5 Businesses You Must Avoid in Nigeria If you Want to Become Rich

This article contains the top businesses you must avoid in Nigeria.

Nigeria has become a hub for business ventures. Most individuals who embarked on business in Nigeria have recorded great success.

However, the large population of the nation actually made it favorable for good business.

Investors from different walks of life have enjoyed business in Nigeria given the good government policies that have surrounded the business world.

On the other hand, there are businesses that might not thrive in the country given some reason or the other. An individual venturing into such a business is bound to fail.

Nevertheless, this work will border on exposing us to those businesses we must avoid if we want to good success and become rich.

Nature of business in Nigeria

 

Nigeria remains a fertile ground for businesses, many investors have testified of the success they recorded in doing business in Nigeria.

Nigeria is one of the most populated countries in the world and the most populated in Africa.

The dense population of the country made it become a business hub for both foreigners and citizens of the country.

However, there are certain businesses that have lost their salt and as such no longer thrive in Nigeria.

Some of such businesses may thrive in the beginning, but may hardly last the taste of time.

While investing in such a business, one should never invest all their eggs into it, because it may break down at any point in time.

Such businesses have become a landmine that impoverishes individuals who venture into it.

Changing technology, or maybe, oversaturation of the market has made these ventures not to be as profitable as they used to be.

Again, poor government policies have in their own way done a great deal of blow to some business. Any investor going into such a business is destined to fail.

Major factors affecting business in Nigeria

There are many factors affecting business in Nigeria. Those factors have to a larger extent determined the chances of any business thriving or otherwise. They are among the reasons some businesses you must avoid.

However, an individual who intends to go into business and become successful must study these factors and keep them at the back of their mind. The factors are as follows:

1. Harsh Business Environment

 

Investors have greatly complained about the business environment in Nigeria.

The truth remains that there are multiple issues to battle within Nigeria’s business environment.

There are unnecessary administrative hurdles that businesses have to go through, undefined regulations that affect businesses, a business culture that does not hold people accountable to time, government policies that do not improve the business community and poor infrastructure.

These factors have cumulatively built an unfriendly business environment that strangles business growth in Nigeria.

2. Insufficient Competent Staff

 

There is an insufficient supply of competent and qualified staff. The success of any business organization depends greatly on the talents employed in the organization.

The degree of incompetency among staff has raised the alarm about the need for competent staff to enable business success.

Finding the right candidates who have the educational background, professionalism, and problem-solving skills has become a challenge for companies looking to soar.

However, with personnel with the needed skills and knowledge success becomes inevitable in every business venture.

3. Lack of good Infrastructure

 

Poor infrastructure is another setback in business success in Nigeria. Poor infrastructural development has become a great stumbling block to business success in Nigeria.

In the absence of a good road network and consistent electricity, one can only be as productive as the infrastructure around them.

However, bad roads and a poor power supply remain the two main infrastructural problems in Nigeria.

These setback has made business success in Nigeria count for nothing in Nigeria.

Howbeit, these setbacks cause a great deal of damage to some businesses more than others.

For instance, the electricity issue affects manufacturers the most because they end up spending more money on power supply.

On the other hand, the bad roads affect almost everyone given important business meetings are often delayed as a result of traffic.

Again, poor road network remains an impediment for businesses trying to distribute goods around the country.

Whether one is a small business owner or a manager of a multinational firm, the poor infrastructure will certainly be a setback in business in Nigeria.

Companies that break through are those that build operational buffers around these infrastructural setbacks and mix this cost into their business system.

4. Bad Market Information and Data

 

This remains the topmost priority for any business in Nigeria. Gaining access to the customer base in a very much greater way boosts a company’s revenue.

Nigeria’s large population has made business ventures in Nigeria very appealing for investors looking to tap into a vast customer base.

Again, the large market size also brings with it the challenges of underpinning exactly who and where the ideal customer base is, not just in the “noise” of the huge market.

Lack of sure business and market information will always be a major challenge for companies that are trying to validate their business model and find product-market fit.

In the absence of good market information, businesses will always be unable to identify the needed target customers – their location, their needs, how much they are willing to pay for services and products.

Again, it will be difficult for companies to understand the competitive landscape and to identify possible partner channels.

Poor market insights, will not allow companies to build strong business strategies that can help them reduce potential risks while they aim to capture available market opportunities.

To surmount these challenges and enhance successful business in Nigeria there will be a need for the collation of market information for better business.

Irrespective of the possibility of this approach, it time taking and demand for resources could slow down business growth.

5. Fast-changing government policies, Red Tape, and bureaucracy

 

After Nigeria struck oil in the sixties, the exportation of crude oil became the main force in the Nigerian economy.

This of course brought great wealth to the nation which was unevenly distributed in the country. However, oil exploration left other industries in the nation dead since then.

The implication of this remains that many government policies that have been put in place have never favored non-oil industries and, more specifically, small businesses.

In addition, instantaneous changes in government policies and bureaucratic systems have brought many businesses to a halt and sent them to extinction.

Also, multiple revenue collectors requesting paperwork and unclear payments from business owners cause a lot of frustration.

This is why it is important to be aware of these government policies before setting up business in Nigeria.

6. Outrageous cost of business financing

 

Inaccessibility of capital at a very much affordable interest rate hampers the business growth in Nigeria.

Nigerian banks give loans with an average interest rate of 25%. Given such a high interest rate, businesses can barely find suitable capital to fund their enterprise.

Also, when a business fails to succeed in securing the needed capital, a huge part of their returns ultimately goes to the repayment of their loan.

Although international firms access capital at a very cheaper rate outside of Nigeria, they are also affected by this same issue because of their partnerships with local businesses that have the financial strength and capability to evolve.

In Nigeria, the number of companies that have access to such finances remains few.

The question remains, why are the interest rates very high? Creditworthiness is the answer.

Recently the Nigerian financial system began prioritizing creating a database to up the visibility of the repayment of credit taken by consumers and companies.

To ascertain that companies pay back loans, banks depend on collateral, such as land, as security for loan repayments.

However, unless creditworthiness is ratified in Nigeria to foster more trust between banks and lenders, the interest rates will remain high.

Companies will have to develop unique funding strategies to surmount this challenge.

7. Trust

Progress works with trust. For any business to record success, there must be trust from both ways; the absence of trust in the education system produces a limited supply of qualified candidates.

Again, absence of trust in governmental agencies, who have not in any way in the past show good efforts to aid small businesses. And the limited number of credible business information.

The major setback here remains TRUST!  Lack of needed trust leads to slow business progress.

Trust has become the main issue when it comes to doing business in Nigeria. After all, most businesses hold on to trust as an intangible commodity that is traded between stakeholders.

When there is no trust between business partners, logistics providers, new hires, government policymakers, and market information received, one’s consumer base target for product purchase will fail in making the appropriate business decisions that are necessary to reach business goals.

Trust remains paramount in every business venture, and it is something traded everywhere, not only in Nigeria.

However, there is a need for proper law enforcement policies in place to enhance business in Nigeria.

Businesses You Must Avoid in Nigeria

1. Sports betting

 

Sports betting became the most lucrative business in Nigeria after its reinvention by bet9ja.

As of 2010, the sports betting business flourished and their owners made great deals of profit given the large patronage they recorded.

Punters will always go to shops to place their bets on various sports competitions and the shop owners will enjoy the commission for all bets placed at their locations.

However, as a result of the growing tough economy and the increasing negative stigma attached to betting, most gamblers now deem it convenient to place bets on their phones to avoid being stigmatized.

Again, bettors love to keep their betting business private.

Again, sports betting shops are almost on every street corner in Nigeria.

It has become much more convenient for people to place bets online, and as a result, this has made the sports betting centers less lucrative as a business idea in Nigeria currently.

Some few persons may succeed in this business, this always depends on the environment they open their business, but there is no guarantee that the business will last the taste of time.

This business is dependent on the host company, anything that negatively affects the host company will interrupt your business. For example, there was a time when the Bet9ja website had some challenges and was down for days, this pauses every betshop under bet9ja.

There is no guarantee on longevity this is why we included it among the businesses you must avoid in Nigeria.

2. Printing of Recharge Card

The recharge card business was among the most lucrative businesses in Nigeria.

But the banking system and technology have greatly evolved, now one can almost do every form of recharge through a mobile bank App, POS, and several fintech apps.

As a result, the recharge card printing business has lost that vitality that made it a lucrative business.

Imagine those who invested so much into it a decade ago, now instead of experiencing a boom their recharge card business keeps declining. This business is one of the businesses you must avoid in Nigeria.

Secondly, recharge cards were the best-selling items in Nigeria, even better than selling garri and pure water.

But currently, people don’t make calls like they used to given the invention of WhatsApp, Facebook Messenger, and many other online chat apps.

Also, as pointed out earlier, most people now recharge their phones digitally through their bank apps, other payment apps, or via ATM machines.

All of these add to the fact that the profit margin on each recharge card printed is about 5%.

Again, the starting requisites to enter the business is already flooded making recharge card printing business less lucrative.

Old existing investors might still be making a profit given the dynasty they built, but it is not advised one go into it currently.

3. Hire purchase business

 

Hire purchase business (e.g buying a car, or bus for someone to drive for you a bring returns) is the act of buying expensive goods where the buyer makes an initial down payment and the balance payments are accepted in installments.

Understanding hire purchase as a business, its advantages, and its disadvantages allows for proper thought into it as the right business or otherwise.

Hire purchase was once among the lucrative business in Nigeria. But as time went on the issue of trust now crept into the business as a result of failure to live up to the terms of the agreement between the buyer and the seller.

Again, customers have come to realize they are paying over twice the price of what they are buying in hire purchase.

All of these in a way have made the business of hire purchase lose its vitality, and no longer the lucrative business it used to be.

Aside from the trust challenge, inflation is another thing that do greatly affect this kind of business.

Let me give you a real-life instance I experienced. Some years ago I bought a Tokunbo Toyota Sienna for 2 million Naira and gave it out for hire purchase for 3.5 million Naira. The repayment period was agreed to be 2 years. After 2 years the value of such Tokunbo Toyota Sienna became 3.6 million Naira. This means it would have been more profitable for me if I simply bought and kept the car to sell in the future. By calculation with the inflation using purchasing power during the period, I made over 13% loss, instead of profit.

Hire Purchase business is among the top businesses you should avoid in Nigeria.

4. Ponzi scheme or any get-rich-quick business

Ponzi business is a scheme where persons in charge promise investors they can double or triple their money.

In this business the person in charge takes the investors’ money and keeps it for themselves, paying out nominal amounts to individuals who invested earlier in the scheme.

It has been discovered that Ponzi schemes are fraudulent investing scam that generates returns for earlier investors with money taken from previous investors.

Most individuals who invested in such business regretted the business as a result of the loss the business left them with.

5. Cyber Cafe

Another business that one must stay away from if they want a business that will last for ages, or if they want to get rich is a cybercafe business.

Nigeria has fast evolved, and many people now own smartphones. However, this has made access to the internet easy, The cybercafe business was once a booming business but now the reverse has become the case.

Most investors that venture into this business have lost their investment.

However, in some locations with poor or zero internet, people may see an opportunity to open a cybercafe. But what will happen when good internet and development come in?

Even if you see an opportunity in a cybercafe business, do not expect the business to last the taste of time.

6. Business you will totally depend on someone’s expertise

Never put your money in a business that needs a skill you don’t have.

For example, investing in a barbing saloon when you have zero skill in barbing hair. Again is opening an ICT hub having zero knowledge of ICT.

If you invest in such a business your employees can easily take advantage of you.

Businesses of this nature are among the top businesses you must avoid in Nigeria.

Just imagine a non-medical practitioner investing in a hospital! how do you think the hospital will perform? No matter the experience they have in business or management their investment is very likely to fail with time.

This is the reason why so many business ends up crashing.

Conclusion on Businesses You Must Avoid in Nigeria

In as much as this work went on pointing out some businesses that are no longer lucrative, it is not in any way an attempt to demean anyone’s business but to help improve people’s understanding of how evolving time is and how businesses can phase out as a result of development.

Every business remains lucrative depending on the location and the time the business is done.