Challenges to Doing Business in Nigeria
Introduction
Nigeria has a population of over 150 million from which 40 % signify the active and young population. This is obviously a massive market when you consider that the nation is still not well developed.
Starting a company in Nigeria has some really challenging challenges apart from the normal ones every company faces. In Nigeria you need to provide your own power source, Pay substantial communication expenses, compete with bad roads, slow Government procedures and insecurity.
Power Supply
The present state of electricity supply in the country is this that there's absolutely no guarantee on the number of hours of electricity supply you might get per day or if you could find whatsoever. Despite all of the attempts of this Government in this respect, the state of Power supply has remained poor.
As a business owner, you must factor in the expense of producing your own power for 100 percent of the time typically. When you think about the fact that in most overseas countries, this is not the situation. This certainly contributes to higher company startup costs and luckily more marketplace for generator Manufacturers and Providers.
Communication
With the advent of the GSM Technology at 2002/2003, mobile phones became available on the streets in Nigeria. Its affordability with respect to Tariffs has stayed high when you compare it to other nations. Many GSM companies and Fixed line mobile Operators have dreamed of the high cost of electricity generation for their business activities and also the high price of the operating licenses because the significant reasons for high phone tariffs.
These factors also affect the Internet service providers to a huge extent. The majority of the population still depend on satellite technologies that is still very costly in Nigeria.
If how to register a business in Nigeria plan to do business in Nigeria, then prepare for high internet and phone bills.
Road Network
Based on the kind of business that you wish to do, nearly 80 percent of Nigeria roads outside the business centers are poor. For those from the commercial centers, I could say about 60 percent are bad. If your plan is to initiate a road transport related company like logistics, freight, delivery, taxi etc you may want to budget a significant sum of money for automobile breakdown as a result of bad roads. Even if you've got a factory, you will sill have to get your merchandise to the distributions centers. This is another major obstacle to conducting business in Nigeria.
Security
In Nigeria today, the insecurity problem applies largely to the oil rich south-south and the Northern areas. Other areas of the country are relatively safe apart from the unavoidable isolated small incidents like burglary and property break-in. Regrettably, Nigeria depends heavily on Oil and has made very enormous investments in that respect.
The oil industry accounts for the bulk of foreign direct investment in Nigeria along with also the present insecurity situation in the oil producing areas isn't helping that sector of the economy. Though there has been attempts by the government in this regard but a lot more has to the done to enhance the quality of life of people living in these areas before it can become completely safe to conduct business there.
Conclusion
These are by far not the only challenges you would face to start or run a business in Nigeria but they are the most annoying ones. In the event the Government could correct a least the the Power supply, small businesses will spring up like weeds throughout the nation.
Nigeria has a population of over 150 million from which 40 % signify the active and young population. This is obviously a massive market when you consider that the nation is still not well developed.
Starting a company in Nigeria has some really challenging challenges apart from the normal ones every company faces. In Nigeria you need to provide your own power source, Pay substantial communication expenses, compete with bad roads, slow Government procedures and insecurity.
Power Supply
The present state of electricity supply in the country is this that there's absolutely no guarantee on the number of hours of electricity supply you might get per day or if you could find whatsoever. Despite all of the attempts of this Government in this respect, the state of Power supply has remained poor.
As a business owner, you must factor in the expense of producing your own power for 100 percent of the time typically. When you think about the fact that in most overseas countries, this is not the situation. This certainly contributes to higher company startup costs and luckily more marketplace for generator Manufacturers and Providers.
Communication
With the advent of the GSM Technology at 2002/2003, mobile phones became available on the streets in Nigeria. Its affordability with respect to Tariffs has stayed high when you compare it to other nations. Many GSM companies and Fixed line mobile Operators have dreamed of the high cost of electricity generation for their business activities and also the high price of the operating licenses because the significant reasons for high phone tariffs.
These factors also affect the Internet service providers to a huge extent. The majority of the population still depend on satellite technologies that is still very costly in Nigeria.
If how to register a business in Nigeria plan to do business in Nigeria, then prepare for high internet and phone bills.
Road Network
Based on the kind of business that you wish to do, nearly 80 percent of Nigeria roads outside the business centers are poor. For those from the commercial centers, I could say about 60 percent are bad. If your plan is to initiate a road transport related company like logistics, freight, delivery, taxi etc you may want to budget a significant sum of money for automobile breakdown as a result of bad roads. Even if you've got a factory, you will sill have to get your merchandise to the distributions centers. This is another major obstacle to conducting business in Nigeria.
Security
In Nigeria today, the insecurity problem applies largely to the oil rich south-south and the Northern areas. Other areas of the country are relatively safe apart from the unavoidable isolated small incidents like burglary and property break-in. Regrettably, Nigeria depends heavily on Oil and has made very enormous investments in that respect.
The oil industry accounts for the bulk of foreign direct investment in Nigeria along with also the present insecurity situation in the oil producing areas isn't helping that sector of the economy. Though there has been attempts by the government in this regard but a lot more has to the done to enhance the quality of life of people living in these areas before it can become completely safe to conduct business there.
Conclusion
These are by far not the only challenges you would face to start or run a business in Nigeria but they are the most annoying ones. In the event the Government could correct a least the the Power supply, small businesses will spring up like weeds throughout the nation.
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