The success enjoyed by most industrialized countries can be attributed to the role played by technological innovation and entrepreneurship, both of which continue to drive their economics today.
These two factors are seen as key components for the industrialization and development of African countries. The Nigerian government has recognized this fact and has taken measures aimed at promoting and cultivating the entrepreneurial culture in our country.
Through the Nigerian Investing Commission (NIC), our government has in the past introduced a policy that required university students regardless of their area of study to take courses in entrepreneurship. While our government is putting extra effort in promoting entrepreneurship in Nigeria, there are still a number of Challenges that a Nigerian Entrepreneur faces.
Below are some of the Challenges encountered and possible solutions.
Diversifying the Economy
Although our country's economy has over the last couple of decades relied heavily on its oil production, we must find ways to diversify our economy and avoid the over reliance on oil.
Like other developing countries, Nigeria is facing an increase in its unemployment rate that is now at 6% and is on the increase, with many graduations finding it hard to get jobs while most of those who get jobs are underemployed.
This coupled with the global financial crisis in which massive numbers of employees are being laid off; entrepreneurship is seen as an essential key if we want our country to achieve its ambition of being an industrialized nation by the year 2020.
Unfriendly Business Climate
Being an entrepreneur in Nigeria requires great determination as practicing and potential business owners are faced with countless challenges. Nigerian's business climate should have made welcoming to those in the Micro, Small and Medium Enterprises (MSMEs).
The role played by these MSMEs should not be underestimated since majority of the thriving businesses fall in this category and for us to achieve our goals, adequate attention and support must be directed towards these institutions.
To be able to help and protect entrepreneurs, we must first have a clear idea of the challenges facing our entrepreneurs in their pursuit of making Nigeria a prosperous country.
Lack of Credit Facilities
Potential Nigeria entrepreneurs go through many hardships when trying to access credit for their businesses. Although there is a wide range of financial institutions that offer business loans, they usually charge high interest rates deterring aspiring entrepreneurs.
For instance, major banks have pegged their lending rates to as much a 28% deterrent potential entrepreneurs who are mostly low income earners. Other obstacles faced by our entrepreneurs include some contractual conditions set by banks and other lending institutions.
Although our government through the Central Bank and the Banker's Committee came up with guidelines requiring banks to set aside 10% of their profits for funding MSMEs, majority of these banks have been related to do so. This has led to the emergence of micro-finance institutions which although helpful are not sufficient for meeting the financial requirements.
One other sensitive challenge that is encountered by majority of Nigerian entrepreneurs is multiple taxation. Although we have a responsibility of funding the government through paying taxes, most of the taxes charged on entrepreneurs are not legal 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.
Poor State of the Country's Infrastructure
The state of our infrastructure can be deemed to be a nightmare to both entrepreneurs and the rest of the country's population. With the existing infrastructure deteriorating and in some places it is non-existent; the cost of doing business has tremendously gone up.
The state of the country's road network makes it hard for entrepreneurs in the agricultural sector to transport harvested produce from farms to processing factories. According to a report released by the World Bank, Nigeria's pace of socialeconomic development and growth is way below what we can achieve.
This is largely because of the erratic supply of electricity which has negatively affected many businesses. The output of power Challenges has prompted entrepreneurs to generate power through expensive ways that have in turn increased their production costs and made their products uncompetitive due to high prices.
Our government should put policies in place to perk up Nigeria's infrastructure so as to promote successful entrepreneurship.
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 Challenges arise, most of these business owners lack sufficient Challenge solving skills and in the end they find it hard to survive. With the telecommunications sector having grown by about 206.5% between 2002 and 2004 and is continuously expanding, 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 embroidered 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, we must adapt to the changing business environment and embrace technology.
Addressing the Challenges
Solving the Challenges encountered requires a combined effort by both the entrepreneur and all concerned stakeholders. As Small and medium business owners, we need to increase our knowledge and skills of the market by acquiring relevant and up to date education specifically in your area of business.
Our entrepreneurs need to collect information about their target market by seeking help from consultants and professionals who have experience in the particular market.
One strategy that can be used by our small and medium entrepreneurs to remain relevant and competitive in today's market is to come up with fresh and creative ideas of doing business. Due to the increase in technology, business is fast changing, then our MSMEs need to constantly re-invent the way they do business.
There is a great need of creating a strong link between MSMEs and supporting institutions if Nigeria is to fully benefit from such businesses. Although some financial institutions are still relevant to provide financial assistance to MSMEs, there are some that give out loans at reasonable rates provided the business sounds viable.
The key challenge is for our entrepreneurs to prepare sound business proposals. For our country to achieve its goals and stop relying on oil alone, we need to focus much attention needs on the private sector and our government must create a concucive atmosphere for such businesses to thrive and drive the country towards economic prosperity.