Out of these great number, over 40% are literate and ambitious, making it one of the great places to set up a business. So many entrepreneurs and investors are setting up their businesses in the major Nigerian cities.
Looking at the Nigerian economy, you'd notice that it's a country blessed with so many great resources like petroleum, tin, natural gas, iron ore, zinc, niobium, lead, limestone, coal and arable land.
What Are The Challenges Of Managing Business In Nigeria?
But how true is that? I would have said 100% true if not for some challenges that pose as challenges to businesses in Nigeria.
Ride with me while we explore some of the challenges that Nigerian entrepreneurs face and their solutions:
• Poor power supply
This is one of the major problems faced by Nigerian businesses. For example, one of my friends told me about his intentions of setting up a business in Orlu, Imo State. After sharing the business idea with me, everything sounded great and profitable until I raised the issue of electricity.Where I reside in Owerri is one of the best part of Nigeria...lol. Don't mind me, I was actually talking in terms of electricity, we get almost 18 hours of light everyday and it's close to perfect.
But in Orlu where my parents live, the opposite is the case. Sometimes, they only bring light during month ends, probably when they want to scout for electricity bills.
Considering the two locations I listed above, you'd see that investors would prefer setting up their businesses in Owerri, especially when the business requires steady power supply.
Before you launch that your dream business, try getting an alternative and less expensive power supply. The most common alternative is the solar electricity. Depending on how you acquire it, you might not be required to pay a monthly subscription bill.
• Insecurity
They say that no one, whether poor or rich is safe in Nigeria. The bigger your business gets, the more exposed you become to dangers and threats.Regularly we hear news of kidnappings, robbery attacks, domestic terrorism, communal clashes and more.
One negative effect of these on the society is that business owners will have to spend more on security measures, thereby leading to an increase in the cost of running their businesses.
• Government Policies
Inasmuch as government policies are made for sustaining the nation's economy, they can also pose as challenges to start-ups.For example, tax increase discourages investment, especially among entrepreneurs, who take the risks of starting and managing businesses.
For example, in November, 2019 the Lagos State Government imposed a new regulation, including licensing fees, requiring all bike-hailing startups to pay a monthly fee for operating.
The fees included an annual licensing fee of $70,000 per 1,000 bikes and then $83 per bike after the first set of 1,000. One shocking thing was that these fees will be in addition to the regular annual taxes that is being paid on revenues by these start-ups.
Taking a look at this, you will see that other bike-hailing startups might think twice before investing in another Nigerian state.
• Access to funds
This is also another major challenge that Nigerian start-ups encounter. To get your business funded by a financial body, there are certain criteria you need to fulfil which might not be too easy, especially as a beginner.There are still several ways of funding your business in Nigeria that you should explore. Some of them include grants, loans, business angels and kill trading. To find out more, please see these 7 easiest ways to raise capital for your business as a startup.
• Lack of adequate infrastructure
Lack of adequate facilities like steady water supply, good road, internet access and more can also directly affect businesses in Nigeria.
For example, an aluminium company can't properly function when the road connecting to it is bad. It can even lead to the company trucks developing faults.
• Corruption
Corruption is also another major problem that businesses face in Nigeria. There are various forms of corruption that you can notice including government awarding contracts to companies based on what they stand to gain rather than on merit and bribery.Also, a lot of companies engage in various corrupt practices to increase their profits to the detriment of other honest business owners.
• Corruption among employees
This is similar to what I explained above but in a different dimension. A number of companies have folded due to corrupt practices among their employees.These practices can include selling off the company's assets, purchasing fake raw materials and many more. In fact, a company that gets good and considerate employees will really go very far.
What do you think? What did we miss? Don't forget to drop us a comment and share with your friends. Also check out our next post on the 10 factors affecting entrepreneurship development in Nigeria.
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