Top Challenges of Entrepreneurship in Nigeria
1. Absence of Infrastructural Facilities
Certain basic infrastructural facilities aid the development of the mind and body and assist productivity in any environment. Some of these facilities include good roads, good water supply, constant power, access to information and communication technology and other tools of trade. Lack of these infrastructure in a country stifles the growth of the economy. In Nigeria, these basic work tools as well as the enabling environment is lacking. The lack of basic infrastructure in Nigeria has made entrepreneurial activities cost intensive, unprofitable and uninteresting thereby dissuading the youths from assuming entrepreneurial ventures.
2. Inadequate Working Capital
Non-availability of capital is a prime problem of entrepreneurship development. The availability of capital, is central to the establishment and continued existence of any enterprise irrespective of the size. For an entrepreneur in Nigeria to start a business, he/she must have adequate funds. In a situation where the working capital is inadequate or unavailable, it becomes a problem. This is one of the major, if not the major problem that young people encounter when opening a business. Banks are reluctant to give out loans to intending entrepreneurs especially when they are young people.
The procedures for accessing such credits are often rigorous and dependent on the provision of collateral, which the potential entrepreneur may not possess. Therefore, intending entrepreneurs often fall back on their personal savings or on loans from family members and friends.
3. Low Standard of Education
An intending entrepreneur must be conversant and in tune with events around and about him, education becomes a critical factor in preparing and empowering the entrepreneur with the qualities required of him. Unfortunately, the role of education in forming young people to become change agents it seems, have been ignored. Year after year, the quality of education in the Nigerian institutions has gradually been on the decline, due to strikes and unqualified teachers.
While those who stay in the system is as a result of the unavailability of alternative jobs. Government policy or lack of one has been a major bane of education in Nigeria. The schools are not adequately funded, equipped, regulated and managed to bring out their optimum potentials in youths and potential entrepreneurs.
4. Lack of Adequate Training
Absence of adequate training for students such has made it difficult to them to meet up the transformation question. This challenges the future of the youth as entrepreneurs. It has been observed that the educational curriculum in Nigeria focuses more on the theoretical without a corresponding practical approach. Most employers are always compelled to retrain their employees due to lack of knowledge of basic work ideas or familiarity with the area of study of the employee. Technology has been used to improve the quality of life through the use of the computers and other technological discoveries such as the internet. Where the youth does not have the knowledge or skill of the latest technology, it affects their outlook to life. This also results in low morale, inefficiency and lack of confidence.
5. Constrained Access to Local and International Markets
Constrained access to local and international markets stunt entrepreneurial expansion and proliferation because Entrepreneurs find it difficult to successfully market and expand their business as a result of high cost of doing business. Enterprises can only succeed if awareness of market availability is created.
Widespread and all present corruption that makes the procurement of licenses, permits, goods and services from government agencies and even the payment of taxes and levies difficult without playing the game i.e. paying bribes and kickbacks.
7. Inconsistent Government Policies
Government inconsistency is really a challenge an entrepreneur will have to tackle if he must succeed in Nigeria. Governance is something entrepreneurs have no control over; all entrepreneurs can do is to influence government’s policy with respect to enacting favorable business laws. But he must have political clout and massive resources to be able to influence government laws. Now he may not have the political clout or financial muscle to influence government’s policy so the best strategy to combating the ever changing policy of the government is to keep a keen eye on government laws and swiftly adjust your business to align with the policies.
8. Multiple Taxation
One other sensitive challenge that is encountered by majority of Nigerian entrepreneurs is multiple taxation. Although entrepreneurs in a country have a responsibility of funding the government through paying taxes, most of the taxes charged on entrepreneurs are not lawful and have the effect of increasing the cost of doing business. Although Nigeria’s Companies Income Tax Act (CITA) has approved only 39 taxes and levies, there are over 500 various levies and taxes that are imposed by state and local government agents. These taxes are questionable and in the case where they are genuine, they are mostly duplicated and this has the effect of increasing the cost of doing business.
9. Failure to Adapt to the Changing Business Environment
Majority of those who venture into MSMEs (Micro, Small and Medium Enterprises) do so because of their need to make money and in almost all cases, such entrepreneurs lack relevant and adequate information about the businesses they engage in. In the event where problems arise, most of these business owners lack sufficient problem solving skills and in the end they find it hard to survive. With the growth in the telecommunications sector since the introduction of GSM in 2002, Nigeria has become one of the fastest growing ICT market not only in Africa but also worldwide. This presents a challenge to entrepreneurs who have not embraced technology, and who are now finding it hard to remain relevant in the competitive business environment. For existing and potential MSMEs to survive and be relevant, it must adapt to the changing business environment and embrace technology.
10. Insecurity/Security Issues
When there is no guarantee of security of lives and properties, it is difficult to run a successful venture. Nigeria has become a den of kidnapping and resulting in incessant hostage taking, kidnapping and unjust harassment.
11. Poor Planning
Experts say individuals who have successfully managed major events are aware of the fact that success mostly come as a result of careful, systematic, strategic planning and hard work.
12. Poor Product or Service
The entrepreneur must understand the needs of his customers and seek ways to meet these needs via the product or service which he offers to the market.