Common Problems Founders Face while Running Startups in Nigeria
As an entrepreneur, running a successful business can be such a herculean task because you are met with a lot of unforeseen circumstances, but it can be very rewarding if you weather through the storm.
Despite the challenges, Africa has reached huge milestones in recent years, and the rise of startups was impressive as they raised a total of $4.08 billion worth of investments in 2021, an increase of 438.8 percent from $757.3 million in 2020, a 2021 Africa Venture Capital report shows.
Nigeria is estimated to have the highest number of start-ups with around 3,300 in 2020.
Though Nigeria is prospering in the startup industry, it does come with some major challenges.
Here are some of the challenges Nigerian startups face
1. Poor internet connection
It is challenging for a business to run successfully in these modern times without a stable internet connection. The lack of proper internet facilities affects startups in running day-to-day businesses smoothly and the productivity levels of employees drop. An organisation cannot survive optimally without the internet.
2. Insufficient/lack of funding
One of the best ways that owners can get funding for their company is either through loans or grants. Getting loans from banks in Nigeria is very daunting because the process is long and interest rates are not favourable, especially for small businesses. Another problem is the lack of trust of the bank toward small businesses because of their refusal to pay back loans.
3. Bad infrastructure and discouraging government policies
Nigeria lacks a conducive environment that encourages business growth. Some government policies discourage business growth. Nigeria’s struggling economy is also a huge problem because sometimes products of startups may not be affordable to the masses or they see no benefits. In Nigeria, promising startups that have the potential to contribute significantly to the economy have had to stop operations due to the rapidly shifting position of the government.
4. Lack of constant power supply
Unreliable power makes operating a business even more challenging than expected. This is one major issue that businesses face in Nigeria. The power situation in the country affects both the big organizations including the multinationals down to the small businesses and sole proprietorships. It costs the company extra spending costs to run which would not have been necessary if there is a regular power supply. Also, companies lose sales revenue in the informal sector.
5. Unreliable employees
For a startup to be successful it needs a strong and reliable team. Unreliable employees can destroy a company’s reputation. Workers’ poor performance can damage a business’s reputation. Employers must be ready to train the employees, especially in aspects of customer service, and give them the right skill they need to be employed. Employees need to be made accountable for their actions concerning the business.
My final thoughts are that though there are many problems in running a startup in Nigeria, the growth of startups still continues to rise. Businesses still continue to prosper despite the harsh environments. A large number of firms have been discouraged due to one challenge or the other. It can be seen that Africa is startup friendly but only needs to put the right measures in place.
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