Start-ups in Nigeria are increasing annually and reports have shown that Nigeria is one of the top countries in Africa that invites investments and start-up businesses.
Despite the relative ease of starting up businesses in Nigeria, studies have shown that about 80% per cent of start-ups fail within their first three years. Only 20% of Small Medium Enterprises have shown to survive for more than three years in the country.
Studies have shown that start-ups in Ghana have about 85% failure rate, South Africa start-ups have about 75% failure rate, Uganda at about 50% failure rate of SMEs, Kenya with 70% failure rate, Ethiopia with about 78% failure rate, Tanzania has a failure rate of about 63% failure rate.
Despite the failure rate, SMEs in Nigeria contributes about 48% of the country’s total GDP. SMEs account for about 96% of businesses in Nigeria and they contribute about 84% of the employment rate.
According to Weetracker, in 2019 Nigeria Start-ups created a joint revenue of about $663.24 million. Experts have concluded that a major factor in the high failure rate of Small Business in the country has to do with the harsh economic climate, the fluctuation of the country’s currency is another major factor.
Lack of adequate funding is another major factor that destroys the Small Medium Enterprises in the country. Many SMEs cannot afford to expand their businesses by themselves without external funding such as loans.
Receiving loans for small businesses and start-ups in Nigeria can be very difficult, according to business owners and the interest rates are too high for the businesses to be able to pay back in such limited time provided.