Wow, how time flies! It’s hard to believe that it’s been a full decade since this column started publishing articles on a wide array of topics, offering insights and opinions on the policies and strategies of governments in Nigeria and across Africa. Over these ten years, we’ve conservatively shared more than 400 articles focused on African development and good governance.
On August 26, 2014, I proudly saw my debut article, “The Entrepreneur: Looking Beyond Business Capital,” published. In this piece, I delved into the entrepreneurial landscape of Nigeria, shedding light on the myriad of challenges faced by aspiring business owners. I noted, “In Nigeria, a significant number of unemployed youth aspire to become entrepreneurs. However, they often grapple with hurdles such as conceptualising viable business ideas, securing startup capital, building a competent team, and recruiting reliable employees. Additionally, they face the daunting tasks of attracting loyal customers and navigating fierce competition.”
“The Economic and Recovery Growth Plan of 8 years did not yield the desired positive outcome.”
Over the past decade, the journey of the Nigerian entrepreneur has been fraught with challenges. The Nigerian entrepreneur has endured a rollercoaster of policy inconsistencies from both state and federal governments, making their path to success a tumultuous one. Both local and international investors are growing increasingly wary of the Nigerian market, where policies can shift overnight and some government officials, driven by selfish or partisan interests, can abruptly overturn agreements. In this environment, no contract is considered sacred, thanks to the breed of greedy “dragons” that roam the corridors of power in Nigeria.
Read also: Entrepreneurship: Gateway to economic recovery
Navigating the business landscape in Nigeria has been anything but smooth. Entrepreneurs in the past 10 years have faced a barrage of challenges, including two economic recessions in 2016 and 2020, the global upheaval caused by the COVID-19 pandemic, and ongoing issues of insecurity. The Economic and Recovery Growth Plan of 8 years did not yield the desired positive outcome.
Between 2015 and 2023, many entrepreneurs found themselves facing unprecedented challenges. Rising interest rates and inflation, incessant power failure coupled with assorted taxes from state and non-state actors, forced numerous businesses to close their doors. The situation took a turn for the worse in 2023 with the removal of “fuel subsidies” and a dramatic collapse in foreign exchange rates, pushing even more firms out of business. Regardless of the sector, operating a business in Nigeria in the last decade has been an arduous journey for many firms—formal and informal—and some have struggled to survive. The Moniepoint 2024 Informal Economy Report shows that Nigeria is home to approximately 40 million MSMEs, of which almost 90 percent are in the informal economy.
Recall that in 2014, the Central Bank of Nigeria (CBN) introduced a significant initiative: the SME Intervention Fund, amounting to N200 billion. This substantial allocation by the Federal Government aimed to empower small and medium-sized enterprises (SMEs) to unlock their potential and drive economic growth. The primary goal of this N200 billion loan was to stimulate production activities among entrepreneurs, thereby fostering price stability—a core objective of the CBN. This initiative was both commendable and impactful. In 2024, the Minister of Trade said that N75 billion will be allocated to MSMEs while N75 billion will be allocated to manufacturers under the Presidential Intervention Fund.
In my previous article, I was quick to emphasise that while the provision of capital can encourage the growth of SMEs, support production, and reduce poverty and unemployment, it may not necessarily lead to economic growth. I argued a decade ago that “capital provision is not an end in itself, but merely a means.” Those benefiting from these financial supports cannot be left to navigate the complexities of business alone if they are expected to succeed. Furthermore, I contended that “to enhance the contributions of SMEs to GDP and export earnings, government policies must drive comprehensive strategies at both national and state levels.”
The nation must persist in taking a leading entrepreneurial role to empower SMEs to offer goods and services that stand competitive against those from other emerging countries. Any society aiming for economic growth must possess the ability to continuously create, renew, and expand wealth.
A research study conducted by staff at the Apex Bank has uncovered several key challenges faced by program implementers in Nigeria. Among the primary issues are high loan default risks, the politicisation of initiatives, and insufficient infrastructural development. Additionally, the study found that many applicants fail due to non-eligibility for the programs they apply for, poorly crafted business plans, or inadequate knowledge of their proposed ventures.
I recently read in the papers that Coca-Cola has pledged, for the second time, to invest $1 billion into the Nigerian economy over the next five years, contingent upon a stable business environment. The initial promise, which was made and published by financial analysts on October 12, 2021, was not kept. Why? “The business environment has been very unfriendly.”
Mr. President has, however, released a press statement expressing “his administration’s commitment to creating a robust financial system and a business-friendly economy that will attract more foreign direct investments.”
While presenting an overview of Coca-Cola’s business in Nigeria, its President, Mr. John Murphy, noted that the company generates N320 billion annually through nearly 300,000 customers and contributes almost N90 billion in revenue to the Nigerian government.
For Nigeria to harness the entrepreneurial talent of its citizens, the government must establish continuous methods for measuring the effectiveness and performance of SMEs. Following this, relevant reforms should be enacted to bolster support for new businesses within the formal and informal sectors. I am pleased to see that the Federal Government has recognised the need to streamline regulatory systems to enhance the ease of doing business in the country. Additionally, regulatory agencies must eliminate redundancies and align their processes with the president’s agenda.
Nigeria must reduce barriers and offer educational support to accelerate entrepreneurial growth. Collaboration between private, not-for-profit organisations and the government is essential to promoting entrepreneurial education at both state and federal levels. Meanwhile, the federal government will ensure that regulatory responsibilities and standards are upheld and sustained.
As stated in this column ten years ago, if the nation’s educational system fails to produce industry-oriented human resources in this century, it is doubtful that SMEs will reach their potential to create jobs, reduce poverty, and promote economic growth. With the right education and the integration of appropriate technology, SMEs can thrive. Business capital alone is not enough; we must look beyond it to achieve sustainable economic growth. Thank you.
MA Johnson, Rear Admiral (Rtd).
