Nigeria is located in southeast of West Africa which has an area of about 923,000 square kilometers. (The World Factbook 2010) Abuja is the capital of Nigeria. Nigeria estimates 149 million citizens that is the most populous and most national country in Africa. (The World Factbook 2010) Nigeria has abundant natural resources, especially of petroleum. (The World Factbook 2010) Nigeria is not only the biggest petroleum producer in Africa, but also is a member of the Organization of the Petroleum Exporting Countries (OPEC). (OPEC 2010) With the development of the economy, more and more enterprise and business expect investment in Nigeria. This report focuses on the business consultant from World Bank to dialectical analysis the small business environment in Nigeria.
The first section of this report deals with the culture and human source. It mainly describes the culture, population and educational level in Nigeria. The second section will be regarding the political and society environment in Nigeria which is corruption and crime. The third and fourth section will be about the natural source and technological in Nigeria. Next two parts are conclusion which is a summarization of the whole report and recommendation part.
Culture and human resource
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Nigeria is one of the Africa countries with an ancient civilization which was ruled successively by Portugal and British colonial over 100 years. In 1960, Nigeria declared her independence and her establishment of the Federal Republic in 1963. Nigeria has more than 250 tribes; the largest is the northern Hausa-Fulani, western Yoruba and eastern Igbo. English is the official language. Hausa, Yoruba and Igbo are also widely spoken. Nigerian is the major religions which are Christianity and Islam, almost 44% Christian of the total population and nearly 53% people adherent to Islam. (Culture of Nigeria n.d.)
Figure 1: Nigeria Population
(Midyear Population, by 5-Year Age Groups-Nigeria)
Figure 2: Educational Level
(Level of school attended by age)
Figure 3: Skilled Production Workers
(Enterprise Surveys-Nigeria: Country Profile)
In the diagram, Figure 1, it is shown that Nigeria has got about 149 million people, of which about 76 million people are male and almost 73 million female, which is the most populous country in African. Therefore, Nigeria has abundant human resources. Nevertheless, Nigeria has low educational level and lack of the humanities quality. As figure 2 shows, primary school range from age of 5 to 21 years old. Only 40% children were attending primary school when they were 6 years old. And about 18% people in the secondary school when they were 24. As illustrated in this figure 3, the number of skilled production workers in Nigeria far short of the other countries in Sub-Saharan Africa, because of the low educational. Opening factories in Nigeria not only need investors to send their technical staff and managerial personnel, but also require comprehensive training to the local workers; this will result in high cost.(Tangier 2000)
Political and society environment
Figure 4: Corruption
(Enterprise Surveys-Nigeria: Country Profile)
Generally, the worst problem for small business in the economic environment is the corruption. Based on figure 4, business license is the main reason lead of corruption. 47.7% and 47.3% of small business want to give gifts to get license. The two data has been higher than other countries in Sub-Saharan African.
In 2004, a German appraisal company released a report which is about the capacity analysis of each country to attract foreign investment. If the small business expect investment and manufacturing in Nigeria, need to add more than 36% additional budget in investment amount. The fund is for establishment of relations and bribery of government officials. (Sule and Ezugwu 2009) An official in Nigeria who always followed that practice, need to send at least 20% of the kickback to official in any allocation of fund. Nigeria in 2000 and 2001for two years has been elected the most corrupt country in the world by Transparency International.(Muse 2006)
Figure 5: Crime
Figure 6: Cost of Crime
((Enterprise Surveys-Nigeria: Country Profile)
In the diagram, Figure5, it is shown that 23.07% of firms consider Crime, theft and disorder as major constraints, so they need to spend more money on the security problem. As Figure 6 shows, the percentage of security costs higher than other countries. And violence also caused high percentage of losses due to crime against the firm. Due to poor security order and rampant crime, bring about the enterprise resources can not completely to used in the production and investment and enterprise will enhance the cost. Nigeria is the third largest crime at the sea in the world, especially in Lagos and the Niger Delta out of the cargo ship more vulnerable to the pirate. Weak law enforcement leads to Nigeria become hot spots of pirate attack. There were 10 cases of pirate attacks in Nigeria within 3 months, one-fifth of that in the world. (Pirate attacks on the high seas up 20 percent 2008)
Always on Time
Marked to Standard
Nigeria is a country rich in natural resources, the most representative object which is petroleum and Nigeria is one of the OPEC. (OPEC 2010) Up to date, reserves of petroleum 340 billion barrels and 350 million cubic meters of natural gas were ranked eighth and fifth in the world. There are 42 billion tons of natural asphalt and nearly 2.8 million tons of coal, moreover, the coal of low-sulfur and low-ash is the most environmental coal in the world. In Nigeria forestry resources are also abundant; there is 20% of forest coverage and almost 30 kinds of highââ‚¬"quality timber for export. Nigeria has 70 million hectares of arable land that is rich soil, sunshine and water-rich, so the land very suitable for planting crops and tropical. ( Management of Environmental Problems and Hazards in Nigeria 2004)
Figure 7: Infrastructure
A strong infrastructure not only can improve economy system and business environment will benefit the development of company, but also can effectively connect the suppliers and customers provided for convenience and profit for small business. On the contrary, infrastructure shortage should be increasing the production obstacles and business costs. From the Figure 7 shows that, Nigeriaââ‚¬â„¢s infrastructure construction and the improvement was slow, such as electricity, transportation, water supply and communication. Electricity and communication are the problems which need to improve. (Nigeria - Infrastructure, power, and communications 2001)
Nigeriaââ‚¬â„¢ electric power capacity is 5.958 million kilowatts which are three hydropower stations and six geothermal power stations. In 2001 years, total installed capacity was 4.126 million kilowatts. However, during the same period, the electricity demand was 1000 kilowatts and a shortage of almost 6 million kilowatts. It is lead to enterprises, institutions and residential regular cuts the power suddenly, and also result in the enterprises prepare the electric power equipment by themselves and increase the production cost.(Brian 2008, 91-2)
In addition, communication is the chief obstacle to small business. In 2001 years, there are 726,500 telephone lines can be used; the telephone density was per 165 people own a phone which is greatly under normal standard for the International Telecommunication Union, and the telecommunication of poor quality, higher price and lesser quality of service. Mobile just can cover a number of large cities, whereas the mostly rural areas lack of communication facilities. (Volker 2010)
To sum up, this report dialectical analysis of small business environment in Africaãâ‚¬â€š And this report mainly analyses the four points which are culture and human source, political and society environment, natural resource and technological. The first part is culture and human source. Nigeria has the largest population in Africa that is result in rich source of human beings. In spite of that, Nigeria has low educational level and short of humanities quality will result in high cost for enterprise. The second part will be regarding the political and society environment performance in two points that is corruption and crime. Corruption will bring on political instability; image of a nation damaged and hindered economic development. However, Nigeria is the most serious state of corruption unfortunately. In addition, crime is also a problem in Nigeria and caused huge losses to the enterprise. In recent years, crime at sea was rampant in Nigeria. The third part will concentrate in natural resource. Nigeria flows with natural resources, such as coal, timber, soil and so on, yet the most famous natural resource which is petroleum. Nigeria is rich in petroleum, is a member of OPEC. The fourth part will discuss the technological will focus on the infrastructure in this report. A strong infrastructure can bring on high economic efficiency to enterprise. However, Nigeria is completely devoid of infrastructure such as electric power and communication. Because of inadequate power supply will often power failure; it will directly affect the work and effectiveness of enterprise. Otherwise, relatively poor communication will be a huge inconvenience for enterprises. Thus, the above analyses represent the four different kinds of environment in Nigeria.
Enhance small business in Nigeria need to solve or alleviate the above problems. Firstly, Nigeria has the abundant human resource of 149 million citizens. For small business should grasp this point. Enterprises should minimize automated factory equipment and machinery; increase the number of employed workers to enhance the local rate of employment. According to local law, if enterprise groups employing more than 100 or 100 people, enterprise can receive 6% of tax preference. (Ekwueme 2008) Secondly, in corruption aspect, government can enhance the awareness for all public and increase weight of the criminal law to limit embezzler. Thirdly, enterprises supposed to investment and development other resource, such as coal and timber, because they also have a good quality. Finally, in infrastructure aspect, because of the lack of infrastructure in Nigeria, enterprise can make investment in infrastructure. Based on local law, the firms will enjoy 20% of tax relaxation if the firms can construct the infrastructure which should be responsible establishing by the government consist with the road, water and electricity supply. (Ekwueme 2007)
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