Business start-ups in Nigeria on 3-year downward trend — Report

•Dips to 24% in 2024

By Yinka Kolawole

Creation of new businesses in Nigeria has been on a downward trend over the past three years, a new report has revealed.

The 2024 State of Entrepreneurship (SoE) Report, just released by Fate Foundation, a non-profit private-sector-led organisation, shows that the business birth rate in Nigeria fell to 24 per cent, from 30 per cent in 2023 and 32 per cent in 2022.

The survey, which examines the entrepreneurial ecosystem and the performance of Nano, Micro, Small and Medium-sized Enterprises (NMSMEs) in Nigeria, is conducted annually by Fate Institute, the research, policy and advocacy arm of Fate Foundation. The 2024 SoE report attributed the slowdown in business creation mainly to the prevalent harsh economic conditions in the country.

According to the report, the desire for entrepreneurs to start new businesses in Nigeria is largely driven by economic necessity.

Bright spots in the report were that more female entrepreneurs

established new businesses, and many more young Nigerians are venturing into entrepreneurship.

“In 2024, the birth rate in Nigeria fell to 24%, from 30% in 2023 and 32% in 2022. “This slowdown in business creation was largely due to Nigeria’s harsh economic conditions.

“For entrepreneurs starting new businesses, the main motivation cited was the need for additional income, implying that entrepreneurship in Nigeria is driven by economic necessity. “Notably, 47% of new businesses were established by female entrepreneurs, an increase from 42% in the previous year.

“The share of female-led businesses has consistently increased over the past three years, rising from 43% in 2021 to 48% in 2024.

“This trend suggests a growing role for women in Nigeria’s entrepreneurial landscape. “However, female-led businesses appear to be more adversely impacted by the challenging business environment than their male counterparts.

“In 2024, 63% of female-led businesses reported growth, a decrease from 74% in 2023 and slightly lower than the 64.3% for male-led businesses.

The report further stated: “For the first time in four years, youth-led businesses had the highest share of total businesses surveyed, with a share of 44.4% in 2024. This indicates that many young Nigerians are venturing into entrepreneurship. “Relative to last year, youth-led businesses performed better in terms of access to finance, job creation and skills acquisition, despite a challenging business environment.

“Compared with other age groups, youth entrepreneurs had the highest share of technology adoption (72%), which was also linked to business growth – 71.4% of youth-led businesses that adopted technology reported growth, while 82.4% of youth-led businesses that experienced growth had adopted technology.

“Essentially, young entrepreneurs are a formidable force in Nigeria’s entrepreneurial ecosystem, displaying a high level of ambition, adaptability, and tech-savviness.”

Furthermore, the SoE report noted that in 2024, Nigeria had an entrepreneurial index of 0.46 out of 1.0.

“This score is lower when compared with 0.52 in 2023 and 0.58 in 2022, indicating a deterioration in the state of entrepreneurship in the country,” it stated.

Highlighting the key challenges, the report noted that in 2024, the top five most problematic factors for entrepreneurs included limited access to finance, poor power supply, insecurity, foreign exchange difficulties, and infrastructure challenges.

Commenting on the report, Executive Director of FATE Foundation, Adenike Adeyemi, stated: “The 2024 survey reveals lower business growth rates, fewer jobs created, lower levels of skills adoption among entrepreneurs, and the persistence of challenges such as local currency depreciation, high inflation, insecurity and poor power supply.

“Yet, we note some green shoots, particularly among female and youth-led businesses. Female-led businesses have shown a notable increase in both market participation and growth. At the same time, youth entrepreneurs have become a driving force, leading technology adoption at an impressive rate of 72%.

“These trends underscore the potential of inclusive policies and technology-driven interventions to foster sustainable growth.”

Among other recommendations, Adeyemi said the government should ensure macroeconomic stability by implementing business-friendly policies to attract long-term foreign direct investment and enhance non-oil exports.

She further urged the government to make business registration more accessible to informal entrepreneurs, as well as creating public-private dialogue platforms to facilitate peer learning.

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