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Top Challenges of Doing Business in Nigeria

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It is quite promising to do business in Nigeria, given the market availability occasioned by the alarming population. However, there are some challenges which have put a comma in the business-friendly nature of Nigeria. Although some of these challenges may depend on the kind of business you are doing or intend to do, they are all issues affecting the conduct of business in Nigeria. A few of them are discussed in this post. 

But before striking the challenges, it would be fair to consider some benefits and advantages of doing business in Nigeria. Nigeria’s vast human and natural resources have pushed her to the front line in both market and investment potential. The large market can accommodate almost all kinds of businesses, including consumables and non-consumables. Services of various categories can find fertile ground in Nigeria. Some government regulations also support business greatly. For instance, all expenses made on account of business operations and having the potential to promote business ventures are allowed under the companies’ income tax act to be deducted from taxable income. That’s an encouragement for business. 

On the other hand, business owners and those who have the intention of doing business in Nigeria will definitely have to brace up for some unique challenges. In a report by the World Bank, Nigeria was ranked 169th out of 189 countries in an ease of doing business report. It could be a nice venture to do business in Nigeria. But that is when your business has seen the light of the day. However, there are some challenges that such successful businesses might face. Below are some of them:

Insecurity and political unrest 

From the Boko Haram insurgency and Fulani herdsmen killings to violent protests and unknown gunmen, Nigeria is plagued by various levels of insecurity which has posed serious setbacks to both existing and startup businesses. A typical example is the Endsars protest that occurred in 2020. It was reported that several businesses were looted and shops destroyed. No one would want to invest their money where they would wake up one morning and have it carted away by hoodlums. The political instability of our time has turned many into political thugs and rivals. This has created uncertainty in the atmosphere of business, as you do not know when it will be your turn to tell how it happened. 

Lack of access to credit 

Despite the several programs that have been aimed at offering loans to businesses, the lack of credit facilities still remains a huge challenge faced by anyone doing business in Nigeria or intending to start one. This is because most of the credit opportunities offered by government or commercial banks or non-governmental organizations come with conditions that can hardly be met. Some of them have been reportedly politicized and given on the grounds of favoritism. The interest rate attached to these loans has also made them inaccessible to businesses in need of them. 

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Infrastructural problems

If you are looking forward to starting a manufacturing business in Nigeria, then your plans should include how you will contend with the poor roads and shortage of electricity power supply. Using an alternative power supply for production tends to increase the cost of production, which in turn kicks up the prices of goods. Despite its huge population, Nigeria produces less electricity nationally than an Irish city consumes. As a result, everyone is dependent on diesel generators, which increases the cost of doing business. Distribution can also become mountainous as a result of bad roads and a lack of it in some areas. 

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Registration challenge

Another challenge that besets the Nigerian business environment lies in the processes of obtaining permits and licenses to do business in Nigeria. The processes and documentation that a business must go through before being allowed to operate in Nigeria. Furthermore, they also face the problem of kickbacks and illegal charges from personnel. In addition, the concepts of “area boys” and “land fee” have added to the sorrows of business owners in Nigeria


Unfavorable policies

One of the common characteristics of the Nigerian business environment is the existence of policies that are anti-business growth and existence, especially for small and medium-scale enterprises. For instance, the sudden ban on bike-hailing service companies in Lagos state led to a loss of customers and the eventual shrinking of many businesses. These policies are frequently enacted without adequate surveying and consultation.Their immediate and long-term effects on businesses are far from consideration. It goes a long way towards killing businesses. This certainly discourages investors and business minds. 

Undue treatment by the authorities

Constant extortion and intimidation by regulatory authorities is another challenge often decried by people doing business in Nigeria. Individuals from these bodies often abuse their office to make quick money through illegal charges and fines and threaten them with grave consequences for disobeying. This practice often distorts the smooth running of business operations even when they have not broken any law. 

Inadequate information flow

Information is essential for any business. The large market size of Nigeria is accompanied by the challenge of correctly identifying who and where your customers are based. This has become a challenge for businesses that are trying to validate their business. Who customers are, their location, their needs, and their capacity to pay for those needs are vital pieces of information that drive a business. But this is difficult to get in the Nigerian market.


In summary, doing business in Nigeria can be very rewarding considering the large market and technological advancement. But there are also some significant challenges with which business owners struggle in order to push forward their business. They include insecurity, undue treatment by regulatory authorities, unfavourable policies, infrastructural problems, registration challenges, lack of access to credit and inadequate market information. 

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