Lack of access to finance, poor electricity, insecurity and foreign exchange instability have continued to affect the formation of new businesses, which dropped by 24 per cent last year.
The 2024 State of Entrepreneurship (SoE) Report published by Fate Foundation revealed this, stating that business formation dropped from 30 per cent in 2023 to 24 per cent a year later. In 2022, it was 32 per cent.
The report noted that entrepreneurship in Nigeria is driven by economic necessity, with the main motivation being the need for additional income.
The SOE said Anambra and Ebonyi were the best-performing states in 2024 with an entrepreneurship index score of 0.77, significantly higher than the national average of 0.46.
According to the report, both states excelled in business birth rates, the share of registered businesses and support for youth and female-led businesses that grew and secured financing.
Further, the report listed Kogi, Kwara, and Oyo in third, fourth and fifth, respectively. Among the top five states in the 2023 survey – Kano, Kogi, Kaduna, Borno, and Bayelsa – only Kogi retained its spot in 2024.
At the lower end, Niger, Cross River and Zamfara recorded the weakest scores.
The report noted that overall, relative to last year, 20 states recorded a decline, while 15 states improved their rankings.
Two states – Plateau and Zamfara – maintained the same spots in 2024.
The report noted that despite the slowdown, female participation in entrepreneurship rose. It showed that 47 per cent of new businesses in 2024 were established by women, up from 42 per cent in 2023. Bauchi, Niger and Abia recorded the highest rate of new female-owned businesses.
The share of female-led enterprises has risen steadily over the last three years, from 43 per cent in 2021 to 48 per cent in 2024.
Despite women-led business growth, the report, however, said female entrepreneurs remained more vulnerable to economic shocks.
“In 2024, 63 per cent of female-led businesses reported growth, a decrease from 74 per cent in 2023 and slightly lower than the 64.3 per cent for male-led businesses,” the report stated.
The SoE states that states such as Anambra, Ebonyi, and Ogun recorded the highest growth rates for female-led enterprises, supported by access to new markets, rising demand, and technology adoption.
Yet, access to finance stood out as the most critical challenge for women in business.
On challenges confronting business development in Nigeria, the report said: “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.
“Factors such as insecurity, foreign exchange issues, and infrastructure challenges emerged among the top five in 2024, reflecting problems of exchange rate depreciation and insecurity, which dominated headlines during the year.”
Despite the constraints, the SoE observed that most Nigerian entrepreneurs remained hopeful, saying that 87 per cent of entrepreneurs said they are optimistic or very optimistic about business opportunities in the next year.
It, however, revealed that expansion plans have slowed. Only 68 per cent of entrepreneurs indicated plans to grow their businesses in 2024, compared to 78 per cent in 2023.
The report urged the Nigerian government to ensure macroeconomic stability by implementing business-friendly policies to attract long-term foreign direct investment.
It recommended the need to enhance non-oil exports to boost foreign exchange inflows and address volatility in the exchange rate and inflation.
