Challenges to Doing Business in Nigeria

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Nigeria has a population of more than 150 million out of which 40 % represent the young and active population. This is clearly a huge market when you consider the fact that the country is still not well developed.

Starting a business in Nigeria comes with some really challenging hurdles apart from the normal ones every business faces. In Nigeria you have to provide your own power supply, Pay huge communication costs, contend with bad roads, slow Government processes and insecurity.

Power Supply

The present state of power supply in the country is such that there is absolutely no guarantee on how many hours of power supply you could get per day or if you could get any at all. Despite all the efforts of the Government in this regard, the state of Power supply has remained poor.

As a business owner, you have to factor in the cost of generating your own power for 100% of the time in most cases. When you consider the fact that in many foreign countries, this is not the case. This definitely contributes to higher business startup costs and fortunately more market for generator Manufacturers and Suppliers.


With the coming of the GSM Technology in 2002/2003, mobile phones became available on the streets in Nigeria. Its affordability in terms of Tariffs has remained high when you compare it to other countries. Most GSM companies and Fixed line phone Operators have always complained of the high cost of power generation for their business activities and the high cost of their operating licenses as the major reasons for high phone tariffs.

These factors also affect the Internet service providers to a large extent. Although there has been various efforts to bring down bandwidth costs by construction of direct international cable links like the “Glo-1”, “SAT-1” etc but the demand is much more in excess of what these initiatives can provide. The bulk of the population still depend on satellite technology which is still very costly in Nigeria.

If you plan to do business in Nigeria, get ready for high internet and phone bills.

Road Network

Depending on the type of business you want to do, almost 80% of Nigeria roads outside the commercial centers are bad. For those in the commercial centers, I could say about 60% are bad. If you plan to start a road transport related business like logistics, freight, delivery, taxi etc you may want to budget a considerable amount of money for vehicle breakdown due to bad roads. Even if you have a factory, you will sill have to get your products to the distributions centers. This is definitely another major challenge to doing business in Nigeria.


In Nigeria today, the insecurity problem applies mostly to the oil rich south-south and the Northern areas. Other areas of the country are relatively safe apart from the unavoidable isolated small incidents like burglary and property break-in. Unfortunately, Nigeria depends heavily on Oil and has made very huge investments in that regard.

The oil industry accounts for the bulk of foreign direct investment in Nigeria and the current insecurity situation in the oil producing areas is not helping that sector of the economy. Although there has been efforts by the government in this regard but a lot more needs to the done to first improve the quality of life of people living in those areas before it can become completely safe to do business there.


These are by far not the only challenges you would face to start or run a business in Nigeria but they are the most annoying ones. If the Government could fix a least the Power supply, small businesses will spring up like weeds all over the country.

In spite of all these challenges, business are still starting and surviving. This makes me to believe that Nigerians will definitely do very well if they find themselves in a country without all these challenges

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