Coursework: Disadvantages Of Doing Business In Nigeria
Although Nigeria is a vast country with a large population to support any business, there are certain inherent disadvantages of doing business in the country. The largest problem is corruption. Nigeria is termed as one of the most corrupt countries in the world and without connections and the willingness to grease palms any investor will face an uphill task to settle down or run his business. Apart from that, it is the poor state of the infrastructure and the scarcity of power and other amenities. Where there is rampant corruption; you always have a law and order situation and Nigeria is no exception.
The corruption extends to the judiciary, and any investor that seeks from the country’s courts will be sorely disappointed if the person thinks that he will get justice easily, speedily or even cheaply. Security is another major problem and kidnapping for ransom is a pretty lucrative business. The government is making efforts to attracts foreign investment, however, foreign investors go where there is security, both for assets and self, the infrastructure can adequately support growth the and expansion, and they can repatriate profits to their country. Basically, government officials in Nigeria do not care about anything but swelling their own bank accounts, most of which are in western countries. The writ of the government is virtually non-existent.
The prospect of establishing businesses in a regime that has such conservative laws does not appeal to many western investors. Even the Arab oil-rich countries and states mistrust such conservative governments because there is no security for their investments. Corrupt practices have also pervaded the educational system, therefore, the availability of educated and skilled workers is quite difficult to come by. The government is trying to improve the situation, but investors have no guarantees for the safety of their investments. Despite these setbacks investment has been coming in because of the vast potential for growth and the resources and population to support progress and expansion.
Another business challenge businessmen face when doing business in Nigeria is the lack of a cohesive Infrastructure and logistics to support entrepreneurship. If a person is going to run a successful business in Nigeria; then they must have the financial muscle to provide your own infrastructure. This single factor lengthens the time frame from initial planning to full business operations when compared to developed countries that have the basic infrastructure in place. The infrastructural challenge will directly or indirectly increase your startup overhead cost so you have to properly factor in this challenge in your business plan.
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