In a recently published report titled “State of Entrepreneurship,” Fate Foundation reveals that a staggering 90% of businesses in Nigeria experienced adverse effects following the removal of fuel subsidies by President Bola Tinubu. The comprehensive survey covered over 10,000 businesses across all 36 states of the country and the Federal Capital Territory (FCT).
The findings indicate that smaller businesses bore a more significant brunt than their larger counterparts, grappling with heightened operating costs, diminished profits due to weakened demands, and a notable loss of customers. The report further highlights regional disparities, identifying businesses in the South-east as the most impacted by the subsidy removal, while those in the South-south faced the least severe consequences. The policy’s repercussions were reportedly equally felt by male and female entrepreneurs.
Naira Scarcity Adds to Business Woes
The report doesn’t stop at fuel subsidy removal, shedding light on another economic challenge faced by Nigerian businesses. Approximately 89% of businesses in the country were negatively affected by the scarcity of the naira earlier in the year, particularly before the general elections. The agricultural sector emerged as the most affected, with the scarcity contributing to a 0.9% contraction in the sector’s GDP output in the Q1 report—an unprecedented decline in over three decades.
Entrepreneurial Outlook and Sectoral Distribution
Despite the challenges, the report suggests that 86% of Nigerian entrepreneurs maintain optimism about future business opportunities. However, this figure marks a decrease from the 93% who expressed a positive outlook in 2022.
The report delves into the sectoral distribution of businesses in the country, revealing that the service sector holds the majority, constituting 35% of all businesses. Meanwhile, 22% focus on selling goods, and 42% engage in both goods and services. At the sectoral level, 18.8% of total businesses operate within the wholesale and retail trade sector.
As Nigerian entrepreneurs navigate the complex economic landscape, the report provides valuable insights into the challenges faced by businesses and their resilience in the face of adversity.
