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7 Challenges Of Doing Business In Nigeria

Nigeria is one of the most marketable countries this side of the world for prospective investors and entrepreneurs alike what, with its vast population; of over 180 million people with over 40% of that literate and ambitious people.

Nigeria is blessed with mineral natural and human resources making her the envy of the more developed Nations as well as an ever dynamic hub for high class investors and diverse businesses.

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On paper Nigeria seems like one of the most ideal places to do business. But, how far from the truth this is cannot be completely covered in one article.

Read Also: How To Start Internet Business In Nigeria

7 Challenges Of Doing Business In Nigeria
Doing Business In Nigeria -Photo Source: https://thewhistler.ng

More than 75% of new businesses in the country barely survive after 3 years, multiple foreign investors and business owners chose to cut their losses and move elsewhere to do their business.

It goes without saying that Nigeria has the potential to be one of the top industrialized and commercial nations in Africa but a series of successive bad policies, and gross mismanagement of resources have contributed to impeding the growth of commercialization in the country.

And while it is easy and convenient to completely blame the government for the challenges of doing business in this country (and they do deserve most of the blame) if we are going to be objective and completely honest in our assessment, some of the problems lies with the masses (more on this later on the article).

Every business, whether established or a startup bares within it the seeds of success and failure, and most times the difference between succeeding or failing in business has to do with one’s level of awareness or ignorance of the possible challenges bound to be encountered in the course of doing business.

This article brings to the limelight some of the challenges of doing business in Nigeria, so every budding entrepreneur, business owner and even the foreign companies/ investors can be made aware and put strategies in place in other to overcome them and increase their chances of success in their business of choice.

Read Also: 10 Tips To Prevent Business Failure In Nigeria

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Here are some of the challenges of doing business in Nigeria:

1. Insecurity

Domestic terrorism, kidnappings, communal clashes are just few of the threats to national security this country faces on a daily basis.

Theft and organized armed robbery are the business owner worse nightmare, it seems nowhere is safe and nobody is immune to this menace that has ravaged our society.

The implication of the insecurity situation on businesses in Nigeria is that business owners and organizations spend more than is appropriate on security measures and this increases the cost of running a business in the country.

2. Poor power supply

This is one problem no government (past or present) seems to have a solution to, in fact it seems the rate of power supply seems to worsen with each new government.

This is a major challenge to business owners around the country and even the established companies are affected by this problem (probably, more so).

This problem increases the cost of running a business as almost every business present in this country depends on steady power supply.

The solution most businesses seek is alternative power supply in the form of generators and solar plants and these do not come cheap.

Read Also: 10 Best Business Opportunities In The Agricultural Sector In Nigeria

3. Corruption

Probably the biggest challenge to doing business in Nigeria. The cost of corruption in Nigeria is immense, economically the country is at a standstill or at best going round in a negative cycle without any real progress being made, and while corruption exists in virtually every sector in the country, we chose to focus on its effects on the business environment in Nigeria.

Unfortunately corruption has become synonymous with the business landscape and every other sector in Nigeria. In 2012 Nigeria ranked 139th out of 176 countries surveyed by Transparency International in their annual assessment of the most corrupt nations in the world and since then the rate of corruption in the country has consistently gone higher.

Corruption in Nigeria takes many forms and in business these includes; Government awarding contracts to companies based on what they stand to gain rather than on merit, paying security agencies extra to help you solve a problem, bribery etc.

Contrary to popular opinion corruption does not just exist in the government agencies, or just with the government officials, a lot of successful individuals and business owners also engage in corrupt practices in a bid to increase their earnings.

3. Government Policies

The role of government policies in the business landscape can never be overstated; a lot of policies put in place favor the established companies.

The government creates policies to regulate the market, some of the policies define how much tax you pay, pensions, immigration laws, exchange rates etc. And while a lot of the policies are put in place to boost business growth, the problem most times lies with the implementation.

4. Lack of adequate infrastructure

lack of basic amenities and infrastructure poses a serious challenge to business owners in Nigeria. Entrepreneurs and prospective investors alike spend lots of money on a daily basis to make up for the lack of infrastructures such as; internet connectivity, steady water supply, good access roads, building supplies etc

5. Access to funds

Lack of capital is a major challenge to entrepreneurs and foreign investors in Nigeria and despite efforts by the government to provide aids in the form of grants and loans a lot of business owners in the country still have limited access to these aids

Read Also: 20 Businesses You Can Start With N50,000 In Nigeria

6. Getting competent/trustworthy employees

Most successful business owners in Nigeria have at one point struggled with getting employees that did not give them problem in one area or another.

The quality of people you hire plays a very important role in the success/failure of a business, and while there is usually no shortage of qualified and well trained job seekers in Nigeria, the challenge lies in finding employees that align with your vision for your business.

These are some of the challenges of doing business in Nigeria, and while they are all significant in their own particular way they can all be overcome with good planning and persistence.

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Smith Segunfunmi

Smith Segunfunmi is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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