According to data, Nigeria it’s no longer that favorable business environment for investors, both local and foreign. Any business that survives in Nigeria is practically going to survive in another climate.
The problems that stifle businesses in Nigeria are humongous. Multiple taxes, regulations, economic retrogression and many other issues you can think of. While the population is probably one of the biggest gains why any investor should come to Nigeria.
Nothing much has really changed, these businesses confronting mostly the Small and Medium Enterprises are not alien. These problems have been there for many years. There have been different forums where these problems are discussed but at the end of the tunnel, no actions are taken. It’s all promise and promise.
Lagos is usually the first point of destination for any investor. It has the largest population in Nigeria, investors settle down here before extending to other cities like Abuja, Benin or Port Harcourt. The city tends to kills businesses in Lagos.
Before Sanwo-Olu became the Governor of Lagos State, he promised that there would be a reform in the Okada transport system, not a ban. It seemed like a joke when the Lagos government decided to shut down Okada businesses, including e-hailing bikes like OPay and the rest.
Those businesses have practically shut down, some of the e-hailing startups are now venturing into delivery service in partnership with a logistics firm. They already lost money and recovery will take time if not impossible.
“At least 42 Small and Medium Enterprises in Lagos have been forced to shut down due to huge losses resulting from stifling operating environment,” said Dr. Femi Egbesola National President, Association of Small Business Owners of Nigeria.
According to him, the businesses involved were those belonging to the registered members of the association in Lagos State alone.
He said the businesses were in the manufacturing/production sector, while others were in the importation of commodities and consulting/services.
Giving a breakdown of the affected companies, Egbesola said, “About 92 percent of the 42 businesses that closed shop were manufacturing/production companies; six percent were into importation of commodities, while the remaining two percent were into consulting/services business.”
Egbesola said about 40 percent of the 42 businesses crashed in 2019.
He added, “They all ran out of business due to repeated losses, which led to negative liquidity and inability to meet up with financial obligations.”
Meanwhile, both the Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry rued the rise in Nigeria’s economic growth indices to 2.55 percent in the fourth quarter of 2019 as released by the National Bureau of Statistics.
While MAN noted that the GDP growth had failed to meet up with the surge in the population, the LCCI argued that the growth had failed to address the unemployment challenge in the country, while the economy could be best described “as weak and sluggish.”
They also noted that the manufacturing sector had remained stunted due to a tough operating environment, poor infrastructure and unpredictability of government policies.