Small and Medium-scale Enterprises (SMEs) are an integral part of developing economies, contributing to the increase in employment and growth. According to the Nigeria Bureau of Statistics, SMEs in Nigeria have contributed about 48% of the national GDP in the last five years.
Cottage businesses are some of the major contributors from the small-scale business category. This article highlights some of the key areas in which the cottage industry contributes to the development of Nigeria.
According to Investopedia, “A cottage industry is a small-scale, decentralized manufacturing business often operated out of a home rather than a purpose-built facility.”
By nature, cottage businesses are small and usually run by families or communities in rural settings. They are ideal for developing countries where capital is difficult to access.
Your furniture maker down the street is a Cottage Practitioner. The caterer who supplies your food at your event is also a part of the large community of the Cottage Industry.
Businesses of this nature require little capital and are labor-intensive which characterizes most developing economies like Nigeria. The demand for labor creates job opportunities for many individuals.
However, the cottage industry does face some setbacks. First, the chance of scaling upward is low due to the lack of capital. Also, this industry faces stiff competition with other firms both big and small.
The growth of the cottage industries and other SMEs has been significant in Nigeria over the last decade. In Nigeria SMEs account for 96% of businesses and 84% of employment. This is why the government has created policies and schemes to promote SMEs to curb the unemployment crisis in the country.
One of such schemes is the compulsory Skill Acquisition and Entrepreneurship Development (SAED) incorporated into the National Youth Service Corps (NYSC) which mandates young Nigeria to learn meaningful skills.
However, there is still much to be done in promoting the cottage industry in Nigeria. The growth of the cottage industries will significantly curb the unemployment of Nigeria and increase economic growth through the consumption of locally made products.
Also, the cottage industry played a key in the industrialization of the West. The same can be said of the lying manufacturing sector in Nigeria.
In a nutshell, there is so much the cottage industry can bring to the table by the way of development and growth of the Nigerian economy. The private and public sectors must collaborate to ensure that the cottage industry is attractive to the teeming youth population.