Onome Amuge
Nigeria’s entrepreneurial sector is under mounting strain, with new business creation falling for a third consecutive year as inflation, insecurity and power shortages sap investor confidence. Yet beneath the headline decline, the country’s latest entrepreneurship survey reveals a quieter transformation led by women and youth, reflecting both the vulnerabilities and the untapped potential of Africa’s fourth largest economy.
According to the 2024 State of Entrepreneurship Report, released by Lagos-based non-profit Fate Foundation, the country’s business birth rate fell to 24 per cent in 2024, down from 30 per cent in 2023 and 32 per cent in 2022. The deterioration reflects what analysts describe as the worst operating environment for small businesses in decades, marked by surging borrowing costs, currency volatility and rising insecurity.
But the survey, which examined more than 6,000 nano, micro, small and medium-sized enterprises (NMSMEs), also highlights areas of resilience. Women and young Nigerians are establishing businesses in growing numbers, increasingly turning to technology and digital tools to offset economic constraints.
“While overall business creation slowed, we are encouraged by the green shoots we see among female and youth-led enterprises. These groups are showing ambition, adaptability and tech-savviness despite systemic challenges,”said Adenike Adeyemi, executive director of Fate Foundation.
According to the report, female entrepreneurs accounted for 47 per cent of new businesses in 2024, up from 42 per cent a year earlier. The share of women in the entrepreneurial space has risen steadily from 43 per cent in 2021 to nearly half of all new ventures this year. Although female-led firms were more vulnerable to macroeconomic shocks,only 63 per cent reported growth in 2024 compared with 74 per cent the year before, they nonetheless remain a growing force in Nigeria’s entrepreneurial ecosystem.
Similarly, youth-led businesses captured 44.4 per cent of the total surveyed, the highest in four years. The report showed that young entrepreneurs distinguished themselves by embracing technology. This is as 72 per cent of their businesses adopted digital tools, compared with much lower rates in older cohorts. The link to performance was also notable as 71 per cent of youth-led businesses that adopted technology reported growth, and 82 per cent of those that grew had embraced technology.
These findings, Adeyemi argued, underscore the potential of targeted interventions to harness the demographic and gender shifts underway. “Inclusive policies and technology-driven solutions can accelerate growth, provided the macroeconomic environment becomes more stable,” she said.
For now, however, Nigeria’s entrepreneurs continue to face challenges. The report’s entrepreneurial index, which measures the health of the ecosystem, fell to 0.46 in 2024, down from 0.52 in 2023 and 0.58 in 2022. Top challenges identified by respondents include limited access to finance, erratic power supply, insecurity, foreign exchange shortages, and infrastructure bottlenecks.
The scarcity of credit is particularly crippling. Despite government pledges to expand financial inclusion, small businesses often face prohibitively high interest rates and collateral requirements. Many are forced into informal borrowing arrangements, limiting their ability to scale.
In addition, the naira’s sharp depreciation and inflationary pressures have raised costs across the board, squeezing margins in sectors from retail to manufacturing. Entrepreneurs complain that unreliable electricity compels them to rely on costly diesel generators, even as global oil price swings add further uncertainty.
“The 2024 survey reveals lower business growth rates, fewer jobs created, lower levels of skills adoption among entrepreneurs, and the persistence of structural challenges such as local currency depreciation, high inflation, insecurity and poor power supply,” Adeyemi said.
Still, the appetite for entrepreneurship remains strong, driven largely by necessity. Many respondents said they launched businesses to supplement income rather than pursue opportunity, reflecting Nigeria’s high unemployment and underemployment rates.
The Fate Foundation report urges policymakers to address the macroeconomic environment by implementing business-friendly reforms, stabilising the currency, and expanding support for non-oil exports. It also calls for reforms to make business registration easier for informal entrepreneurs and the creation of public-private dialogue platforms to facilitate peer learning and policy feedback.
“The real story is not just that fewer businesses are being created, but that women and youth are increasingly at the forefront of those that do emerge. That resilience is a signal worth paying attention to,” said Adeyemi.
