Nigeria still remains a harsh terrain for SMEs, startups

In the DBI ranking released by the World Bank last week ranked Nigeria moved to 131st position from 146th last year. The report stated that Nigeria improved in the six indicators the report measures.

Despite this reported improvement, SMEs and start-ups are yet to feel the impact in their processes.

In Lagos, one of the states the World Bank report surveyed – SMEs and start-ups still face a hostile business environment from multiple levies and taxation, the problem of host communities, to “landlords’ wahala.”

To confirm this position, Sim Shagaya, a one-time Chief Executive Officer of a popular e-commerce platform, Konga, revealed in a series of tweets recently how the business process of Konga was temporarily halted by a credit facility tussle between a commercial bank and the owner of their distribution centre.

According to him, the owner of the distribution centre defaulted on a loan repayment and the bank used law enforcement agents to foreclose the warehouse.

“What I found were over 100 warehouse workers that were chased out of the facility milling about along with a platoon of policemen.

“It turned out that our landlord – the DC owner, who we had rented the place from – indeed was indebted to the bank. And the bank’s collection officer was convinced that the landlord owned the online retail operation,” he said.

This, he claimed, took him several days to resolve due to the way and manner the company and the bank chose handled the case.

Shagaya added: “We spend the whole day at the collecting firm’s offices at Dolphin Estate. We finally hammered out a deal. I would write a cheque for two years additional rent in favour of the bank.

In July this year, the Lagos State Government had proposed a N25 million annual license fee for motorcycle hailing businesses within the state. This after the taxes and levies they have to pay to the Lagos State Internal Revenue Service (LIRS), local governments and different agencies.

This kind of harsh business climate only hampers the growth of SMEs and startups.