The success enjoyed by most industrialized countries can be attributed to the role played by technological innovation and entrepreneurship, both of which continue to drive their economies today. These two factors are considered key components for the industrialization and development of African countries. The Nigerian government has recognized this fact and has taken measures aimed at promoting and cultivating the entrepreneurial culture in our country. Through the Nigerian Investment Commission (NIC), our government has in the past introduced a policy requiring university students, regardless of their area of study, to take entrepreneurship courses. While our government is going the extra mile to promote entrepreneurship in Nigeria, there are still a number of issues that a Nigerian entrepreneur faces. Below are some of the problems encountered and possible solutions.
* Diversifying the Economy
Although our country’s economy has relied heavily on its oil production for the past two decades, we must find ways to diversify our economy and avoid over-reliance on oil. Like other developing countries, Nigeria is facing a rise in its unemployment rate which is now 6% and rising, with many graduates finding it difficult to get jobs, while most of those who do get jobs are underemployed. This, coupled with the global financial crisis in which large numbers of employees are being laid off; Entrepreneurship is seen as a fundamental key if we want our country to achieve its ambition of being an industrialized nation by the year 2020.
* Hostile business climate
Being an entrepreneur in Nigeria requires a great deal of determination as practicing and potential business owners face myriad challenges. Nigeria’s business climate must be welcoming to micro, small and medium-sized enterprises (MSMEs). The role that these MSMEs play should not be underestimated as the majority of successful businesses fall into this category and for us to achieve our goals, proper attention and support must be directed at these institutions. In order to help and protect entrepreneurs, we must first have a clear understanding of the challenges our entrepreneurs face in their quest to make Nigeria a prosperous country.
* Lack of Credit Facilities
Potential entrepreneurs in Nigeria face many difficulties when trying to access credit for their businesses. Although there is a wide range of financial institutions that offer business loans, they typically charge high interest rates that deter would-be entrepreneurs. For example, major banks have pegged their loan rates at up to 28%, which deters potential entrepreneurs who are mostly low-income earners. Other obstacles that our entrepreneurs face include severe guarantee conditions established by banks and other credit institutions. Although our government, through the Central Bank and the Bankers Committee, presented guidelines that require banks to set aside 10% of their profits to finance MSMEs, most of these banks have been reluctant to do so. This has led to the rise of microfinance institutions which, while useful, are not sufficient to meet financial requirements.
* Multiple Taxation
Another sensitive challenge faced by most Nigerian businessmen is multiple taxation. Although we have a responsibility to finance the government by paying taxes, most taxes levied on entrepreneurs are illegal and have the effect of increasing the cost of doing business. Although the Nigerian Companies Income Tax Act (CITA) has passed only 39 taxes and levies, there are more than 500 various levies and taxes imposed by state and local government agents. These taxes are questionable and if they are genuine they are mostly doubled and this has the effect of increasing the cost of doing business.
* Poor State of the Country’s Infrastructure
The state of our infrastructure can be considered a nightmare both for businessmen and for the rest of the country’s population. With the existing infrastructure deteriorating and in some places non-existent; the cost of doing business has increased tremendously. The state of the country’s road network makes it difficult for entrepreneurs in the agricultural sector to transport harvested products from farms to processing factories. According to a report published by the World Bank, the pace of growth and socio-economic development in Nigeria is far below what we can achieve. This is mainly due to the erratic supply of electricity that has negatively affected many businesses. The result of energy problems has led entrepreneurs to generate energy through expensive ways which, in turn, have increased their production costs and made their products uncompetitive due to high prices. Our government should implement policies to encourage Nigeria’s infrastructure to promote business success.
* Lack of adaptation to the changing business environment
Most of those who venture into MIPYMES (Micro, Small and Medium Enterprises) do so because of their need to earn money and in almost all cases, these entrepreneurs lack relevant and adequate information about the businesses they develop. In the event that problems arise, most of these business owners lack sufficient problem-solving skills and ultimately find it difficult to survive. With the telecommunications sector growing by approximately 206.5% between 2002 and 2004 and constantly expanding, Nigeria has become one of the fastest growing ICT markets, not only in Africa but also worldwide. world. This presents a challenge for entrepreneurs who have not embraced the technology and now find it difficult to stay relevant in the competitive business environment. For existing and potential MSMEs to survive and be relevant, we must adapt to the changing business environment and embrace technology.
* Address challenges
Solving the problems encountered requires a combined effort from both the entrepreneur and all interested parties. As small and medium-sized business owners, we need to increase our market knowledge and skills by acquiring relevant and up-to-date education, particularly in your area of business. Our entrepreneurs need to gather information about their target market by seeking help from consultants and professionals who have experience in the particular market.
One strategy that our small and medium-sized entrepreneurs can use to remain relevant and competitive in today’s market is to come up with fresh and creative ideas for doing business. Due to the rise of technology, business is changing rapidly, which is why our MSMEs need to constantly reinvent the way they do business.
There is a great need to create a strong link between MSMEs and supporting institutions for Nigeria to fully benefit from such businesses. Although some financial institutions are still reluctant to provide financial assistance to MSMEs, there are some that provide loans at reasonable rates as long as the business appears viable. The key challenge for our entrepreneurs is to prepare solid business proposals. For our country to achieve its goals and move away from relying solely on oil, we must focus close attention on the private sector and our government must create an atmosphere conducive for such businesses to thrive and propel the country toward economic prosperity.