Nigeria’s Many Businesses of Little Substance
Sometimes when I see a stat about Nigeria, it causes me to start looking for comparative data from other climes.
For instance, I saw a report by SMEDAN — the Small and Medium Enterprises Development Agency of Nigeria — showing that out of Nigeria’s 200 million population, there are approximately 39.6 million MSMEs.
That’s too high.
The great United States, a country of 330 million people widely considered the home of entrepreneurship, has 30 million MSMEs.
China, the world’s largest exporter, by far, with a population of 1.4 billion people, has 38 million MSMEs.
Why does Nigeria have more small businesses than these capitalist powerhouses?
The answer is Unemployment.
A vast majority of people you see doing business around you have no business doing business. It is why there is much high failure rate. The U.S. Bureau of Labor Statistics (BLS) reveals that 45% of business fail during their first five years. In Nigeria, it’s 80% according to a report I saw this week.
A chap leaves school, looks for a job. With none forthcoming, he delves into business. If Switzerland, the most friendly country to businesses has a failure rate of 50% within 5 years, what is the hope of this guy in a Beau Harry-driven economy?
Even worse, most businesses that survive the 5-year mark labour to grow. BusinessDay interviewed a businessman in Aba who has been in business for fifteen years. For all of his ‘institutional’ knowledge of running the shoe business, he only has one employee and two apprentices.
Where are the business expansion and sustainability expected from such a business?
Tens of thousands of these people exist across the country.
We have too many people who have no business going into business who are going into entrepreneurship.
Entrepreneurship is not for everybody.
Most people are better served working for others, even if they will later go into business.
But where are the jobs?