A recent report titled “State of Entrepreneurship,” published by the Fate Foundation, discloses that a staggering 90% of businesses in Nigeria experienced adverse effects following the removal of the fuel subsidy by President Bola Tinubu. The extensive report, which surveyed over 10,000 businesses across the 36 states and the Federal Capital Territory (FCT), outlined the disproportionate impact on smaller businesses compared to larger enterprises. The policy change resulted in heightened operating costs, diminished profits due to weakened demand, and a loss of customers.
The report highlighted regional variations, noting that businesses in the South-east were most severely affected by the subsidy removal, while those in the South-south reported the least impact. The negative consequences cut across both male and female entrepreneurs.
Impact of Naira Scarcity on Businesses
The report further delved into the repercussions of naira scarcity, revealing that approximately 89% of businesses in the country were adversely affected by the currency shortage experienced earlier in the year, particularly leading up to the general elections. The agricultural sector bore the brunt of the naira scarcity, causing a contraction of 0.9% in the sector’s output, as indicated in the GDP report for Q1. This decline marked the first in over three decades.
Outlook on Business Opportunities
Regarding the outlook on business opportunities, the report indicated that 86% of Nigerian entrepreneurs expressed optimism about the future. However, this figure was slightly lower than the 93% reported in 2022, suggesting a nuanced sentiment within the business community.
Sectoral Distribution of Businesses
The report provided insights into the sectoral distribution of businesses in the country. Notably, the service sector accounted for the majority, with 35% of businesses offering services, 22% selling goods, and an additional 42% trading goods and services. At the sectoral level, 18.8% of total businesses operated within the wholesale and retail trade sector.
This comprehensive report serves as a crucial resource for understanding the intricate dynamics and challenges faced by businesses in Nigeria, shedding light on the multifaceted impact of economic policies on entrepreneurs across various sectors and regions.
