Amid far-reaching economic reforms, Nigerian entrepreneurs are refusing to fold. GLORIA NWAFOR writes that business owners are pushing through with innovative, adaptive measures that underscore the grit and resilience of Nigeria’s entrepreneurial class.
While ongoing reforms signal a commitment to stabilisation and long-term growth, their short-term effects have strained the operating environment for entrepreneurs.
Navigating a period of intensive monetary, fiscal, and tax reform – including significant monetary tightening, foreign exchange unification, subsidy removal, and the passage of four recent tax reform bills.
The ultimate success of these sweeping measures rests heavily on the resilience and adaptive capacity of Micro, Small, and Medium Enterprises (MSMEs).
The report offered a comprehensive and timely analysis of how the enterprises have coped in the last year with a high-cost operating environment shaped by the changes.
This year’s state of entrepreneurship index calculated at 0.47 out of 1.0, reflects the first marginal increase from 0.46 recorded in 2024.
This is the first time the index has increased since its inception in 2022, reflecting a modest improvement in the entrepreneurial landscape.
The positive shift is driven by a subtle but important increase in the perception of opportunities and the wider adoption of digital technology.
The survey revealed that Nigeria’s entrepreneurial index stood at 0.46 in 2024, down from 0.52 in 2023 and 0.58 in 2022.
The index suggested that entrepreneurs are adapting through innovation and cautious optimism, but still require stronger policy support, especially in access to finance, skills training, and regulatory consistency.
Addressing these constraints, the survey said, would be key to transforming entrepreneurial energy into broad-based job creation and productivity growth.
Identifying challenges of access to finance, security, and power supply as the most critical for the government to improve the business environment, entrepreneurs reflected on them as the priorities constraining enterprise growth across Nigeria.
The report argued that addressing them required coordinated efforts between policymakers, financial institutions, and the private sector to create a supportive environment for small businesses in the country.
On the business environment in Nigeria, vis-à-vis its challenges and opportunities, the report noted a remarkable shift in the factors that negatively affected businesses in 2025.
It stated that while lack of finance maintained its top position for the fourth consecutive year, poor access to markets, poor capacity building, and limited business support, as well as unstable government policies and regulations, made it to the top five, among others.
However, it stated that the 2025 survey showed that electricity from the national grid remained the dominant source of energy spending for most businesses.
It stated that 51 per cent of respondents spent the most on electricity from the national grid, compared to 35 per cent who rely primarily on petrol or diesel, and 16 per cent who use renewable energy sources such as solar inverters.
It stated that the growing investment in renewable energy reflected a gradual shift towards cost-efficiency and sustainability as businesses adapt to energy challenges.
This, the report stated, reflected lower business growth rates, fewer jobs created, lower levels of skill adoption among entrepreneurs, and the persistence of challenges such as local currency depreciation, high inflation, insecurity, and poor power supply.
It observed a decline in the business birth rate from 30 per cent in 2023 to 24 per cent, showing a slowdown in new business creation.
However, it noted some green shoots, particularly among female and youth-led businesses, showing that female-led businesses have shown a notable increase in both market participation and growth, while youth entrepreneurs have become a driving force, leading to technology adoption at an impressive rate of 72 per cent.
The trends, according to the report, underscore the potential of inclusive policies and technology-driven interventions to foster sustainable growth.
In her remark, Executive Director of FATE Foundation, Adenike Adeyemi, said findings from the report are expected to support the design and implementation of suitable policies and incentives for a more enabling entrepreneurial ecosystem where businesses could thrive despite the challenging operating landscape.&
She said data used in the report covered 10,882 businesses across the 36 states and the Federal Capital Territory (FCT) in Nigeria, with a decline in innovation and digital technology adoption, business performance, and skills acquisition relative to last year, while that of enabling business environment remained the same.
She said the survey identified the top five most problematic factors for businesses – limited access to finance, poor power supply, insecurity, foreign exchange difficulties, and infrastructure challenges, while the top two factors – limited access to finance and poor power supply – remained unchanged from the previous year.
However, Adeyemi stated that insecurity, foreign exchange issues, and infrastructure challenges emerged among the top five concerns in 2025, replacing unstable government policies, and poor market access, which fell out of the top five.
The shifts, the FATE boss said, are unsurprising given the state of insecurity and major policies over the past.
The report noted that only 30 per cent of entrepreneurs said they were able to access finance from financial institutions in the past year, while many entrepreneurs raise funding from personal savings and funds from family and friends.
It stated that in assessing the access to finance challenge, high interest rates, huge collateral requirements, and limited public finance are some of the factors that inhibit access to finance for businesses.
It stated that the challenges persisted in 2025 and continued to affect the growth of businesses in Nigeria.
In addition, the report stated that Nigeria’s electricity supply was unable to meet the country’s demand.
According to it, limited electricity coverage arising from the frequent collapse of the national grid is a major problem that businesses faced in the past year.
On business opportunities, the report stated that despite the challenging business environment, Nigerian entrepreneurs remain positive about the future.
“There is a decline in the share of entrepreneurs who plan to expand their businesses in the coming year. In 2025, only 68 per cent of entrepreneurs expressed plans to expand their business, a significant drop from 78 per cent in 2024 and 82 per cent in 2023.
Conversely, the share of businesses not planning to expand increased to 32 per cent in 2025, from 22 per cent in 2024 and 18 per cent in 2023.
On policy recommendation and looking at Nigeria’s macroeconomic environment, which has been challenging for businesses over the past year, and the ongoing reforms by the federal government in the long term, the report stated that they are likely to prolong the strain on businesses in the short term.
It said: “In this context, it is essential for the government to not only communicate a message of hope but also to prioritise short-term support for nano, micro, small, and medium-sized enterprises (NMSMEs). These businesses are fundamental drivers of job creation and income generation in the country, and they must be supported to achieve their potential.”
In the survey, entrepreneurs identified the top five areas the government should focus on to improve the business environment such as security, power supply, access to finance, infrastructure, and training, as well as business support.
The report stressed that while long-term reforms are necessary, Nano, Micro, Small, and Medium-sized Enterprises (NMSMEs) require immediate, targeted support to survive and eventually contribute meaningfully to economic recovery.