5 Greatest Business Challenges in Nigeria
What are the main challenges facing businesses in Nigeria today? Among the committee of nations, Nigeria undoubtedly has abundant human and natural resources which are under-utilized or untapped at all.This phenomenon has directly or indirectly affected many sectors including the art of doing business in the country. In 2016, a report from World Bank shows that Nigeria ranked 169th out of 189 countries in the World Bank’s Ease of Doing Business.
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Though this is a slight improvement compared to the 2015 ranking when the country was ranked 170th. That improvement may be as a result of more business start-ups and protection enjoyed by the minority investors.
Challenges of starting a business in Nigeria
Sincerely, many business owners have successfully earned above-the-average profits but there are abundant challenges that are impeding the survival as well as high- profit margin of various businesses in Nigeria when compared to international companies. Those challenges facing Nigerian businesses have been discussed below.
What are the major challenges of small and medium scale family, hotel, financing, insurance, online, retail, poultry, fish, pig, pure water, recharge card, agriculture, e business in Nigeria?
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One of the challenges facing any business start up and running is power infrastructure.With its huge population of 170 million,Nigeria up till now produces national electricity less than 5,000 megawatts while South Africa with 47 million people produces about 49,000 megawatts.That ultimately translates to dependence on fuel (petrol and or diesel) to power generators which thereby increases the cost of doing business.
The second challenge is government bureaucracy that has affected doing business in Nigeria. One of the obvious results of that is difficulties in obtaining permits and licenses. According to Obi and Chukwuemeka (2006:112) in a research stated that strict adherence to the bureaucratic rule by the civil service usually leads to poor and belated policy making and its implementation. Haven’t you aware of how “official corruption and red tapism have crippled the starting and smooth running of businesses in the country? Yes they do!
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Not very far from that is another government -induced -challenges of multiple taxation or levies as a major fiscal policy. This policy either advertently formulated or not has sent many businesses to their earlier graves .How, you may ask? ¬Hear this: the Nigerian government in some occasions raised revenue and thus forced many firms to pay multiple levies or taxations. The report by the Manufacturers Association of Nigeria(MAN) and Centers for International Private Enterprises (CIPE ) shows that multiples taxation is a great challenge private sectors business faces in Nigeria (Anyavu,2012). With that policy, the cost of doing business in Nigeria increases and thus leads to divestment, loss of manpower to both government and the businesses, winding up of businesses among others.
Funding is another major challenge that business faces in Nigeria. Many entrepreneurs and small business find it difficult to expand their business as a result of lack of fund. Can’t they borrow from banks, you may ask? Yes it is possible, but the banks is not meant for some kinds of businesses. Wale Tinubu stated in one economic summit in Nigeria that” any small business here must know that banks are not designed to fund startups. What is required is more private equity...” Apart from that, sourcing for fund requires well-detailed business plan that can attract lenders and many business owners lack skills to prepare excellent business plan!
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Poor management from individual or team doing business in Nigeria is another challenge confronting business in Nigeria. Many business-owners find it difficult to inject the services of individuals with skills and competence who can manage their business well even if the owner can’t do it himself/herself. This is a deadly disease to any business as no problem or issue will be attended to adequately. Some managers also worsen the matter as they failed in making thier subordinates to be problem-solvers and proactive.
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Think about the above-mentioned challenges. Are they not really restraining or murdering doing business in Nigeria? Definitely yes. Dr Herbert Ajayi, the president of Nigeria Association of Chambers of commerce, Industry Mines and Agriculture lamented that between 2009 and 2011, no fewer than 800 companies wound up in Nigeria due to harsh conditions faced.
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The figure is never an overstatement as the Vice Chairman, Toiletries and Cosmetics (T&C) Group of Manufacturers Association of Nigeria Mr. Ikpong Umoh, corroborated it that the hardship facing operators of Small and Medium Enterprises (SMEs) alone has ,made 130 manufacturing firms folded up in few years. Sincerely, many businesses you knew then, and probably yours too have been swept off by those challenges!
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