5 Biggest Challenges Facing Nigerian Startups Revealed. Nigeria is the most populous nation in Africa, with an estimated population of 150 million people. Over the last few years the Nigerian economy has grown at a steady pace, as shown by the recent GDP rebasing of the economy which has led to more than 80% growth in the economy.
Nigeria is a country blessed with human, mineral and natural resources, making her a viable hub for various business activities as well as investments, thus making her the toast of every entrepreneur and investor all over the world.
Despite the growth of the economy and the potential of great business opportunities, Nigeria still has some challenges that can affect an entrepreneurs or investors who plan to do business in the country.
Below are the various problems or challenges that an entrepreneur or investor who plans to do business in the country could face.
1. Lack of Enabling Environment and Infrastructure
The Nigerian business environment lacks basic amenities and infrastructure that aids and helps business development and survival.
For example, if an investor intends to start or set up a production firm, he or she will find out that they need to provide their building, water supply, logistics and other amenities needed.
This in the long run leads to more money being spent on the business and increase the time frame needed to start.
2. Poor Power Supply
A major problem facing even established companies and organizations in Nigeria.
So far, government has not been able to find a lasting solution to the power situation in the country which affects the big organizations including the multinationals down to the one man business such as the barbers or tailors who depend on power to run their business.
The solution to this is to get solar plants or a generator which in turn leads to a lot of money spent by the business for their purchase, even before any sale or production has been done.
This not only affects the business as money that could have been spent to improve the other areas of the business are spent on generator and fuel, but also the end product of whatever the business produces becomes more expensive to the final consumer as the business has to make sure they do not lose.
3. Poor Transport Network
Most organizations and companies locate their businesses near their source of materials or market to help save cost and time.
But in cases where this is not possible, the problem of transportation will come up. Nigeria does not have a good transport network, most roads are not in good shape and the railways and waterways have not been fully established.
The problem a company will face is getting their goods from their warehouse to their consumers.
There have been incidents where products of companies have been stuck on the roads for days because of bad roads that have either made it difficult for the goods to get to their destinations or have damaged the carriers of the goods.
This can lead to great losses to companies as perishable goods are affected in such situations.
4. Poor Access to Funds
Finance and funding is a major aspect of starting or setting up a business. Money is needed to buy materials, suppliers, equipment, pay staff and lots more. In Nigeria, funding is a major problem especially if an entrepreneur does not have enough money to kick start the business.
The banks that should help investors are not willing to give startups or new businesses loans because they do not believe in them or feel they have no experience and do not trust them. Where such startup companies or entrepreneur is fortunate to get a financial institution to assist and support them, there is the issue of interest rate or collateral to contend with.
Banks usually place high interest rates on loans they want to give their customers. Another problem is that the payback period is usually short which will make it almost difficult for the business to pay back within the stipulated time.
5. Not Enough Government Support
Often, people have complained of government not doing enough to help startup businesses or entrepreneurs in general.
People have often complained of the cost of such registration and the administrative bottlenecks involved in registering the business, which leads to a delay in the business starting on time.
There are also the problems of high taxes and duties placed on the business.
These are some of the problems one will encounter when trying to start a business in Nigeria. With proper planning and patience one can overcome these problems and grow a successful business from a startup to a conglomerate.
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