Reasons Why Small and Medium Scale Business in Nigeria Often Fold UpPosted by Thompson Whalen on May 10th, 2021 Reasons Why Small and Medium Scale Business in Nigeria Often Fold Up The high rate at which small and medium scale business in Nigeria are folding up, has brought to limelight, the issue of Government sincerity in ensuring that the revamping of the economy is given utmost priority. The reasons behind the collapse of these businesses can be traced to the following reasons: Lack of Capital No business can thrive without sufficient fund to carry out its daily operations. The situation is pathetic in Nigeria, as most small businesses are starved of needed funds. Commercial banks are not willing to release funds, and when these funds are made available, the interest rate is so high, thus discouraging potential lenders. Epileptic Power Supply The power sector in Nigeria has gone from bad to worse, as most businesses are now forced to resort to the use of petrol or diesel generator to sustain their business. This has adversely affected the running cost of these businesses which are barely managing to survive. The present move by the Nigerian Government to privatized the power sector is aimed at encouraging private investors to fully utilize the huge potential available in the Nigerian market. Low patronage Some small and medium scale businesses easily go under due to low patronage from customers. This low patronage can be linked to the harsh economic situation which has forced Nigerians to cut down on some luxuries. Inexperience Management This is a key factor in the survival of every small business. The influence of management on business success cannot be undermined. Most small and medium scale business is owned by individuals, and this can often affect the choice of who manages the business. The decision about who manage these businesses is often influence by family ties and relationship with recourse to experience and business ethics. This can ultimately prove disastrous in the long run. Insecurity The spate of violence in most part of Nigeria has resulted in most of the small businesses closing shop. Militant activities, kidnapping and ethnic/religious crisis have conspired to ensure that the average business life span in Nigeria is greatly reduced. Government Policies The frequent change in Government has also resulted in change in Government policies. Some of these policies are not business friendly, as they tend to add strain to the limited resources of these small businesses. There are cases when multiple taxation is implemented and where goods in ports are unduly delayed due to change in Government policies. Lack of Creativity The creative ability of small business owners can become a survival weapon in time of depression. Most business owners are lacking in this regard, hence the high rate of failed businesses. Some creative entrepreneur having studied the economic tide, are forced to diversify their operation to counter any adverse effect that would otherwise have some negative implication on the operation of their business. Latest Nigeria JobsLike it? Share it! |