FROM FRAGMENTATION TO INNOVATION ECOSYSTEMS: CASE FOR DESIGNING A NATIONAL MSME INNOVATION SYSTEM FOR SUSTAINABLE ECONOMIC TRANSFORMATION IN NIGERIA

Micro, Small and Medium Enterprises (MSMEs) constitute the backbone of Nigeria’s economy, accounting for over 90% of businesses, approximately 84% of employment, and nearly half of the nation's Gross Domestic Product (GDP) (SMEDAN & NBS, 2021). Despite their significant contribution, Nigerian MSMEs continue to face persistent innovation-related challenges, including limited access to finance, weak technological capabilities, inadequate research-industry linkages, poor digital infrastructure, fragmented support institutions, and policy inconsistencies. These challenges have constrained productivity growth, competitiveness, and the ability of MSMEs to participate effectively in regional and global value chains. Recent studies emphasize that innovation has become a critical determinant of enterprise resilience, sustainability, and competitiveness in developing economies, particularly in the post-COVID-19 era characterized by accelerated digital transformation and technological disruption (Audretsch et al., 2022; Kraus et al., 2022; Ratten, 2023). Drawing on National Innovation Systems (NIS) theory, Triple Helix theory, and innovation ecosystem perspectives, this conceptual study argues for the establishment of a National MSME Innovation System (NMSIS) for Nigeria. Through a structured review of contemporary literature, policy documents, institutional reports, and empirical evidence from Nigeria and comparable emerging economies, the study identifies critical systemic gaps affecting MSME innovation performance. The paper proposes an integrated framework that connects government agencies, research institutions, universities, financial institutions, technology hubs, private-sector actors, and development partners within a coordinated innovation ecosystem. The study argues that a properly designed NMSIS would strengthen knowledge diffusion, improve technology adoption, facilitate access to innovation finance, enhance entrepreneurial capabilities, and support the commercialization of research outputs. Such a system would position Nigerian MSMEs to exploit opportunities arising from the African Continental Free Trade Area (AfCFTA) while contributing to national industrialization, employment generation, and sustainable economic development. The paper concludes with policy recommendations and a research agenda for the operationalization and empirical validation of the proposed framework.