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Why Do Businesses Fail To Grow In Nigeria?

Challenges of Business Growth in Nigeria 2021?

It is well understood that Small Scale Enterprises (SMEs) are the most effective means of generating employment and fostering growth. Typically, SMEs adapt with greater ease under Changing business conditions because of flexibility and low capital involved. In spite of their resilience, small businesses encounter numerous challenges which limit their ability to grow.
These challenges are not only peculiar to start ups but also limit the capacity of medium and large enterprises. It is pertinent to recognize that, like many African countries, Nigeria‟s economy is mono-cultural, relying overwhelmingly on oil resources. Oil and gas contributed about 99 percent of exports and provides about 85 percent of government revenues (World Bank/DFID, 2006). Over the years, the country has failed to diversify its economy away from the extractive sectors which increasingly limits its ability to grow and develop. This problem further prevented Nigerian entrepreneurs from moving towards higher productivity in value added sectors. Hausman and Rodrick (2005) posit that poor countries tend to rely on lowincome goods even though when they overcome certain externalities, they can successively move to higher value goods. The years of inaction in this regard resulted in the low productivity and non-competitiveness of Nigerian industries. Interestingly, Nigerian people have demonstrated that even without government support and direction, they are capable of staring and growing ventures. This resilience of Nigerians can be found in the following trades:
•Movie and music
•Internet cafes
•Phone cards and call stands
•Business centres
•Satellite installation and repairs
•Computer soft and hard wares
•Transportation

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Other business activities that experienced significant growth in the last few years include:

•Photo studious and video coverage

•Automobile dealership and repair

•Electric generators and repairs

•Electronics and repairs

•Restaurants

•Chemists

•Super markets

•Traditional medication

•Tailoring and design

•Block making

The problems of many of ventures listed above remains lack of expansion, low technology and skills; and limited capital. In fact, significant numbers of youth that have low skills are either unemployed or are engaged in street hawking and road side petty trades because the ventures that are expected to absorb them do not frequently grow. Thus, there is the need to carefully address the binding constraints to growth of businesses in order to regenerate the economy.

Some of the key challenges are as follows:

1. Lack of coherent economic empowerment policy: There is yet to be a comprehensive long term agenda for youth development which would draw momentum from reliable data bank for skilled and unskilled; employed and unemployed youth in the country. There is almost total absence of coordination among various agencies concern with employment generation in the country.

2. Technical constraints: Although there are few vocational and other skills acquisition centers in the country, their number and competencies are inadequate to improve the technical capacity of many Nigerians. Also, the technical skills provided are skewed towards low technology and low skill trades.

3. Deteriorating economic condition: Due to weak economic policies that engender high
inflation, high interest and exchange rates couple with the smuggling of foreign cheap products into the country, many people consider it extremely risky to invest in agri-business and manufacturing.

4. Lack of productive culture: People are accustomed to being dependent on parents, relative, friends and government. Without social re-orientation, it will be difficult to free the enormous talent and energies of people to think and act their way to financial independence.

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