Entrepreneurship is widely regarded as a key driver of economic growth, innovation, and social development. However, many young Nigerians who aspire to start their own businesses face numerous challenges that hinder their entrepreneurial potential. This report examines some of the major obstacles that young Nigerian entrepreneurs encounter and suggests possible solutions to overcome them.
One of the most critical challenges is the lack of adequate funding for start-ups and small businesses. According to a survey by the Global Entrepreneurship Monitor, the formal financial sector supplies only 7% of funding, with over 80% of funding currently coming from either the entrepreneur’s personal or family savings, or informal sources such as friends, relatives, and money lenders. This limits the scope and scale of entrepreneurial activities, as well as the ability to invest in technology, equipment, marketing, and human resources. Moreover, accessing formal credit is often difficult and costly for young entrepreneurs, due to high interest rates, collateral requirements, bureaucratic procedures, and corruption.
Another major challenge is the poor state of infrastructure in Nigeria, especially in terms of power supply, transportation, and communication. The unreliable and insufficient power supply affects the productivity, profitability, and competitiveness of businesses, as they have to rely on alternative sources such as generators, which are expensive and environmentally unfriendly. The poor road network and transportation system also increase the cost and time of doing business, as well as the risk of accidents and theft. Furthermore, the low penetration and quality of internet and telecommunication services hamper the access to information, markets, and customers for entrepreneurs.
Corruption is another pervasive obstacle that young Nigerian entrepreneurs face in their entrepreneurial journey. Corruption manifests in various forms, such as bribery, extortion, nepotism, fraud, and embezzlement. It affects all aspects of doing business, from obtaining licenses and permits, to paying taxes and fees, to securing contracts and customers. Corruption not only increases the cost and uncertainty of doing business, but also erodes the trust and confidence in the institutions and systems that are supposed to support entrepreneurship. It also creates an unfair competitive environment, where honest and hardworking entrepreneurs are disadvantaged by those who use unethical means to gain advantage.
In addition to these external challenges, many young Nigerian entrepreneurs also lack the necessary skills, knowledge, and attitudes to succeed in their entrepreneurial endeavors. According to a study by the British Council, many young Nigerians have low levels of education and literacy, as well as limited exposure to entrepreneurship education and training. They also face cultural and social barriers that discourage them from pursuing entrepreneurship as a viable career option. For instance, some young Nigerians may face pressure from their families and communities to seek formal employment or follow traditional norms and expectations. Others may lack the self-confidence, motivation and resilience to overcome the difficulties and risks involved in entrepreneurship.
To address these challenges and unleash the entrepreneurial potential of young Nigerians, there is a need for a holistic and coordinated approach that involves multiple stakeholders from the public, private and civil society sectors. Some of the possible interventions include:
– Improving the access to finance for young entrepreneurs by providing more diverse and affordable sources of funding, such as grants, loans, equity, crowdfunding and microfinance. This also requires strengthening the financial literacy and management skills of young entrepreneurs, as well as enhancing the transparency and accountability of the financial sector.
– Improving the quality and availability of infrastructure for businesses by investing more in power generation and distribution, road construction and maintenance, internet and telecommunication services. This also requires improving the efficiency and effectiveness of public service delivery, as well as encouraging public-private partnerships and innovation in infrastructure development.
– Reducing corruption in the business environment by enforcing stricter laws and regulations against corrupt practices, increasing the awareness and participation of citizens in anti-corruption initiatives, promoting ethical values and norms among entrepreneurs and public officials. This also requires improving the governance and oversight mechanisms of public institutions and agencies that support entrepreneurship.
– Enhancing the skills and competencies of young entrepreneurs by providing more opportunities for entrepreneurship education and training at all levels of education system, as well as through non-formal channels such as mentorship programs, incubators, accelerators and networks. This also requires fostering a culture and mindset of entrepreneurship among young Nigerians, as well as raising their awareness and appreciation of the benefits and opportunities of entrepreneurship.
Glory In Wealth Foundation 