Over the years, the benefit and impact of entrepreneurship have, time and again, proven quite instrumental to uplifting societies and improving economies.
Whether it be the developed or the developing world, the idea of individuals starting and running ventures that can create value and improve people’s lives mostly sound the right notes these days, even though many, many years back it was only thought of as something for people who weren’t smart enough for school.
Well, as it is, some of the world’s biggest and most successful businesses of today are products of entrepreneurship. And how fitting it is that some of those businesses were actually built by people who weren’t good enough for school.
These days, it’s quite common to find people jettisoning all other pursuits to chase the emancipation that comes with running some kind of private venture. And that’s because entrepreneurship is a good thing. Or is it?
Well, maybe entrepreneurship is “mostly” a good thing. Except for those few times when it is actually a sign that all is not well — like the case in Nigeria.
Just like in most parts of the world, entrepreneurship is celebrated in Nigeria, and for good reasons too. After all, it’s an undertaking that could see small businesses go on to become huge conglomerates if conditions permit.
However, perhaps entrepreneurship is celebrated a little too much in Nigeria. Or maybe it is not celebrated at all and it is just the default path for individuals who still have some dignity and humanity left given the poor state of affairs in the country.
“As recently as 2015, the Global Entrepreneurship Monitor (GEM) said that 35 percent of working-age Nigerians are entrepreneurs,” Stanley Ikechukwu, Primary Data Team Lead at SBM Intelligence, told WeeTracker.
“Based on SBM’s own data, I’ll estimate that for every five jobs lost in Nigeria, three people venture into entrepreneurship, so given Nigeria’s current unemployment/underemployment rate (40 percent), I think our entrepreneurship rate is about 24 percent of working-age Nigerians.”
That’s between 24 percent to 35 percent of working-age Nigerians engaged in one form of entrepreneurship or the other. Could that mean that Nigerians are inherently resourceful people who just like to run their own gigs? Or is that figure symptomatic of a system that has forced people into a do-or-die fight for survival?
Well, evidence supports the latter.
Entrepreneurship is just as much a good thing as it is a sign of a bad thing.
At least, that’s the message that can be drawn from global entrepreneurship data which shows some sort of inversely-proportional relationship between the rate of entrepreneurship and the degree of development of a country.
GEM data from last year puts entrepreneurship figures for advanced economies like France, Germany, Italy, Japan, Luxembourg, Spain, and Sweden, at 1.7 percent, 2.3 percent, 1.3 percent, 1.3 percent, 2.3 percent, 2.2 percent, and 1.9 percent respectively.
Those numbers contrast the entrepreneurship figures for developing countries like Angola, Brazil, Cameroon, Thailand, and Uganda, which are respectively 12.4 percent, 13.8 percent, 13.7 percent, 16.7 percent, and 28.1 percent.
The case in the United States is somewhat exceptional in that, while the entrepreneurship rate is around 14 percent and SMEs are, in fact, known to employ up to 80 percent of the working population, none of that can be attributed to people being forced into SMEs because it’s either that or bust for them. It’s borne out of personal convictions, willful intentions, and a genuine desire to create value.
In Nigeria, however, it is a different story. Countries like France, Germany, Italy, Japan, Spain, Sweden, and Luxembourg, have some sort of social welfare package for their unemployed, and those unable to work. Hence, low entrepreneurship rates.
And the high rate in the U.S can be put down to people genuinely wanting to create stuff, meet societal needs, or run businesses of their own. Not because they don’t have any other choice.
And while the relatively higher rate of entrepreneurship in developing countries like Angola, Brazil, Cameroon, Uganda, and Thailand can mostly be attributed to people taking advantage of unique opportunities, the situation in Nigeria is more like that of people clawing at straws because they would freeze out in the cold if they don’t.
Often times, there is a certain weird sense of pride that comes with saying stuff like: “35 percent of working-age Nigerians are entrepreneurs and 41 percent of working-age Nigerian women are entrepreneurs.”
Now, this is both odd and sickening and should not be applauded or encouraged. If anything, it should elicit panic as it is an indication of systemic failings on several fronts and a far cry from a system that is working.
When entrepreneurship becomes a must-do thing which people have to engage in so as to “keep body and soul together” lest be left to beg for alms on the streets, then there is a colossal problem. Entrepreneurship was never intended as a survival mechanism, it’s about creating value because one can, and being rewarded for it.
At best, the “hyper-entrepreneurship” situation in Nigeria just means that people are barely surviving and that the entire system is failing — or more aptly — has failed under the government’s watch. It reeks of people desperately trying to make ends meet amidst government failures.
“There are a couple of key factors that have contributed to the rise in entrepreneurship in Nigeria, one of them is unemployment,” said Ikechukwu.
“The unemployment rate in Nigeria increased to 23.10 percent in the third quarter of 2018 from 22.70 percent in the second quarter of 2018 and could possibly hit the highest in the country’s history at 33.5 percent by 2020. The underemployment rate is slightly higher,” he added.
“Most Nigerians go into entrepreneurship as a means to cater to their needs.”
The SBM Intelligence analyst, however, maintained that some Nigerians (though very few) actually feel the need to create jobs tapping into the evolution and simplicity of technology, social networking, process innovation, and opportunity perception to close up the gap most especially in the service-driven sectors, though achieving this is far from easy as Nigeria is a difficult place to do business.
This is even highlighted by the country’s ranking of 146 out of 190 countries in the World Bank’s latest Ease of Doing Business rankings.
And according to him, it all comes down to the government which has not only left a large number of Nigerians with no choice but to survive somehow but also made it very difficult to even “survive somehow.”
“The blame goes to the government. Doing business in Nigeria, or being an entrepreneur is very difficult. Power is a major challenge and it is known to cripple a lot of businesses. Power is a major example of the systemic challenges facing entrepreneurs in Nigeria, but they all combine to decrease efficiency,” he stated.
“Government investment in the country’s infrastructure is at an abysmal level; the economy itself is growing at a very poor level, the Naira is weak, the security situation is scary, the port is congested and FDI is shrinking.”
“The government needs to roll out game-changing policies to enable the private sector to drive the economy, then there is the issue of continuity. If this government somehow makes the right policy decisions, our history shows that there is no guarantee that the next government will continue on that path.”
“Think of how Yar’Adua reversed some of Obasanjo’s best decisions simply because some people did not like them. That is the biggest problem that needs solving.”
Featured Image Courtesy: MakeItGlobal
Get Access to 20+ well researched and insightful African business stories monthly & unlimited access to Free-reads.
If you are a Corporate or a Student, please reach out to us at [email protected]