Nigeria is blessed with abundant natural and human resources. However, for businesses to fully harness this potential and thrive, Nigeria must focus on building an enabling environment.
This requires targeted efforts across multiple fronts: improving infrastructure, strengthening institutions and regulations, expanding access to capital and skills, and fostering innovation.
With the right reforms and ecosystem, Nigeria can unlock its dynamism and emerge as one of the most attractive investment destinations in Africa. Here we explore priority areas for creating a thriving pro-enterprise climate.
Fixing Infrastructure Gaps That Stymie Business
Inadequate infrastructure, from transport to electricity, severely impacts productivity and operational costs for Nigerian businesses.
Powering Business Operations
Erratic electricity supply and frequent outages hamper the industry. Priority solutions include:
- Privatising electricity distribution to improve supply, maintenance, and customer service
- Investing in the grid to enhance generation and T&D capacity
- Off-grid alternatives like solar power parks and captive plants for industrial clusters to ensure reliable, affordable energy
- Encouraging mini-grids and rooftop solar to ease pressure on the national grid
- Strengthening regulatory oversight of the sector through bodies like NERC to hold DISCOs accountable
Connecting Markets
Lagging transport infrastructure drives logistics costs. Strategic imperatives are:
- Upgrading highways, rail, ports, and airport capacity. This expands connectivity between commercial hubs.
- Developing intermodal transport through terminals like dry ports and optimising corridor routes
- Leveraging technology for route optimisation, transparent tracking, etc. to improve cargo services
- Enabling private investment in transportation infrastructure via PPP models
Digital Highways
Affordable, fast internet enables modern business, yet penetration in Nigeria is below 40%. Steps to bridge this:
- Expand broadband infrastructure through programmes like the National Broadband Plan with clear roadmaps.
- Ease right-of-way approvals to expedite fibre rollout for telcos.
- Improve spectrum allocation through transparent 5G auctions.
- Support digital literacy programmes to boost e-commerce and internet adoption.
- Develop data centres across Nigeria to meet the growing demand for data localization.
Water Security
Water scarcity and supply disruptions hurt manufacturing, agriculture, etc. Solutions include:
- Expand piped networks in urban and industrial zones through partnerships.
- Improve irrigation infrastructure like dams and canals for farms.
- Promote rainwater harvesting, conservation, and recycling across sectors.
- Leverage technology like sensors, remote metres, etc. for efficient monitoring and leakage reduction.
These infrastructure improvements can significantly improve competitiveness and unlock growth.
Strengthening Regulatory Quality and Ease of Doing Business
Nigeria ranks low on global ease of doing business metrics. Simplifying procedures and regulations is vital.
Cutting Red Tape
Initiatives to reduce bureaucratic burdens include:
- Streamlining business approvals through online single-window clearances
- Eliminating duplicative licences and requirements. Move permissions online wherever feasible.
- Introducing regulatory impact assessments for new policies with compliance cost-benefit analyses
Improving contract enforcement
Steps like digitising courts, alternative dispute resolution mechanisms, dedicated commercial courts, and insolvency reforms help enforce contracts.
Tax Reforms
Measures such as improving clarity, e-filing facilities, reducing multiplicity, and rate rationalisation improve compliance and competitiveness.
Access to Land
Transparent land registries, digitised records, and liberalised allocation policies ease access to industrial and commercial land.
Labour Regulations
Balancing flexibility in hiring and retaining talent, along with fair worker protections, aids expansion.
Privatisation
Strategic privatisation of state-owned enterprises improves their productivity, service quality, and fiscal burden.
Corruption and security
Tackling corruption, strengthening IP enforcement, and improving security are imperative to attract investment and enable commerce. Holistic reforms across processes, institutions, and mindsets are needed.
With targeted reforms, Nigeria can considerably improve its business environment.
Boosting access to finance
Limited access to capital hinders Nigerian enterprises. Remedies lie in building a vibrant financial system.
Developing Capital Markets
Deepening segments like equities, corporate bonds, securitization, derivatives, etc. broadens funding avenues beyond bank debt. It enables companies to raise lower-cost, long-term capital. Policy measures to achieve this include:
- Incentives for listings and market-making
- Robust disclosure standards
- Financial literacy programmes
- Allowing pension and insurance funds to invest in capital markets
Expanding Venture Capital
Structured incubation, angel investing, and VC funding must expand to transform Nigeria’s technology startups into global players. Steps include:
- Fiscal incentives for VC investments in specified sectors
- Building successful VC-funded startups as role models
- Establishing technology parks and centres, housing accelerators, and shared facilities
- Promoting networks like angel investor groups and incubators
Development Finance
expanding the availability of affordable, longer-term financing for vital sectors like agriculture and manufacturing through entities like BOI and DBN.
Alternative Financing
Emerging channels like FinTech lending platforms, private credit, invoice financing, crowdfunding, etc. widen funding access for SMEs unable to secure bank loans. Developing credit scoring systems and digital identities will aid inclusion.
Banking Services
Policies that spur financial inclusion, digital payment adoption, and risk-based lending help expand bank credit for enterprises. Competition and risk management capabilities within banks also need strengthening.
With multi-pronged efforts, Nigeria can mobilise capital to fuel enterprises.
Building a highly skilled workforce
Nigeria’s youthful demography offers a competitive edge. To harness this:
Improving educational quality
Priorities include a curriculum revamp focused on skills like critical thinking, digitization, and virtual learning to improve teaching quality across K–12 schooling.
Enterprise Exposure
Incorporating entrepreneurship, technology, and vocational skills early in education exposes students to employability and enterprise. Apprenticeships and industry partnerships further help.
Technical/Vocational Training
Expanding high-quality vocational and technical training centres aligned with industry demand boosts skilled labour availability.
Workforce Readiness
Programmes enhancing soft skills, interview capabilities, workplace conduct, and ethics prepare youth for jobs while meeting industry needs.
Higher Education
Encouraging market-relevant graduate and professional education, along with funding mechanisms like education finance, aids employability.
Digital Fluency
Promoting digital and technology literacy across educational levels generates tech talent for emerging roles.
Lifelong Learning
Making skills training accessible and affordable for working professionals enables the workforce to reskill and stay competitive.
With strong foundations and continued learning, Nigeria’s talent can drive sustainable growth.
Fostering innovation and technology adoption
Leveraging innovation and emerging technologies allows Nigerian businesses to build a competitive advantage.
Boosting R&D
Increasing R&D spending across academia, companies, and government labs incubates new ideas while incentivizing commercialization and tech transfer.
IP Frameworks
Robust IP protection policies foster innovation by allowing the monetization of inventions and creations.
Industry 4.0 Technologies
Promoting automation, IoT, 3D printing, AI, etc. helps Nigerian manufacturing and services adopt advanced technologies, driving productivity globally.
Innovation Hubs
Building technology parks and digital innovation clusters facilitates the sharing of infrastructure, knowledge spillovers, and sectoral transformation. Targeted incubation and open innovation programmes also spur innovation.
Financing Innovation
Tax breaks and financial incentives for R&D expenditures enable firms to invest in innovation. Specific funds to commercialise university and lab research and bank innovation finance help convert ideas into marketable solutions.
Adopting emerging technologies
Using technologies like blockchain, drones, robotics, etc. in key sectors like agriculture, health, and education allows leapfrog improvements in operations, service delivery, and productivity.
Digital Governance
E-governance solutions expand inclusion and efficiency. Open government data also enables innovation by businesses.
With supportive policies, Nigeria can harness innovation to enhance competitiveness.
Promoting export competitiveness
Expanding exports is crucial for Nigerian companies to scale. This needs:
Export Infrastructure
Integrated agro-export processing zones with warehousing, testing labs, and shared cold storage boost food exports. Air cargo facilities also aid in the export of perishables.
Export Credit and Finance
The increasing availability of export credit insurance, FX risk cover, and working capital credit enables exporters to enhance overseas engagement.
Trade Facilitation
Initiatives like digitised customs procedures, paperless documentation via Single Window clearances, authorised economic operator programmes, etc. cut export costs and time.
Regional trade integration
Harmonising policies and standards with regional blocs boost intra-African trade. Nigeria must take the lead, being the largest market.
Improving Quality
Supporting SMEs to achieve global certifications through subsidised audits and training raises product quality.
Export Promotion
Programmes to facilitate participation in foreign trade fairs, virtual B2B partnerships, and accessible export market intelligence aid in connecting with overseas buyers.
Developing export clusters
Geographic clusters allow enterprises to collaborate on exports and build efficient supply chains targeting key export markets.
A vibrant export ecosystem expands possibilities for Nigerian businesses to tap global demand.
Cultivating a supportive business culture
Apart from policy measures, cultural mindsets shape entrepreneurial outcomes.
Celebrating Enterprise
Showcasing entrepreneur success stories for inspiration and promoting business role models creates a culture where enterprise is admired.
Minimising the Stigma of Failure
A start-up ecosystem needs second chances. Policies that dispel the stigma of failure through tools like fast insolvency resolution enable fearless entrepreneurship.
Fostering Trust
High-trust environments enable larger networks and partnerships. Developing mechanisms that engender trust, like escrow services, rating systems, etc., reduces transaction costs.
Encouraging Collaboration
Industry networks, alliances, and public-private partnerships leverage synergies for innovation and competitiveness. Trade associations also enable self-regulation.
Diversity and inclusion
Businesses reap benefits when all groups can participate equally. Improving gender diversity and minority inclusion creates a level playing field.
Strong Institutions
Well-functioning independent institutions—regulatory, judicial, etc.—that uphold the rule of law provide stability crucial for enterprises.
With supportive cultural attitudes, Nigerian entrepreneurship can thrive.
Conclusion
Nigeria undoubtedly possesses the potential to be a leading economy. But to unlock this promise, concerted action is required across many fronts to build an enabling environment where enterprises can grow and create jobs. As seen, from infrastructure to innovation, skilled talent to access to finance, the imperatives for change are clear.
With visionary leadership, bold reforms, and public-private sector collaboration, Nigeria can reap its demographic dividend and transform into a global economic powerhouse driven by enterprise. The opportunities beckon.