Before one looks into how to start a business in Nigeria, they should be aware of the problems with such ventures. While the flourishing cities like Abia, Lagos, and Abuja are booming with entrepreneurial businesses, they are not without their problems. Read on to see whether you can manage these hassles or not:
The Current Situation
There are, no doubt, several business opportunities within Nigeria. However, there are just as many stories of business failures as successes. International groups and companies are increasingly pulling out of the Nigerian economy due to problematic regulations and difficult economic conditions.
In order for any business to be properly successful and profitable, it must have the system that enables it to function. This means basics like gas, electricity, and water supplies. There are several problems with the supply of such amenities in Nigeria, especially for businesses that want to expand. Hence, many companies and ventures would find their work interrupted, stalled, or even made impossible by the erratic systems.
While there have been economic reforms by new governments, the state of the power supply in Nigeria remains sadly deplorable. This could affect any kind of business, whether it’s a multinational franchise or a tiny private venture like a barber, tailor, or mom and pop store. You may have to look into solar panels or other sources in order to maintain an uninterrupted supply.
A rising tide doesn’t raise people who don’t have a boat. We have to build the boat for them. We have to give them the basic infrastructure to rise with the tide – Rahul Gandhi
Many businesses would like to have their factories and outlets near either their market or their source of raw materials. It is usually not possible to be near both, so some transport costs must be incurred. If nothing else, one would have to factor in the labor that needs transport to work every day.
Unfortunately, the transport system in Nigeria is not that great. Many roads are in need of some serious work, and there is a long way to go for the railways. Hence, the costs and effort of transporting labor, raw materials, and the finished product itself could be too high to allow a profit.
When you set up a business, you would naturally want some sort of funding, grants or subsidies. A lot of money goes into buying supplies, machinery, rent, and other costs. However, there is not much of a setup for funding in Nigeria. If you don’t have most of the money yourself, you may have to depend on foreign investors rather than local government subsidies or bank loans.
The banks in Nigeria have some way to go before they can trust new entrepreneurs. If any new business does get a loan, it will have to deal with high interest rates or collateral demands. This makes it very hard for the business to stay afloat for a long time.
No matter what the hassles of doing business in Nigeria are, they are tempered by the benefits available by catering to that society. There are a lot of promising opportunities and loads of customers just waiting for the next best thing. It is, hence, worth struggling a little to succeed a lot in the future.