This piece of informative writing will interest individuals or groups interested in starting a business in Nigeria. This is because the article is focused on the Major Challenges of Doing Business in Nigeria. Nigeria is undoubtedly a commercial giant and a business hub of Africa. However, there are several challenges that frustrate the effort of doing business in Nigeria, some of which will be unveiled soon. Doing business in Nigeria can be interesting but the challenges are way too overwhelming. Read through the article from beginning to ending to learn about the major challenges faced in Nigeria when doing business.
Major Challenges of Doing Business in Nigeria
In 2019, out of 190 countries, Nigeria ranked 131 in the World Bank’s Ease of Doing Business Report. Although it is a good sign from 2016 when it ranked 169th, nonetheless, we still think majority of the challenges is yet to be over.
Although starting up a business comes with its own share of challenges, there are some problems and challenges that are peculiar to all businesses in Nigeria.
- Access to capital & credit
- Electricity / Power Supply
- Government regulations and Policies
- Corruption & Bribery
- Market developments
- Lack of adequate infrastructure
#1. Access to Capital & Credit
As we begin our discourse, the first Major Challenges of Doing Business in Nigeria is lack of access to capital and credit. Capital is one of the most fundamental elements of starting a business and it is not easy to raise capital except if you have the means already. Despite the various financial programs targeted to help and support entrepreneurs to achieve their dream of owning a business, it still remains a difficult task to access these funds. That’s why entrepreneurs struggle to establish their business or look for alternative means to source capital.
#2. Electricity / Power Supply
The poor or inadequate electrical power supply is undoubtedly one of the Major Challenges of Doing Business in Nigeria. This is a challenge that the Nigerian government (both present and past) has been unable to tackle and the rate of power supply keeps diminishing yearly. It is difficult to enjoy 24 hours of power supply in most parts of the country with most households in Nigeria enjoying approximately 6 hours of power supply. This is poor for businesses that solidly depend on electricity to operate. For this reason, a lot of businesses look for an alternative which is a generator but how many persons can afford it couple with the increasing price of PMS. This problem has given rise to an increase in the cost of running a business in the country.
#3. Government Regulations and Policy
Despite most businesses are private and independent businesses, the government still play a vital role in regards to how business is done in the country. The essence of government regulations and policies is to regulate businesses and ensure they do business by the common rule. The law that guides doing business in Nigeria is known as Companies & Allied Matters Act (CAMA).
Some of the policies outline tax to be paid, pensions, immigration laws, exchange rates etc. government regulations and policies in Nigeria is created to boost business growth in the country, but the problem most times is the implementation of such laws.
#4. Corruption & Bribery
Corruption has eaten deep into the fabric of every sector in Nigeria and the business industry as well. Corruption and bribery is still a barrier and it affects doing business in Nigeria. Corruption comes in different forms and in the business sector, it includes Government awarding contracts to companies based on personal gain than merit, bribery, favoritism, etc. Also, the federal structure of the political system gives room to a different range of regulatory agencies, which most times lead to demands for bribes from public officials. Aside from corruption and bribery, organized crime is also another significant problem faced in some parts of the country which also has adverse effects on doing business in the country.
#5. Market Developments
The fifth Major Challenges of Doing Business in Nigeria is market development which refers to disruption. This is a great concern because it affects businesses of all industries in Nigeria. Also, there is market risks due to global uncertainty around economic growth. Poor market development can make it difficult to ascertain the direction an entire economy will take thereby making it difficult to make business planning.
#6. Lack of Adequate Infrastructure
Lack of basic amenities and infrastructure that would have to enhance business endeavors in Nigeria poses a serious challenge to doing business in Nigeria. For this reason, business owners, both small, medium, and large entrepreneurs, as well as prospective investors, spend huge money on a daily basis to make up for the lack of adequate infrastructures such as steady power supply, internet connectivity, steady water supply, good access roads, building supplies, among others.
Insecurity has been a major concern in the country with a sharp rise in domestic terrorism, kidnappings, communal clashes among others are just a few of the insecurity issues this country faces on a daily basis. Because of the high rate of insecurities, businesses have spent more than they should on security measures thereby increasing the cost of running a business in the country.
Conclusion on Major Challenges of Doing Business in Nigeria
We have come to the conclusion of our discourse on Major Challenges of Doing Business in Nigeria having highlighted some of the common challenges most businesses face. This goes to show that there are a lot of factors to consider before you begin your business adventure in Nigeria. This is an eye-opener to the challenges that business owners face in this country and if you are able to cope with the challenges and find the means to maneuver them, you are good to go.
We believe you have learned something new having read this article from beginning to end. Ensure to give us feedback.
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