The formation of new enterprises in Nigeria has been experiencing a downward trajectory over the past three years, as unveiled by a recent report.
The 2024 State of Entrepreneurship (SoE) Report, freshly launched by Fate Foundation, a non-profit organization driven by the private sector, reveals that the business birth rate in Nigeria plummeted to 24 percent, down from 30 percent in 2023 and 32 percent in 2022.
This annual survey evaluates the entrepreneurial ecosystem alongside the performance of Nano, Micro, Small, and Medium-sized Enterprises (NMSMEs) in Nigeria, conducted by Fate Institute, the research, policy, and advocacy division of Fate Foundation. The 2024 SoE report attributes the deceleration in business formation primarily to the prevailing harsh economic climate in the nation. According to the report, the motivation for entrepreneurs to initiate new ventures in Nigeria is largely fueled by economic necessity.
Positive highlights from the report indicate that an increasing number of female entrepreneurs are launching new businesses, alongside a surge in young Nigerians embarking on entrepreneurial journeys.
In 2024, the business birth rate in Nigeria decreased to 24%, down from 30% in 2023 and 32% in 2022. This deceleration in business creation was primarily influenced by Nigeria’s challenging economic conditions.
For those launching new enterprises, the predominant motivation mentioned was the necessity for additional income, signaling that entrepreneurship in Nigeria is driven by economic needs. Notably, a striking 47% of new firms were founded by female entrepreneurs, a rise from 42% the previous year.
The representation of female-led businesses has consistently ascended over the past three years, climbing from 43% in 2021 to 48% in 2024. This trend points toward an expanding role for women within Nigeria’s entrepreneurial realm. However, it appears that female-led ventures are more adversely affected by the difficult business climate compared to their male counterparts.
In 2024, 63% of female-led businesses reported growth, a drop from 74% in 2023 and marginally lower than the 64.3% for male-led enterprises.
The report further elucidated: For the first time in four years, youth-led businesses accounted for the largest proportion of total enterprises surveyed, holding a share of 44.4% in 2024. This suggests that a significant number of young Nigerians are undertaking entrepreneurial initiatives. Compared to the previous year, youth-led businesses exhibited improved performance in aspects such as access to finance, job creation, and skills development, despite the tough business environment.
As opposed to other age categories, young entrepreneurs demonstrated the highest rate of technology adoption (72%), a factor linked to business growth – 71.4% of technology-adopting youth-led ventures reported growth, while 82.4% of those experiencing expansion had integrated technology.
Ultimately, young entrepreneurs emerge as a vigorous force within Nigeria’s entrepreneurial ecosystem, showcasing an impressive degree of ambition, adaptability, and technological acumen.
Moreover, the SoE report highlighted that in 2024, Nigeria recorded an entrepreneurial index of 0.46 out of 1.0.
