How Power Shortage Has Affected Nigerian Startups

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The World Bank data on ease of doing business released this year ranked Nigeria 169 out of 190 countries. Ten sub-indices were used for this ranking such as starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

One area that Nigerians can relate with is getting electricity. See how this challenge is affect small and medium enterprises, and startup businesses:

Huge amounts are budgeted for diesel and generator

There is no way any business can run smoothly without having a generator. This is even worse if it is a startup or an established business. The budget for generators, diesel as well as servicing these gadgets is humongous. These monies, if there is no power interruption, can be deployed to other aspects of the business.

Start-ups are likely to fail

Many young Nigerians have ventured into the uncertain world of entrepreneurship despite the recession. They have satisfied all the constitutional requirements for setting up a business but they have to still factor in how to provide electricity. Sometimes, new businesses overlook this or assume it is trivial until reality hits. Over time, you will observe that some of these great start-ups are likely to fail due to power shortage. They can only do as much.

No room for growth or expansion

Growth and expansion are essential to any business. The more businesses spend on electricity, the more they cut back on growth. Combining power shortage with the economic recession, some companies have no choice than to lay off some of their workers.

Businesses cannot employ

If electricity can be tackled in Nigeria, the monies companies spend on providing power can be used to employ more workers. This is part of the reason why some companies prefer to use contract staff.

Businesses are moving out

Nigeria is the biggest market in Africa. At the same time, it has the biggest challenges. Some of them have decided to continue running their businesses in the country, others have made the decision to move their operations to other countries while maintaining a little presence in Nigeria.

Source: Acceleratetv

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