SPECIAL REPORT: How funding, poor infrastructure stifle growth of Nigerian start-ups

Mr. Wale Bakare ("Oga Wash") and his staff on duty
Mr. Wale Bakare ("Oga Wash") and his staff on duty

Over the years, Small and Medium Enterprises, SMEs, have become sources of employment for Nigeria’s teeming population of unemployed youth. While successive governments have been unable to tackle the problem of unemployment, many Nigerian graduates who choose to embrace entrepreneurship for survival still face numerous institutional challenges in their struggle to create wealth and opportunities, writes PREMIUM TIMES’ Oladeinde Olawoyin.

When Wale Bakare graduated from the University of Ilorin in 2014, he was determined to set up a business and create job opportunities for himself and others. Rather than seek paid employment, the 28-year-old graduate of Zoology co-founded “Oga Wash”, an innovative mobile car washing service outfit in Ilorin, the capital of Kwara State.

More than six months after the company was started, employing 4 people, Mr. Bakare laments his inability to get loans for expansion.

“One of the challenges I am facing is the issue of adequate start-up capital,” he told PREMIUM TIMES in an interview.

“You will agree with me that it is very difficult to secure loans from commercial and government banks as a start-up in Nigeria, because some of these banks see lending start-up money as a giant risk,” Mr. Bakare added.

The loan required by Mr. Bakare for his business would enable him to rent a space for his operations and employ more hands, thereby creating jobs and opportunities. He would also be able to purchase equipment like Pressure washer, Vapor steamer, Paint Correction, Buffers, Polishers, as well as Cleaning and deodorizing equipment.

“One of the machines, Vapor Steamer, cost N550,000 and a fairly used truck cost N900,000,” he told our correspondent.

Like Mr. Bakare, thousands of Nigerian youth running small businesses have found it difficult to expand and innovate due to the various bureaucracies attached with accessing funds from financial institutions. Some of them spoke to PREMIUM TIMES about their challenges.


According to the National Bureau of Statistics, NBS, as at the third quarter of 2016, Nigeria’s unemployment rate rose to 13.9 from 13.3 per cent in the second quarter of the same year.

The NBS disclosed that there had been eight consecutive increases in the unemployment rate since the fourth quarter of 2014.

It is partly to reduce the unemployment rate that the federal government has repeatedly encouraged fresh graduates to be self-employed, to set up their own small businesses.

Speaking at the 2nd Convocation ceremony of the Kaduna State University in December 2015, a few months after his inauguration, President Muhammadu Buhari pledged that his administration would give the fullest possible support to all efforts to create more jobs through the reorientation of Nigerian youth towards an entrepreneurial mindset.

“This administration will ensure that youths in the country are gainfully employed and youth restiveness curtailed,” the president had said.

“One of the focal points of this administration is job creation. Job creation will help in the achievement of other objectives of the government such as poverty reduction. Insecurity cannot be divorced from unemployment and poverty because an idle mind, they say, is the devil’s workshop.

“With declining internally generated revenue and over dependence on equally declining oil revenues, there is need to seek other ways of diversifying the economy so as to boost revenue.

“One of the ways we can achieve this is through the reorientation of our youths towards an entrepreneurial mindset. We must therefore promote and enhance the teaching and learning of entrepreneurial skills in all schools and tertiary institutions, thereby exposing our youth to the basics and rudiments of starting and sustaining their own businesses.”

In addition, Mr. Buhari said that to encourage and assist Nigerian youth to move from being job seekers to job creators, his administration would sustain and improve programmes by the Central Bank of Nigeria, the Small and Medium Enterprises Development Agency of Nigeria, the Bank of Industry, the Bank of Agriculture and other Federal agencies to grant them start-up loans at concessionary rates.

But according to start-up owners who spoke with PREMIUM TIMES, apart from words of encouragement, the government has not done much to resolve the numerous structural impediments militating against the growth of start-ups in Nigeria.

Two dominant complaints from start-up owners who spoke with our correspondent were their inability to access loans and other facilities from financial institutions as well as poor infrastructural facilities to aid their operations.

“The challenge I am currently facing is lack of capital and poor institutional framework,” Olasupo Abideen, a start-up business owner, said.

Mr. Abideen, who studied Industrial Chemistry and runs a gas depot at Malete in Kwara State, noted that it is difficult for start-up owners to access loans for expansion of their businesses and other developmental concerns.

Similarly, for Iyanuoluwa Bolarinwa, who runs a start-up which focuses on the new model of real estate in Lagos, funding has been a major challenge in his drive towards sustainability.

“Our operations actually are very limited because our funds have since been exhausted by running costs and payments of staff,” he told PREMIUM TIMES in an interview.

On the other hand, for Charles Onuoha, a tech entrepreneur based in Ikeja, Lagos, electricity has been the bane of his expansion and growth efforts.

“I power my generator myself every day. Imagine if there had been good power supply, the money I pump into fuel would be used for software acquisition and other manpower development that my job requires,” said Mr. Onuoha, a 24-year-old graduate of the Institute of Management and Technology, Enugu.


Apart from capital and the strict conditions attached to access to loans, PREMIUM TIMES findings showed that poor infrastructural facilities also militate against the growth of SMEs.

Some of the start-up owners lamented the absence of adequate infrastructure that could propel their ideas and initiative and reduce cost of running their businesses.

“Let government just fix electricity and watch the potentials of the Nigerian tech entrepreneur blossom,” Mr. Onuoha told PREMIUM TIMES.

He explained further that poor infrastructure, especially electricity, is the bane of technological development in Nigeria, especially among its “army of super-talented young tech entrepreneurs.”

Speaking with PREMIUM TIMES, Adeniyi Phillip, an agricultural entrepreneur, noted that most SMEs owners, especially in the agricultural sector, provide their own facilities.

This, he said, impedes profitability as it shoots up the running and operational cost.

“For anyone going into farming, it is almost impossible to start-up with little capital, where you don’t have access to water or energy (electricity),” he said.

“This is because, some of the critical challenges of food production include the cost of energy (power), storage and irrigation on the farm.

“Both plants and animals require regular supply of water/irrigation to survive, especially, in the dry season. But, hardly will you find a village with government water or electricity.”

He added that, “Since farming is done in the rural areas where access to water and electricity is very limited, start-ups in the primary production of plants and animals, must consider sinking over N200,000 borehole depending on the area, to serve its water needs.

“With a borehole, you need a generating set. Today, the cost of a 2.2 KVA generator with a capacity to carry a 1-horse power borehole has increased by over 200 per cent.

“Aside the fixed cost, you need to buy fuel regularly to keep the generator running. It is not funny, when you calculate how much you’ve expended on fuel alone in a month, especially, during fuel scarcity.”

Mr. Phillip explained further that the cost of maintenance has also increased, because “everyone continues to blame the hike in the prices of goods and services on dollars.”

This, he said, was not surprising as Nigeria remains an import dependent nation.

“These associated costs have prevented many from starting farming. It has also forced a lot of people out of agribusiness,” he added.

For Mr. Bakare, the University of Ilorin graduate, one of the major facility-related problems he faces running his mobile car wash start-up is poor drainage system in Ilorin. He noted that due to limited funds, he cannot afford to locate his business in an environment where there is good drainage system.

“Sometimes our customers’ neighbours complain that we litter their environment with water runoff. This particular issue is a serious challenge that is making our mobile car wash lose many of our customers,” he said.

“The only solution that can allow us to clean vehicles and at the same time does not need much water is the Auto Detailing process which is very expensive to afford for a start-up like ours.”



According to some of the start-up owners, the conditions put in place as prerequisite for access to loans are ‘unrealistic’ and ‘strict’, thus making it difficult to meet.

On his part, Mr. Abideen, the gas depot owner, noted that the processes and documentation are stressful and overly discouraging.

“Access to loan for start-up like this should be less stressful (once you are) with CAC registration and physical address of your start-up,” said Mr. Abideen.

“The issue of collateral and guarantor is a clandestine approach by the government to deny some youth from poor background access to loans,”he told PREMIUM TIMES.

For Mr. Bakare, some of the financial institutions discourage entrepreneurs with some of their unrealistic demands such as huge collateral and unrealistic interest rates which, he said, is aimed at discouraging start-ups.

“From experience, I have approached the Kwara state government, some commercial banks and also Bank of Industry (BOI) for loan to expand my start up and get involved in auto detailing mobile car wash and I discovered that these financial institutions tend to frustrate aspiring entrepreneurs with some of their ridiculous requirements in a bid to discourage young start-ups from getting loans from financial institutions,”said Mr. Bakare.

“And I believe with this kind of practice by banks and government, a lot of brilliant start-up ideas would have been killed due to financial constraints,” he added.

Bank of Industry, BOI, reacts

According to Mr. Bakare, he was selected in the Youth Entrepreneurship Support, YES, programme, an initiative of the Bank of Industry, BOI, in 2016. But his dream of nurturing his start-up into a huge business enterprise would soon be killed by the conditions stipulated by the bank before he could be given access to loan facilities.

“It was in 2016 and having been selected in the YES programme, I was asked to provide two guarantors with N5 million each in (their) accounts,” he said, adding that he was also asked to submit his University and NYSC certificates.

“Of course, I couldn’t meet the conditions; BOI terms and conditions are too tough for start-ups to cope with,” he lamented.

When contacted by PREMIUM TIMES, the Bank of Industry, BOI, however, said it has a system that ensures all prospective customers meet basic credit criteria in order to encourage best practices in Nigeria’s business environment.

In a mail sent in response to PREMIUM TIMES enquiries, BOI said thousands of SMEs it assisted across the country have had far reaching multiplier effects on the Nigerian economy such as job creation and resultant wealth creation, as well as poverty alleviation.

“Because many of the assisted projects are also import substitution and export-based, BOI’s esteemed customers have contributed significantly to efforts at attaining national self-reliance through backward integration and economic diversification, all of which positively impact the contribution of the manufacturing sector to Nigeria’s Gross National Product,” the bank said.

When confronted with PREMIUM TIMES findings, the bank said the affected entrepreneurs might have come with project proposals that may not key into its broad objective as an organization.

“We emphasise prudent project selection and management…Support quality projects with high developmental impact such as job creation and poverty alleviation to enhance the socio-economic standard of Nigerians,” it noted.

It, however, disclosed that those affected may need to visit the banks’ state offices for complaints.

The bank, incorporated in 1959 as ICON Limited, was reconstructed into the Nigerian Industrial Development Bank (NIDB) in 1964.


Speaking with PREMIUM TIMES, the start-up owners explained that the way out is for government to ensure that the activities of institutions put in charge of providing facilities for entrepreneurs are closely monitored,

Others also suggested that the government should provide infrastructure that would ease business activities and facilitate productivity.

“Another challenge, aside bad road network, is multiple taxes and licences on the road and the market place. Government officials and market leaders are all out to exploit people. Their presence everywhere, is responsible for the increment in the prices of goods and services,” lamented Mr. Phillip, the agriculturist.

“Government must begin to increase access to production inputs and concentrate development in the rural areas. Such development should include, provision of electricity, irrigation, good roads, storage facilities among others,” he added.

Mr. Bakare, on his part, said, “My advice for both state and federal government is to provide enabling environment for start-ups for economic development. Government should also make policies that will favour start-ups, recognise, and genuinely support the essence of entrepreneurship to nation building.”

“Fix electricity and half of Nigeria’s developmental problems will be solved,” said Mr. Onuoha, the tech entrepreneur.


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  • Edmundo2000

    Premium Times Editor,

    Nigerians weep after seeing Raji Fashola at his best…………

    THE BUHARI GOVERNMENT is failure defined – indeed, the worst government Nigeria’s ever had.
    Private businesses have retrenched over five million workers under President Buhari’s government.
    Those lucky not to have been sacked are owed salaries of six months by their distressed employers.
    Companies are closing up under the impossible conditions Buhari’s incompetence wrought on Nigeria.
    Buhari’s daft Energy Minister Raji Fashola has received over 400 billion Naira since resuming in 2015.
    Alas, Raji Fashola at his best supplies zero megawatts electricity till today to put Nigeria in utter darkness.

    With no electricity supply, any start-up business is dead on arrival, because of the high cost of petrol and diesel.
    A local tomato paste plant -ERISCO FOOD – closed down in November 2016 and sacked thousands of workers.
    Erisco food ran on generators and could not compete with Chinese exporters of tomato paste at less unit price.
    In January this year, DANGOTE also closed down its tomato paste processing plant in Kano as impossible to run..
    Aliko Dangote, reputed as Africa’s richest man, said he couldn’t access foreign exchange to buy production inputs.

    Nowadays, the masses in northern Nigeria are stoning politicians on sight and wounding a few in revolutionary anger.
    As poverty deepens under the Buhari daft government more emergency wards will be needed for injured politicians.
    A revolution is brewing in Nigeria where wealth has a bad odour as the proof of theft, and, of insane treasury looting.
    Stealing is the problem with Nigeria – where the country’s government officials are wholly smelly thieves and criminals.
    Foreign analysts project there’ll soon be targeted assassinations of these rogue politicians and their families in Nigeria.

    • Facts & Figures


      • Minimum wage in Nigeria………………………………………….₦18,000 per month.
      • A bottle of Coca Cola soft drink…………………………………₦80.00k per bottle.
      • Smallest can of Baygon insecticide………………………..₦1,200 per tin.
      • A tin of TITUS sardines……………………………………………₦270.00 per tin.
      • Rent of three bedroom apartment…………………………₦450,000 per annum.
      • A packet of St.Louis Sugar………………………………………₦550.00 per packet.
      • A 25kg bag of garri as staple food………………………..₦14,000 per bag.
      • Petrol for six hours of private electricity…………………..₦60,000 a month.
      • Cost of preparing soup for family of six…………………..₦6,000 every two days.
      • Ceeway drinking water ………………………………………₦550 per gallon.
      • School fees for a child in private school………………….₦2 million per session.
      • Cost of two (2) newspapers a day for information……….₦15,000 per month.
      • One packet of Solpadeine headache tablets……………..₦5,400 per packet.
      • Cost of filling up a salon car with petrol……………………..₦10,700 to fill up a car.
      • Private sector graduate starting salary………………………₦80,000 per month.

      • TrueNaija

        FAKE NEWS…FAKE SOURCE….PDP una try!



      I have been reading before that Raji Fashola is the biggest rogue Lagos
      state has had in history. Raji Fashola refused to publish the accounts of
      Lagos state for eight years, even after he was sued to court of law. That was
      when I knew that Raji Fashola can be a big thief. Later now, when alarm blow,
      that 800 billion Naira was stolen in the Lagos state government, i was not
      surprised at all. Raji Fashola must have organized the stealing because he was
      the one who forged the account of Lagos state when he handed over in the year
      2015 to hide the 800 billion Naira from the account as if the money did not come
      come in as revenue. Raji Fashola is living on borrowed times under the corrupt
      cover of President Buhari because Raji Fashola will be arrested and jailed. It is a
      matter of time.

      • Efe2

        “Urhobo man say ‘instead make i born mumu, make i born thief’.
        Somehow, that statement makes sense. I just realize that it is better
        to give birth to a Tinubu than a Fashola.

        I have always seen through Raji Fashola. I have watched his
        decisions, and utterances, and I have come to realize that this
        Raji Fashola does not have the two round inhabitants of a scrotum

        ………….Ena Ofugara

        [December 5, 2014]

  • Alaroye Yoruba


    This destruction is the result of insane theft of the treasury by the like of RAJI FASHOLA
    No one can expect community comfort where individual thieves rob the common treasury.
    Raji Fashola was robbing the Lagos state treasury to a cumulative amount of 800 billion Naira
    in Lagos state. STEALING is the issue. Outright thievery. Raji Fashola submitted forged handover
    note in 2015 saying he received 2.34 trillion Naira as total revenue in his fraudulent 8-year tenure.

    That handover note was forgery. Three months later, his Commissioner for Planning Ben Akhabueze
    told Punch newspaper that not less than ₦400 billion was received as gross revenue in each of those
    eight years, meaning that gross revenue should be ₦3.2 trillion, and not 2.3 trillion Naira Raji Fashola
    fraudulently understated to cover up the missing and therefore stolen sum of ₦800 billion from Lagos state
    treasury under his rogue maladministration.

    • Musikal

      Excuse me please, I am not trying to advertise or anything like that but just want to share the lyrics

      of my new album that will soon be released into the market next month, or latest by October 2017.

      Please sing with me as follows:

      •Raji Ajibole…ole….Fasholajibole….ole,….ajibole….ole…(twice).

      Thank you.

      • pointblankers



        • No-Comment

          Gathering Storms?

          “Three service chiefs were at the presidential villa in Abuja on Friday morning. The service chiefs that visited
          the villa were Tukur Buratai, chief of army staff, Sadique Abubakar, chief of air staff and Ibok-Ete Ekwe Iba,
          chief of naval staff. It is not clear if the trio who left around 9am met with President Muhammadu Buhari.
          Although not seen in public for a few weeks now, Buhari is said to be receiving briefings from key
          government officials”.

          ………………Cable News

          (May 5th, 2017)

          • Junaid Muhammed

            I sympathise with Nigerians for voting Buhari. We have a president who
            doesn’t have a friend outside the North and that’s a tragedy. As I am talking
            to you, I am convinced that President Buhari’s presidency is dead. He may be
            physically alive and I wish him good health, but as far as governance is
            concerned, his presidency is dead and nothing can be done to resuscitate it. A
            presidency can be alive in terms of a leader, but in terms of programmes and
            achievements it can be dead and historically forgotten..

  • C. Egwu

    You are talking of infrastructure, right? Great. Please wait for me.
    I’m coming to join you soon. The room of my niece was burnt to ashes two weeks
    ago. The candle she was using to prepare for Waec exam fell on the mattress on
    the ground and caught fire. Nothing was saved there. We are trying to do some
    repairs. Please wait for me on this topic of infrastructure. I am coming. I
    will send Anthony to go and buy me 5 litres of petrol for my generator for one
    hour so that I can use computer to join you in this discussion. No electricity
    since January. I am coming O. The battery of my smart phone is going down now.
    But my neighbour who promised to help me charge it has gone to the junction to
    buy water from Meruwa Hausa people selling water in tins. Infrastructure,
    right? I never go. I still dey come.

  • Dr Pat Kolawole Awosan

    Mr Wale Bakare, thousands of other graduates, are the patriotic achievers that can grow our national economy as there is no more office employment opportunities for unemployed graduates or post-graduates, anywhere anymore.Even, in the diaspora post-graduates and graduates are establishing themselves in small and medium scale businesses which are the back-bone of advance and developing economies around the world.Being a graduate, does not guarantee automatic employment anywhere in the world.While in the university, under-graduates students must start planning toward what to establish after completion of his/her degree programs.Gone are the days when government or oil sector provided automatic employment.IN the middle-east,oil departments of most oil producing nations have rationalized their human resources as employment strength have been reduced as a result of collapsed of global per-barrel oil price and the USA has stopped importation of oil.

  • real

    Very sad. The problem is that a lot of young Nigerians’ are not asking for much. If the government can improve electricity, this young people would quickly grow the economy. Our main problem is the kind of people we have being electing or supporting to govern the country. They are all a bunch of criminals looking to loot the country dry. it is time young Nigerian’s begin to take their country back from this criminals. Start supporting people with good records, people that can do things and if they fail, don’t reward them with another vote, vote them out of office.

  • Dr Pat Kolawole Awosan

    Poor infrastructure growth in Nigeria, could be blamed for the mass-unemployment and national impoverishment of Nigerians, except the smart looters,thieves and embezzlers of our national funds and asset who are now feeling threatened by the vigorous anti-corruption war led by EFCC-Ibrahim Magu.Senate, must confirm Ibrahim Magu as the substantive chairman of the EFCC.