of the economy. The statement highlighted the program’s alignment with the federal government’s broader economic diversification agenda, which seeks to reduce Nigeria’s reliance on oil revenues by fostering a vibrant and resilient private sector. By formalizing nano, micro, and small enterprises, the initiative aims to unlock their potential to contribute to job creation, innovation, and sustainable economic growth.
The Context: Nigeria’s MSME Landscape
To fully appreciate the significance of this initiative, it is essential to understand the scale and importance of Nigeria’s MSME sector. According to SMEDAN, Nigeria is home to approximately 40 million MSMEs, which collectively account for nearly 50% of the country’s Gross Domestic Product (GDP) and employ over 80% of the workforce. These enterprises span a diverse range of sectors, including agriculture, retail, manufacturing, technology, and services, and they operate in both urban and rural areas.
Despite their economic significance, the majority of these businesses remain unregistered and informal, operating outside the purview of regulatory frameworks. This informality often stems from practical constraints. For many entrepreneurs, particularly those running nano and micro enterprises, the cost of registering a business with the CAC can be prohibitive. Registration fees, coupled with additional expenses such as legal documentation and compliance costs, can consume a significant portion of their limited capital. Moreover, navigating the registration process can be daunting, especially for entrepreneurs with limited education or access to digital tools.
Beyond financial barriers, a lack of awareness about the benefits of formalization further perpetuates the informal economy. Many small business owners are unaware that formal registration can open doors to government incentives, such as tax breaks, grants, and subsidized loans. Formal businesses are also more likely to attract investment from banks and private investors, as they are perceived as less risky and more credible. Additionally, formalization enables businesses to participate in government procurement programs, access export markets, and establish partnerships with larger corporations.
The CAC-SMEDAN Partnership: A Strategic Collaboration
The collaboration between CAC and SMEDAN represents a strategic alignment of their respective mandates to create a more enabling environment for MSMEs. The Corporate Affairs Commission, established under the Companies and Allied Matters Act (CAMA) of 1990, is responsible for regulating the formation and management of companies in Nigeria. Over the years, the CAC has made strides in streamlining its processes, particularly through the introduction of digital platforms for business registration. However, challenges such as cost and accessibility have persisted, particularly for small-scale entrepreneurs in rural areas.
SMEDAN, on the other hand, was created to promote the development of MSMEs through capacity building, market access, and policy advocacy. The agency has a robust track record of supporting entrepreneurs through training programs, financial literacy initiatives, and market linkage programs. By combining CAC’s regulatory expertise with SMEDAN’s focus on MSME development, the partnership leverages the strengths of both agencies to deliver a holistic solution to the problem of informality.
The MoU signed in Abuja outlines the key components of the initiative. Under the agreement, CAC will waive registration fees for the 250,000 selected enterprises, ensuring that cost is no longer a barrier to formalization. SMEDAN, meanwhile, will take the lead in identifying eligible businesses, providing outreach and sensitization campaigns, and integrating beneficiaries into its MSME database. The database will serve as a critical tool for tracking the progress of registered businesses and connecting them to tailored support programs.
A Milestone for Leadership
The launch of this initiative also serves as a testament to the leadership of CAC Registrar-General Hussaini Magaji and SMEDAN Director-General Charles Odii, both of whom have prioritized MSME development since taking office in October 2023. Over the past two years, Magaji has overseen significant reforms at the CAC, including the digitization of registration processes and efforts to reduce bureaucratic delays. These reforms have already made it easier for businesses to register, but the free registration drive takes these efforts to a new level by targeting the most vulnerable segment of the entrepreneurial ecosystem—nano and micro enterprises.
Similarly, Odii’s tenure at SMEDAN has been marked by a renewed focus on grassroots entrepreneurship. Under his leadership, SMEDAN has expanded its outreach to rural and underserved communities, ensuring that small business owners in remote areas have access to training, funding, and market opportunities. The free registration initiative aligns with Odii’s vision of creating an inclusive economy where every entrepreneur, regardless of their location or resources, has the opportunity to thrive.
In their joint statement, Magaji and Odii emphasized that the initiative is a reflection of their shared commitment to empowering Nigerian entrepreneurs. “By removing the barriers to formalization, we are not only helping individual businesses grow but also strengthening the foundation of Nigeria’s economy,” the statement read. “This is a pivotal moment for MSMEs, and we are proud to lead this transformative effort.”
How the Initiative Will Work
The free registration drive is designed to be accessible, inclusive, and impactful. To ensure that the initiative reaches its target audience, CAC and SMEDAN have outlined a multi-pronged approach to implementation. First, the agencies will conduct extensive outreach campaigns to raise awareness about the program. These campaigns will leverage a variety of channels, including radio, television, social media, and community-based organizations, to reach entrepreneurs in both urban and rural areas.
Eligible businesses will be selected based on criteria established by SMEDAN, with a focus on nano, micro, and small enterprises that demonstrate potential for growth and job creation. Priority will be given to businesses in underserved sectors and regions, as well as those led by women, youth, and persons with disabilities. This emphasis on inclusivity reflects the government’s broader commitment to addressing inequality and promoting economic empowerment for marginalized groups.
Once selected, beneficiaries will undergo a streamlined registration process facilitated by CAC. The agency has committed to simplifying its procedures to ensure that entrepreneurs can complete the registration process with minimal hassle. For many small business owners, particularly those in rural areas, this may involve mobile registration units or partnerships with local government offices to bring services closer to communities.
After registration, businesses will be onboarded into SMEDAN’s MSME database, which will serve as a centralized platform for accessing support services. These services include training on business management, financial literacy, and digital skills, as well as linkages to financial institutions, government programs, and export markets. By integrating registration with access to support, the initiative ensures that formalization is not an end in itself but a stepping stone to long-term growth and sustainability.
The Broader Implications
The CAC-SMEDAN initiative has the potential to reshape Nigeria’s economic landscape in several ways. First, by formalizing 250,000 businesses, the program will significantly expand the tax base, enabling the government to generate additional revenue for public services. While formalization may initially raise concerns among entrepreneurs about tax obligations, the benefits of access to finance, markets, and government support are likely to outweigh these concerns in the long run.
Second, the initiative will contribute to job creation, a critical priority in a country where youth unemployment remains a pressing challenge. Formalized businesses are better positioned to scale their operations, hire additional staff, and contribute to economic growth. By targeting nano and micro enterprises, the program also ensures that job creation occurs at the grassroots level, where it is needed most.
Third, the initiative aligns with Nigeria’s broader economic diversification goals. As the government seeks to reduce its dependence on oil, MSMEs are seen as a key driver of growth in non-oil sectors such as agriculture, manufacturing, and technology. By formalizing these businesses and connecting them to markets, the initiative will help unlock their potential to drive innovation and competitiveness.
Finally, the program has the potential to serve as a model for other African countries grappling with similar challenges of informality. Nigeria’s experience could provide valuable lessons for policymakers across the continent, demonstrating how targeted interventions can transform the MSME sector and drive inclusive economic growth.
Challenges and Opportunities
While the initiative holds immense promise, it is not without challenges. One potential hurdle is the need to ensure that the program reaches entrepreneurs in remote and underserved areas. Nigeria’s vast geography and infrastructure challenges could make it difficult to deliver services to rural communities, where many nano and micro enterprises are based. To address this, CAC and SMEDAN will need to leverage partnerships with local governments, community organizations, and technology platforms to ensure accessibility.
Another challenge is the need to sustain the momentum beyond the initial registration phase. Formalization is only the first step; for businesses to thrive, they will need ongoing support in areas such as financial management, marketing, and access to capital. SMEDAN’s role in providing these services will be critical to the program’s long-term success.
Despite these challenges, the initiative presents a unique opportunity to transform Nigeria’s MSME sector. By removing barriers to formalization and providing a clear pathway to growth, the program has the potential to empower millions of entrepreneurs and create a more inclusive and dynamic economy.
Conclusion
The CAC-SMEDAN free business registration drive for 250,000 nano, micro, and small enterprises is a bold and visionary step toward addressing one of the most persistent challenges facing Nigeria’s economy: informality. By covering registration costs and integrating beneficiaries into SMEDAN’s MSME database, the initiative removes critical barriers to growth and opens the door to a wide range of opportunities for small business owners. As Nigeria celebrates the second anniversary of the leadership of Hussaini Magaji and Charles Odii, this program stands as a testament to their commitment to empowering entrepreneurs and building a stronger, more inclusive economy.
As the initiative rolls out across the country, its success will depend on effective implementation, robust outreach, and sustained support for beneficiaries. If executed well, this program could mark a turning point for Nigeria’s MSME sector, unlocking the potential of millions of entrepreneurs and paving the way for a more prosperous and equitable future.
