The Nigerian economic revolution story makes for a very interesting read. Like most developed economies, it has had its own share of ups and downs. In 2014, the Nigerian economy was declared the largest economy in Africa and the 24th biggest economy in the world. Recently, the economy has nose-dived. Inflation is biting hard, hitting almost 19% in January 2017. With several challenges in corruption, infrastructural deficiency, insecurity especially in the north and militancy in the oil-rich south, there is so much more to be desired and talked about in Nigeria than these problems.

According to the United Nations Development Program (UNDP), the poverty rate in Nigeria stands at 62.6%. Calls are being made for more action by the government to empower the poor of the society. As a partner country with the United Nations on the Sustainable Development Goals (SDG), Nigeria has to look inwards and determine how the various resources available at her disposal can be harnessed to cater for and empower more and more people in the society, thereby eradicating poverty, fighting inequality and injustice and tackling climate change.

One resource Nigeria has never lacked is people. With about 170 million people, it is no surprise that despite the daunting challenges the country is facing at this time, start-ups have been sprouting up all around the country. We have seen young, vibrant individuals starting up enterprises across various sectors as Information Technology, e-commerce, entertainment and agriculture. This development has had its positive effect on the Nigerian economy. As expected, it is not all rosy for these SMEs. Most of these startups have faced many similar challenges within the past year.

The first major challenge most SMEs and Start-ups have faced in Nigeria has been lack of funding. Any kind of business needs funds to thrive. Bank interest rates and repayment period makes it an uphill task for any SME to conveniently pay back loans without affecting its operations. Entrepreneurs with good business ideas but no collateral find it even harder to access sufficient facility to fund and ensure the smooth running of their start up.

Where is The Demographic Dividend?

The lack/high cost of obtaining some basic infrastructure needed for the smooth running of an enterprise presents its own challenges as well. Electricity and internet connectivity are some of such infrastructure. The need for high speed internet connectivity cannot be over emphasized. From holding business meetings online via video conferencing to providing quick and efficient service to the customers, most SMEs, especially in the information technology and e-commerce sectors rely heavily on them to do business. However, most startups are faced with issues of poor connection quality and high cost of connectivity. Without steady electricity, most companies have to rely on their standby generators to operate. Running a generating set to power a business often adds a huge chunk of cost to the operating expenses. These are costs that could easily have been eliminated or greatly minimized if these basic infrastructure were already in place and reliable as obtainable in some other developed and developing countries.

Another major challenge that faced SMEs within the last year has been due to some government policies. It is fair to apportion a large portion of the problem to the government solely for the singular reason that they have failed in their duty to provide an enabling environment for businesses to thrive. The government has over the years successfully designed policies and put in place regulations that will stifle innovation. Many entrepreneurs often complain of multiple taxation, with different government agencies demanding for tax. The policy adopted to check the fall of the naira also saw banks limiting and in some cases not providing forex, leaving many startups and SMEs who outsource some part of their business abroad or have need for forex to pay for certain products needed to run their business facing a big problem.

Competition with other well-known brands and imported items also presented a major challenge for most SMEs in the last year. With many Nigerians preferring to patronize the well-known brands, most of these small enterprises have found it difficult to gain appreciable market share to enable them compete favorably. Even lower prices has not swayed the market enough in their favour as many erroneously conclude such products are not of high quality.

Logistics presents a huge challenge for SMEs and startups as there is little credible logistics companies which can deliver goods to customers timely. Most customers of e-commerce startups end up receiving their goods in 6 days or more of their order, and sometimes maybe faulty at arrival due to handling issues. This challenge is costing many startup businesses a huge amount of money yearly. It is unlike western countries where there is a functional postal service that deliver goods within hours to their destinations. Most entrepreneurs are expected to find a new strategy on how customers can get their goods timely and securely

I personally believe that in few years to come some of these challenges mentioned would have been tackled if the Nigerian government show more support to the industry. By providing the necessary basic infrastructure, training and funding entrepreneurs, the government will go a long way in creating an enabling environment that small businesses can thrive in. There is great potentials in investing and supporting the startup ecosystem in Nigeria at this time. There are huge opportunities yet to be explored around Education, Ecommerce, Health, and also Telecommunications. There is need to develop startups that create products for the large consumer market in Nigeria. As the use of mobile phone is growing, it also provide huge opportunities for Nigerian Startups. Creating an idea hub where young and vibrant people with ideas are empowered and also meet with successful businessmen as mentors, irrespective of gender, tribe or religion will help more and more startups emerge, providing more jobs for the populace and eradicating inequality, hunger and poverty, in line with the sustainable development goals.

Ebuka Onyedinma contributed this article. Email him at

chukwuebuka.onyedinma@gmail.com