A survey carried out by the World Bank has revealed that about 322 private companies have shut down due to harsh business environment in Nigeria between 2009 and 2014.
The World Bank Enterprise Survey also said out of 5,833 firms sampled in the country within the period, at least 1,136 were reported to be at the risk of closing down.
A firm is considered to have closed down or exited if it is confirmed as ceasing operation.
The World Bank Enterprise Survey, which focused on emerging markets and developing economies, covered small, medium and large-scale enterprises in the non-agricultural formal private sector.
The study looked at the effects of factors such as trade, finance, labour, infrastructure, innovation, regulations, taxes and business licensing, crime, informality and corruption on business growth.
Results of the survey, which was published in a report by the African Development Bank, entitled ‘Creating Decent Jobs: Strategies, Policies and Instruments’, identified political environment and corruption as major obstacles to the survival of businesses in Nigeria and other African countries.
Stifling business regulations were also identified as a major constraint to doing business, according to the study.
Issues relating to tax rates, access to land, trade registration, tax administration, business licencing and permits are among the constraints relating to business regulations.
Inadequacy of infrastructure, particularly transportation, electricity and telecommunication facilities affected the survival of the businesses as well as access to finance.
The study also found that competition from operators in the informal sector was another factor that undermined the survival of businesses in the review period.
In the same vein, the AfDB report noted that conflict along ethnic and regional lines had stalled economic growth in Nigeria.
“In Nigeria, conflicts along ethnic, and by extension, regional lines, have contributed to Nigeria’s politically turbulent past and stalled its economic growth,” the report said.
The report further observed that the conflicts had had negative impact on the labour market.
It identified human capital challenges as one of the reasons for the decline in the country’s manufacturing sector.
“Nigeria’s manufacturing sector has declined because of a human capital issue: manufacturing firms use low skill, low-wage labour not because higher skill labour is unavailable, but because they cannot afford the wages demanded by higher skill labour,” the report said.
Nigeria’s unemployment rate, estimated at 37 per cent, was ranked as among the highest in Africa, with youths mostly affected.