Doing business in Nigeria comes with its own pros and cons. A lot of businesses started in Nigeria fail within the first three years. In the World Bank’s Ease of Doing Business Report (2017), Nigeria was ranked 145th. Yet it is still one of the leading business locations in Africa, and has even more potential for growth and expansion.
What are the entrepreneurs that succeed doing right? What challenges did they face before getting to their success? And what caused the businesses that failed to crumble?
- Access to capital funds.
Capital is the money required to run your business. Raising money sufficient to run their business activities is very tasking for most entrepreneurs. Some entrepreneurs are lucky though, they have money from inheritances and legacies; others have family and friends that are willing to fund them. But the ones that don’t have these have to source for these funds themselves.
The government tries to help by implementing financial support schemes specially targeted towards SMEs, and banks have business loans for entrepreneurs as well. But a lot of entrepreneurs are scared to apply for these loans because of high interest rates and loan requirements. So, most of the time, they would rather use their personal savings, loans from family and friends or government grants to get their required business capital.
- Electric Power Supply.
If you ask a Nigerian what they don’t like most about Nigeria, they’re likely to tell you it’s the electric power supply. Most areas in Nigeria, especially the residential areas only have access to about 6 hours of power supply every day. It’s no secret that generators are the main dependable source of electric power, while the national power supply is just an alternative. And this affects a lot of new businesses trying to start up because while raising capital, they have to factor in costs for fuel as well.
Successive governments have tried to solve the electricity problem but haven’t really been able to find a successful solution to it. The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has blamed the electric power supply problem on insufficient investments in the power sector.
Entrepreneurs and investors have to spend extra money to make up for amenities and infrastructure that should otherwise have been provided e.g. internet connectivity and water supply.
Although the crime rate has reduced significantly, it is still a cause for concern for people in some parts of the country. Hence, a lot of entrepreneurs are skeptical about starting and investing in new businesses, for fear that they could be defrauded or robbed.
- Government regulations.
In Nigeria, there are business regulations established by the government that all businesses must follow, to keep them in check. The law that guides businesses in Nigeria is known as the Companies & Allied Matters Act (CAMA).
Starting up a business could take as long as a month because it involves jumping through quite a number of regulatory hoops. Although the government is supportive of new SME businesses, the processes involved to start the business might not be so smooth.
While these are challenges that both new and old businesses face, the good news is that all of them can be surmounted with good planning and persistence.
All the best in your business!