Transforming start-ups through economic reforms

 

Start-ups all over the world are nurtured because they are at the early stages of their operations. In China, start-ups are provided with loans at less than one percent interest rate. Infrastructure such as regular power supply, efficient rail and port systems are taken for granted.

This informs why start-ups spring up every now and again, creating jobs and wealth, while extending their footprints on the export market.

The case is different in Nigeria, where start-ups provide many things for themselves.

 

According to experts, for Nigeria to boost investment and ensure the survival of start-ups, there is a need for the government to address the issues around rail transportation, power supply and foreign exchange through reforms.

 

Nigeria’s roads and rail system remains insufficient to facilitate the movement of goods and services.  The country is badly hit by huge infrastructural decay with a deficit estimated at $300 billion, according to industry report.

 

Power remains a big infrastructural challenge in Nigeria, with its deficit increasing operational cost for start-ups and reducing their survival rate, analysts say. Power outages occur six to seven times each day in industrial zones, interrupting the production process and destroying goods, according to the Manufacturers Association of Nigeria (MAN).

 

Businesses are made to pay higher electricity bills from the Discos without power supply, and cost of diesel is rising, with a litre now beyond N200. Beside this, firms are taking out huge budgets to buy new generators, with SMEs the worse hit.

 

“The poor power supply in the country is so frustrating for businesses and its killing a lot of start-ups,” said Femi Egbesola, national president, Association of Small Business Owners (ASBON), said in a telephone response to questions.

 

“With stable power supply, start-ups survival rate will increase tremendously because power alone constitutes about 50 percent of their operational cost,” Egbesola said.

 

He noted that countries in the world where start-ups survival rates are high are countries with adequate power supply. He called on the government to intervene to mitigate the plight of small businesses by providing adequate power supply.

 

Apart from poor power supply, transport infrastructures are also a major challenge for start-ups.  Road network is in a terrible shape, while the railway system is still under-developed and decrepit, making it very difficult for start-ups to get their products to the market.

 

“We need to stimulate the economy with massive investments in roads and rail transportation. It facilitates market access for start-ups,” said Bamidele Onibalusi, founder, Deloni Enterprise.

 

“With effective rail system, I can easily access the northern market but due to the poor rail system, I only sell my goods in Lagos and its environs,” Onibalusi said.

 

Friday Opara, director-strategic partnership, Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), said “the FX issues have made the Nigerian business environment tougher.”