Nigeria’s business creation rate has taken a hit, with the 2024 State of Entrepreneurship Report revealing a downward trend over the past three years.

According to the report by Fate Foundation, a non-profit private-sector-led organization, the business birth rate in Nigeria fell to 24 per cent in 2024, down from 30 per cent in 2023 and 32 per cent in 2022. Harsh economic conditions are the main culprit behind this slowdown.

Entrepreneurs starting new businesses cited the need for additional income as their primary motivation, suggesting that entrepreneurship in Nigeria is largely driven by economic necessity. Despite this, there are some bright spots.

More female entrepreneurs are establishing new businesses, with 47% of new businesses being female-led, up from 42% in the previous year. Female-led businesses have consistently increased over the past three years, rising from 43% in 2021 to 48% in 2024.

However, female-led businesses seem to be more adversely affected by the challenging business environment, with 63% reporting growth in 2024, down from 74% in 2023.

On a positive note, youth-led businesses have become a driving force in Nigeria’s entrepreneurial ecosystem, displaying high levels of ambition, adaptability, and tech-savviness. For the first time in four years, youth-led businesses had the highest share of total businesses surveyed, with 44.4% in 2024.

Youth entrepreneurs have also shown impressive technology adoption rates, with 72% adopting technology, which is linked to business growth. According to the report, 71.4% of youth-led businesses that adopted technology reported growth, while 82.4% of youth-led businesses that experienced growth had adopted technology.

The report highlights that Nigeria’s entrepreneurial index stands at 0.46 out of 1.0, lower than 0.52 in 2023 and 0.58 in 2022, indicating a decline in the state of entrepreneurship.

Limited access to finance, poor power supply, insecurity, foreign exchange difficulties, and infrastructure challenges are the top five most problematic factors for entrepreneurs.

Fate Foundation’s Executive Director, Adenike Adeyemi, notes that despite lower business growth rates and persistent challenges, there are some green shoots, particularly among female and youth-led businesses.

“The 2024 survey reveals lower business growth rates, fewer jobs created, lower levels of skills adoption among entrepreneurs, and the persistence of challenges such as local currency depreciation, high inflation, insecurity, and poor power supply,” she said.

Adeyemi further stated that female-led businesses have shown notable increases in market participation and growth, while youth entrepreneurs lead in technology adoption at an impressive rate of 72%.

To foster sustainable growth, Adeyemi recommends that the government ensures macroeconomic stability by implementing business-friendly policies to attract long-term foreign direct investment and enhance non-oil exports.