Nigerians are industrious people, we thrive in any environment but we thrive more in an environment that supports our ideas and aspirations but unfortunately, people venture into various kinds of business with some succeeding while others fail. I have seen many situations where people starts a business and end up closing down their business in the long run because of economic restraint, mismanagement or a string of bad decision making. Some of the mentioned factors can be properly handled while others are just beyond our control, as things need to be put in place for our businesses to perform optimally. This begs the question, why Nigerian businesses fail?
Firstly, many Nigerian business that produces goods or deliver services do not add value to what they produce or the services they render. For instance, the Buhari administration has placed a ban on rice importation into the country. This was done for Nigeria to be able to produce sufficient rice that will feed the nation while exporting its excess produce. This was seen as an opportunity for Nigerian farmers to boost the production of rice and also make money as a result the foreign rice embargo. Already some Nigerian farmers have attested to the fact that they are making profit but unfortunately, the quality of rice being produced is still below par compared to the foreign rice being imported from abroad. The local rice sold in Nigerian markets still looks unpolished as it has small stones and chaff inside. This makes preparing rice at home more stressful and injurious to our health as one might accidentally swallow or chew stones or rice chaff when consuming it. This makes one not to derive personal satisfaction when consuming it. Hence, the reason why so many Nigerians fancy foreign rice over the local one. For someone to find chaff and stones inside a few measures of rice shows that it wasn’t well processed and this sort of business practices shows why rice producers in Nigeria cannot compete with other foreign competitors who they are in the same line of business with. Hence the reason why they cannot last in business. It is important to note that the government is also responsible as they provide little support it terms of supporting farmers in producing the finished article.
Another reason is the volatile nature of prices of goods and services in Nigerian markets. There is a saying in Nigeria that anything that goes up never comes down. This is because prices of goods and services in Nigeria always goes up every year. This sort of scenario add to our inflation rates which makes life difficult for the average Nigerian and makes our naira to lose its value with each passing day. A retail seller who purchases goods for a particular price might in no time find out that the price of that same product have gone up the following week and from there on the price keeps going up year after year and it doesn’t come down. This has made it difficult for business dealing in groceries to remain in business because they barely make profit and some of the profit they use to stock up their shop because of the increase in the prices of commodities in the market. For instance, if a carton of noodles cost N1100, the retailer might sell it for N1300 thereby making a gain of N200 naira. But when he is out stock and returns to the market to buy noodles he suddenly discover that the price for a carton of noodle has changed compared to the previous amount he bought it last week. This unfortunately demands that he adds his profit to the original amount he took to the market so that he can afford to buy the noodles. This sort of businesses environment makes affects the retailer profits and with time, he will discover that he can no longer continue with the business as it wasn’t profitable for him anymore.
Incompetent personnel affects the survival of a business. Some employers employ people who are not competent enough to handle the job they are assigned to carryout. Some employers also make the mistake of employing based on tribal sentiments, mere paper qualification or the policy of man know man. This policy of man know man means that a person can get a job when he knows Mr A or B in a particular company who is influential, even though he or she does not have the right qualification to work in such an environment. This sort of recruitment will affect the performance of the company in a negative way as they do not possess the right manpower.
Corruption is another factor which has made so many businesses to fail and at the end shut down its operations. So far, the government have been fighting corruption from only one angle, which is the public sector. Meanwhile, corruption is an epidemic in the private sector as well. There are many cases where business have ended up shutting down as a result of embezzlement and mismanagement. People who are entrusted with certain positions in a company end up betraying the trust of the owner as well as embezzle the company’s profits and give false account of business transactions. This has been the case for so many companies in Nigeria that have ended up collapsing because the wrong people have been running the business. This issue also comes down to recruiting the right people who possess good character and competency.
Extravagant spending by business owners who spend their profits lavishly on luxury items, lavish buildings, expensive cars, and even spending big on elaborate ceremonies end up liquidating their business because they don’t reinvest part of their profit into their business. You might even be shock to know that some of these business owners who spend money lavishly, are owing the salaries of their staff. These are some of the kind of proprietors you find in Nigeria and this is considered as one the bad qualities of a leader. As the owner is not being considerate and do not care for the welfare of his workers. Such a business owner end up losing skilled personnel as they will end up quitting the job and look for other better employment opportunities. At the end the proprietor will be the loser and will end up shutting down the business. Because he has wasted so much money to do point he can no longer run the business.
Market trend is another issue. For a business to continue growing, withstand competition and stand the test of time, business owners need to engage in continued research as to the current market trends. Failure to do this may make ones business to liquidate as a result of low patronage. This is because, other competitors will definitely come up with a better product or services and this affects ones business as consumers are attracted to new products being introduced them in the market. Electronic product like Nokia phones have seen a considerable drop in patronage because they can’t keep up with the competition they face from Iphone, Samsung as well other smart phone companies. This is because other mobile phone competitors were the first set of companies to introduce the use of smart phones into the market and before Nokia could come up with its own smart phone model, other electronic companies have already gained a foot hold on the smart phone market. As a result, this has made Nokia loose its old customers to other electronic companies that were able to offer a better product.
Companies in Nigeria suffer from inadequate and inefficient infrastructural facilities in the area of transportation and electricity. Electricity which is the bases of industrilisation, is insufficient in Nigeria. Nigeria has an epileptic power problem and this affects so many businesses as companies spend so much money on powering their plant with either fuel or diesel. This sort of expenditure drastically reduces how much a company makes as its profit. In the process some companies or businesses who are unable to continue this way close down their business because the business is no longer profitable for them because of the kind of expenditure they run. This has been the case for so many companies, like the textile mill industry which have shut down its operations because of lack of steady power supply.
All of the challenges I have just mentioned can be solved individually while other issues can be solved by the government. I mean a government that has the political will. Currently the Buhari administration has made some efforts at resolving the problem of transportation in Nigeria. This is evident in the constructions of railway lines across the country as well as road construction. As Nigerians it is our hope that government will provide all the needed support for business to thrive in Nigeria. For anybody who wish to invest in the country definitely have an advantage because, Nigeria have the largest population well as the largest population of youths in Africa. Another advantage is that Nigeria has abundant natural resources. So your business can still succeed in Nigeria if you are resilient enough. As the saying goes, “Nothing good comes easy.”