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SME Guide

Developing Skills and Talent: How Nigerian SMEs Can Close the Workforce Gap

Small and medium-sized enterprises (SMEs) are the backbone of Nigeria’s economy, accounting for over 90% of businesses and providing almost 50% of jobs. However, many SMEs face challenges in recruiting and retaining skilled talent, hampering productivity and growth. This article explores strategies Nigerian SMEs can adopt to develop skills, upskill employees, and close workforce gaps.

Understanding the Skills Gap Facing Nigerian SMEs

Nigeria has a youthful, rapidly growing population with abundant potential talent. However, education systems have not kept pace with changing workforce demands, resulting in skill mismatches between available workers and employer needs. Key skills gaps include:

Technical and digital skills

With growing technology integration, SMEs require workers skilled in areas like software development, data analytics, digital marketing, and social media management. However, Nigeria’s education curriculum has not evolved to build these capabilities. Most university graduates lack hands-on technical experience.

Soft Skills

Besides hard technical abilities, modern work requires soft skills like communication, critical thinking, creativity, and emotional intelligence. However, Nigeria’s school system focuses more on rote learning than building soft, transferable skills.

Industry-Specific Skills

Every sector has niche skill needs, from tailoring in fashion to welding in manufacturing. However, trade schools providing specialised vocational training are limited in Nigeria. SMEs struggle to find industry-ready talent.

Management and leadership skills

As SMEs scale, they need managers able to set strategic direction, optimise resources, lead teams, and oversee operations. However, few institutions offer robust business, HR, and leadership training tailored to SME needs.

Key Drivers of the Skills Gap

Several factors contribute to the skills shortages faced by Nigerian SMEs:

  • Outdated education system: it focuses on theoretical vs. practical learning and does not equip graduates with skills needed for modern jobs.
  • Limited vocational and technical training: not enough trade schools provide specialised skills training for key industries like manufacturing, construction, etc.
  • Workforce demographics: Over 60% of Nigeria’s population is under 25 years old. Many lack work experience.
  • Talent development is not prioritised. Many SMEs do not invest in training and upskilling due to limited budgets and a focus on short-term needs.
  • High employee turnover: poaching by larger firms makes retaining trained talent difficult for SMEs.

Strategies for Workforce Development

Nigerian SMEs can adopt several strategies to enhance workforce skills and close talent gaps impeding performance.

Partner with educational institutions

SMEs can partner with technical colleges, polytechnics, and universities to influence the curriculum to include more workplace-relevant training. Partnerships can also create apprenticeship and internship opportunities for students to gain on-the-job experience.

Offer Apprenticeships

Apprenticeship programmes allow aspiring workers to gain direct industry experience under the guidance of professionals. Apprenticeships develop technical abilities and help SMEs build a talent pipeline.

Provide internal training and upskilling.

SMEs can provide structured on-the-job and classroom training to sharpen employees’ existing skills and build new capabilities. Internal training is tailored to the company’s specific needs. Options include:

  • Onboarding programmes to integrate new hires
  • Technical skills training through workshops or e-learning.
  • Management development to build leadership capacity.
  • Cross-training to grow skills across different roles.
  • coaching and mentoring programmes to transfer knowledge from experienced staff.

Leverage external training providers.

External training providers, like the Harambe Entrepreneur Alliance and the FATE Foundation, offer courses tailored for SMEs. Programmes cover areas like financial management, digital literacy, marketing, and governance.

Offer competitive compensation and incentives.

SMEs losing staff to larger firms can provide financial and non-financial incentives to retain talent, such as:

  • Competitive pay is benchmarked against industry averages.
  • Performance bonuses to reward workers for hitting goals.
  • Profit sharing to give employees a stake in the company.
  • Training budgets and time off for skill development.
  • Transportation, healthcare, and food allowances.
  • Flexible work arrangements.

Cultivate a learning culture.

Beyond formal training, SMEs can create a culture of continuous learning-by-doing, where on-the-job experience, co-worker collaboration, and work rotations allow for informal skills development daily.

Leverage technology for training.

Digital platforms make training more accessible and affordable. Options include:

  • Virtual classrooms for remote instruction.
  • Microlearning apps that deliver bite-sized training via mobile
  • Learning management systems for e-learning and tracking development
  • Online simulations help build skills through realistic practice.

Develop management skills.

Strengthening leadership and management capabilities is crucial for SME growth. Recommended approaches include:

  • Management training programmes, either in-house or through external providers.
  • Executive coaching and mentoring to advise business leaders.
  • Job rotation to give high-potential staff experience in managing key functions
  • Customized MBAs offered by Lagos Business School and Enterprise Development Centre, Pan-Atlantic University, focused on building SME leadership skills.

Build talent pipelines through workforce planning.

SMEs should forecast workforce needs, identify talent gaps, and develop pipelines to meet future skill requirements. Strategies include:

  • Conduct skills audits to identify current staff capabilities and gaps.
  • Workforce analytics to predict skills needed based on business goals
  • Succession planning is used to develop replacements for key roles.
  • Talent pooling to build a database of qualified, pre-screened candidates.

Collaborate with other SMEs

Pooling limited training resources and knowledge with other SMEs can optimise skill development. Collaboration can include:

  • Joint training programmes where several SMEs share the costs of developing talent.
  • Industry skill councils that establish sector skill standards and training.
  • Peer-to-peer learning networks for SME leaders to exchange best practices.

Government Support for SME Skills Development

Government initiatives to aid SME workforce development include:

  • Technical and vocational education revamp: ongoing reforms to expand technical and vocational training through new infrastructure and curriculum
  • The National Skills Qualifications Framework is being developed to establish occupational standards, assessment, and certification.
  • Industry Partnership Programme: Links SMEs to technical colleges for apprenticeship training.
  • Fiscal incentives for skills development: tax deductions or credits for workforce training investments
  • The National Employability Project prioritises job readiness for youth through skills training and job matching.

Key Considerations for Effective Workforce Development

Some tips for SMEs to ensure training and development deliver maximum return on investment:

  • Align skills development with the overall business strategy and labour needs.
  • Focus on transferable skills with long-term relevance over short-term niches.
  • Blend both technical hard skills and soft skills like collaboration and communication.
  • Make training part of the workplace culture, not a one-off event.
  • Establish metrics and evaluate progress to refine approaches.
  • Motivate employees to learn through incentives and career development plans.
  • Develop leaders and managers as role models and coaches.
  • Share training costs and approaches with other SMEs where possible.


Closing Nigeria’s SME skills gap requires collective action by the government, educational institutions, and businesses. SMEs that prioritise a culture of continuous workforce development will build the talent needed to raise productivity, capabilities, and long-term competitiveness. Investing strategically in people will be a key success factor for SMEs aiming to drive growth and positively impact Nigeria’s economy.

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