DRIVERS AND CHALLENGES
By Shola Adenekan
Tuesday, April 15, 2008.
Nigerians have a relatively strong drive for entrepreneurship, according to a new poll. The latest Gallup Poll conducted in Nigeria shows 67% of Nigerians have thought of starting a business – one of the highest in the world.
Many African governments are implementing reforms to improve the business climate within their countries with Nigeria having one of the most active stock markets in the world.
Compared with other countries in West Africa, where the median percentage of respondents who say that they have thought of starting a business is 44%, the Gallup Poll suggests relatively high interest in entrepreneurship in Nigeria.
Moreover, almost one-half (45%) of Nigerians say they plan to start a business in the next 12 months, suggesting a significant percentage of respondents have firm plans. Additionally, most Nigerians (80%) are very confident that a newly created business will do well in their country.
Nigerian women (67%) are as likely as Nigerian men (68%) to say they have entertained the idea of starting a business. And when considering education levels, Nigerians with some university level education are as likely as those with a primary education or less to have considered starting a business.
The survey also looked at perceptions of social networks in the context of entrepreneurship. A slight majority of Nigerians (53%) say they know someone, exclusive of their relatives, whom they could trust enough to make that person a partner in a business startup.
On the other hand, the poll findings put a spotlight on three important obstacles to entrepreneurship in the country.
Almost three-quarters of Nigerians (73%) say it is not easy to obtain a loan. A majority of Nigerians (59%) also say that the government does not make the filing process easy enough for anyone who wants to start a business.
Additionally, Nigerians are mixed on the constancy of the business regulatory environment with 40% percent of respondents say an entrepreneur can feel very confident that tax laws and other rules of the game will not change all the time, but 33% think they will change.
As part of its plans to encourage small and medium sized entrepreneurs (SMEs), the government is streamlining Nigeria’s notorious bureaucratical red-tape and has also established industrial clusters known in Nigeria as Enterprises Zones (EZ), which many business analysts say will facilitate value-chain bonding, faster technology diffusion processes and regional industrialization identity which in turn, will fast track human development.
But the relatively high percentages of "don't know" responses in the Gallup survey with respect to the filing process and the regulatory business environment suggest that many Nigerians are either unaware of the national government's efforts to simplify the business start-up process or that further reforms are necessary.
“The entrepreneur operating under the current dispensation is the same with any other investor, who is over burdened with having to source additional funds to procure basic infrastructure vital for production of goods and services. These are sunk costs; together with derived overheads, such as diesel, and profitability becomes difficult to sustain,” says Umar Galadima, a business analyst and the head of Gamma Associates Limited, based in the city of Kano, northern Nigeria.
“Governments must assist entrepreneurs and small firms to overcome this dilemma by also providing sustained fiscal policies needed for long term business planning,” he says.
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