Why Businesses Do Not Thrive In Nigeria

In the Nigerian context, many reasons could be adduced to why businesses fail in the country. Most entrepreneurs lack the basic technical know-how about their business ventures.

Lagos state financial district

For example, a tailor establishing a pharmaceutical business venture, because his immediate neighbor is a successful pharmacist! This type of competitive business will glot up the market and sooner than later.

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Another factor affecting business survival in Nigeria is lack of capital. Most of our local businesses are sole entrepreneurship. Even a small scale business requires big money to set up. When the capital is too small, the business is usually sole.

However, the government, federal and states are making business loans available to small businesses lay way of micro-financing, cooperative financing and other poverty – alteration schemes initiated by them.

A major reason business are failing is operating cost, in terms of electricity and other field; when power from National Grid fails.

Generators are supposed to be used as standby power source out when a small or major entrepreneur runs a business on his own generator; one can easily imagine the operating cost of electricity or diesel.

The incidence of this high fuel cost falls on the end consumers of goods and services and when the situation goes from bad to worse, the impact on the producer itself is to close down the business for lack of patronage or relocate to areas where profitability is assured. Invariably, constant power supply is vital to the growth of business, big or small.

Another reason is the problem of smuggling which is badly affecting the market liability of locally produced goods. Most of our local production is done by the marginal producer whose price is higher.

Majority of smuggled goods, some of which are contraband, are cheaper being products of the man- producers. Therefore, to protect local producers, government has classified some imports as “contrabands” since we have series of local alternatives.

The Excise and Customs are always fighting a running battle of preventing contraband from entering our country but only a small % of success is recorded and so local producers are at risk of business failure because of serious competitions by the contraband.

The appetite of an average Nigerian consumer is insatiable because we always give preference to “imported” or “Tokunbo” goods.

If goods are locally produced and not marketed, there can be no return for the producer, Eventually, the producer will be out of business. Here, however, the government protecting our local products must encourage local producers to strive at quality production.

Inability of our government to always guarantee tax moratorium/holiday/relief to local producers makes local or multinational producers to wind-up businesses to avoid recession, or completely move to other countries to continue their business investment may continue to thrive and unemployment checked.

Apart from the large- scale producers who appreciate the importance of advertising and dynamic sales promotion (promo), many small producers in Nigeria do not engage in any sort of sales advertising or promotions of any kind.

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Our small producers should engage in this  type of sales promotion and the advertising of their products on radio and the electronic media to maximize their returns or turn over. In conclusion, entrepreneurs are encouraged to organize and attend seminars and workshops in trade fairs to boost their turnover. ​

Written by Jim Badru.

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