Entrepreneurship in Nigeria: Challenges and Prospect
Entrepreneurship is widely understood as the process of starting and owning a business that provides goods or services to people in exchange for money. A person who has created and owns a business is known as an entrepreneur. We believe that entrepreneurship is more than just starting a business, it is a mindset, a way of thinking and acting. Entrepreneurship in this modern age involves thinking of new ways to solve problems and create value. An entrepreneurial spirit is said to be characterised by innovation and risk-taking.
Entrepreneurship in Nigeria today is not what it used to be. The Majority of Nigerians used to be entrepreneurs. Before the colonization era, a lot of Nigerians were majorly involved in trading. The wealthiest at the time were the traders. Even before money was accepted as the legal tender, people exchanged what they had in surplus for what they do not have. Entrepreneurship was a way of life for most people then. Nigeria was full of people with a business mindset and Nigerians always had a high moral standard and value system for doing business. During the colonial era, the mode of entrepreneurship changed. The colonial masters brought their goods and made Nigerians their go-betweens. Then came formal education and the companies established by the colonial masters. A lot of young Nigerians were employed by these companies. As many Nigerians began to accept formal education, most people were being trained to join the labour force and not to be entrepreneurs. The entrepreneurial mindset began to fade away.
In the last decade more Nigerians have attended entrepreneurial trainings, taken courses in entrepreneurship than ever before. Virtually all young graduates have been tutored or received some form of tutoring on the topic, thanks to the National Youth Service Corps orientation program. With all this in place, however, the success rate of small and medium enterprises have been extremely low; businesses have barely survived, let alone thrived beyond incubation period. Some have downsized to the barest minimum, others press on in anticipation of a better tomorrow, yet many more have been frustrated to closure.
Nowadays, there is a high need for entrepreneurship in Nigeria and many organisations and the government have been working on improving entrepreneurship development in Nigeria. However, due to the set of challenges the entrepreneurship in Nigeria is not flourishing as in many other countries.
Major Challenges of Nigeria Entrepreneurs
As the need and call for entrepreneurship increases day by day, the development of entrepreneurship has been stalled in the last few years. This is because of the problems affecting and limiting its development. Many Nigerian entrepreneurs face a lot of challenges. Here are the major ones that have been affecting the development of entrepreneurship in Nigeria.
1. Lack of Capital: There are thousands of Nigerians with wonderful ideas that could be turned into a bona fide business. However, most of them lack the capital to push their ideas into reality. The lack of capital is the number one reason the development of entrepreneurship has not improved over the years.
2. Difficulties in securing loans: In the first point, I established that the first problem most Nigerian entrepreneurs face is the lack of capital. Most people then try to turn to banks and other financial institution to secure loans to fund their idea or business. But getting a loan is exceedingly difficult and most times impossible for average Nigerians who are looking for funds to start up a business or who already have a small business. The reason for this is that the banks and financial institution feel it is a huge risk lending money to them. Financial institutions are not sure if entrepreneurs will be able to pay back the loan. Another major reason securing a loan is so difficult is the requirements needed for securing these loans. Most of the financial institutions demand huge collateral and high-interest rate that small business owners or start-ups cannot afford. This discourages most Nigerian entrepreneurs and kills many promising ideas.
3. Poor state of infrastructure: The lack of good infrastructural facilities is another major problem affecting the development of entrepreneurship in Nigeria. The number one issue of infrastructure affecting entrepreneurship is the unstable power supply that has forced a lot of businesses to close. Most entrepreneurs must rely on generators to run their businesses. They must spend a lot of money on fuel to run their generators. Also, lack of good roads and transport system is another infrastructural challenge plaguing entrepreneurship in Nigeria. The poor state of infrastructure in Nigeria makes the cost of running a business or company high. Most small businesses and start-ups cannot afford it.
4. Unstable economy: The state of the Nigerian economy is also a major challenge for entrepreneurs in Nigeria. The state of a country and its economy plays a significant impact on the level of entrepreneurship in any country. The socio-economic problems and the unstable economy of Nigeria has killed a lot of businesses in the last couple of years. All these mixed with political instability is not helping businesses at all.
5. Poor knowledge about Business: Not all the problems are from the government or capital related. Another problem is that most people do not know how to manage and grow a business properly. They do not seem to learn or have the resources to learn how to manage and grow a business.
6. Inadequate planning and poor execution: This is the result of the poor knowledge on how to run a business. Most people do not plan properly before they start their business. They do not make researches about the business, the market for the business, the cost of production, etc. Many do not even make a business plan. So, after they start a business, they get stuck, and the business fails. Also, a lot of people start off the wrong path and eventually the business ends up failing.
Prospects of entrepreneurship in Nigeria
1. Promote economic development: The role entrepreneurs play in the economic development of Nigeria cannot be overemphasised. Even though there are a lot of barriers limiting entrepreneurship in Nigeria, it is still needed for the country to develop. According to NBS (National Bureau of Statistics) report, small and medium-sized enterprises (SME) in the industrial sector contributed about 48% of the Gross Domestic Product (GDP) to Nigeria economy. SMEs (Small and Medium sized Enterprises) are one the largest contributor after the oil sector. So, entrepreneurship development has a lot to offer and improve the economy of Nigeria.
2. Job creation: Entrepreneurship creates new opportunities of employment for many Nigerians. More programmes are being laid out to encourage and facilitate Small and Medium-sized businesses (SMEs) in Nigeria. In most developed countries, the existence of SMEs has provided more jobs for their citizens. And so, if entrepreneurship continues to develop in Nigeria, more SMEs will arise and in turn reduce unemployment in Nigeria.
3. Direct Creation of Wealth and Reduction of Poverty: Small scale businesses have helped in contributing to the Nigeria through wealth creation and poverty reduction. Gross National Product (GNP) is the total monetary value of all goods and services produced in a country within a particular year by increasing output of goods and services. Since a country’s levels of economic development are determined by its growth rate from GNP it has contributed to economic development of the country.
4. Technological innovation: small scale business enterprise brings about technological innovation in Nigeria. In most cases small scale business brings about the emergence of new things in our environment. Most of the managers of small-scale business are highly intellectual and with the rate of advancement in technology the managers do not relent, instead they carry on continuous research on how to improve on existing technologies. Research shows that small scale businesses in Nigeria acquires or improve domestic technology in the production of several goods such as bakery products, soft drinks, textiles, foot wears and soap production etc. and what seems to have been acquired was just further improvement in the technology of production to improve the quality of these goods. This suggests that one of the main contributions of small-scale business enterprise to the economy is truly improving indigenous technology.
Opportunities for SMEs
· SMEs have significant untapped growth potential
· Strong export and employment potentials
· SMEs in Nigeria are currently distributed along sectors within regions, creating potential operational and cost synergies
· New growing sectors, such as entertainment and leisure clusters
· Low -Tech Sectors clusters: Footwear, clothing & garment, agro-processing (cassava, oil palm and other oils.
· High Tech clusters: ICTs, Telecom, and Biotechnology (Agric and health)
Conclusion.
Entrepreneurship is a central pillar to economic growth and development, as well as employment generation and poverty alleviation. Therefore, aggressive effort should be made to see to its full development. For Nigeria to achieve the vision enshrined in NEEDS which include youth empowerment, employment generation and poverty alleviation, youths should be enabled to access funds for entrepreneurship. They should also be exposed to training in technology, opportunity to have internship training in entrepreneurship and reinforcements on the concept of risk taking.
We at Lawrence Price and Company have taken the initiative to develop an intuitive web and mobile-based solution built and designed to provide business process automation, basic accounting, and financial inclusion services for Small and Medium-scale Businesses.
The solution (BlackBox)was created with the sole objective of leveraging technology in solving the challenges faced by millions of African SMEs. With BlackBox, most of the challenges faced by SME in Nigeria can be minimized to the barest level through:
- Accelerated incorporation services
- Employing bank accounts from designated banks for quick and easy execution of basic financial services.
- Automated management and optimisation of back-office activities such as HR, Payroll, and operation management
- Swifter access to funding, loans etc. required for business growth.
- Utilization BlackBox’s marketplace in facilitating collaboration between other businesses subscribed to the Black Box model.
