These are major constraints to effective business activities in Nigeria
The 2017 Global Competitiveness Report has identified poor infrastructure, foreign exchange control among other as issues affecting businesses in Nigeria.
Though the country has moved up 2 places, yet it is still struggling with a weak macroeconomic condition and inflationary pressure. Also, the report high-points major areas of greatest concern to businesses operating in Nigeria.
“Nigeria is struggling to adapt to lower commodity prices, with the potential for structural change impeded by low scores on infrastructure, technological readiness, higher education, and innovation capacity.
“However, new prudential requirements have strengthened the banking sector’s soundness, and the Economic Recovery and Growth Plan (ERGP) for 2017–2020 contains much-needed reforms on transport and power infrastructure, the business environment, and education investment,” said the report.
A Presidential Enabling Business Environment Council (PEBEC) was set-up by the Nigerian government to address issues identified in this report and it has initiated some policy actions ameliorate the situation. However, these are top 5 areas that needed more attention for the realization of a better business climate in the country.
1. Poor Infrastructural Supply
Inadequate social capital to support business operations was the greatest problem businesses in Nigeria encounter. According to the GIC 2017-2018, 20 percent of businesses in the country faced infrastructural challenges.
More so, the effectiveness of some initiatives introduced by the government have failed to yield expected impacts, greatly due to inadequate social amenities.
2. Foreign exchange control
The volatility of the country’s forex market is the next most prominent business challenge in Nigeria. Most of the raw materials and goods are imported, hence there is a great dependence on FX to direct the direction and condition of many businesses.
The various controls instituted by Central Bank of Nigeria have posed great challenges to businesses, but the situation is getting better.
3. Access to finance
Most businesses in Nigeria find it extremely hard to access needed funds to scale or growth. However, there is increase in government's effort towards curtailing barrier to funds by small and medium size businesses in the country.
Corruption associated with government and public agencies is a major constraint to business in Nigeria. These extortions constitute a form of taxation, and thus increasing the cost of business operation in the country.
This situation is very frequent as there is a constant need in the country to interact with the government agencies for business approvals or license.
5. Inefficient government bureaucracy
Bureaucracy associated with government agencies is one major problem businesses face in Nigeria. To get licenses and government approvals is a difficult task, hence hampering the efficiency of businesses in the country.