Nigeria’s small and medium enterprises (SMEs) are the undisputed powerhouse of the nation’s economy. They account for a staggering 96% of all businesses, employ over 84% of the workforce, and contribute nearly 50% of the national GDP. On the surface, this paints a picture of a vibrant, entrepreneurial society. However, a deeper look reveals a sobering truth: much of this entrepreneurial activity is driven by sheer necessity, not long-term vision.
The data is telling. According to Moniepoint’s 2024 Informal Economy Report, 51.6% of business owners in Nigeria indicated that unemployment was the primary reason they started their venture. This highlights the crucial distinction between the true, growth-focused entrepreneur and the survivalist entrepreneur, a person who starts a business as a temporary stopgap to keep the lights on until a better, more stable opportunity comes along.
When an enterprise is born out of desperation, the founder’s loyalty is not to the business’s long-term scale, but to personal financial security. This fundamental motivation makes these SMEs inherently fragile and highly susceptible to abandonment.
For the survivalist entrepreneur, perhaps a young graduate who starts a small catering service or a mini-importation business while actively job-hunting, the minute a stable, formal employment offer materializes, the venture is often dropped. A job in a bank, a government agency, or an established multinational offers a guaranteed monthly salary, health insurance, and pension contributions. This structured security easily outweighs the high-risk, high-effort, and fluctuating returns of managing an informal business in Nigeria’s volatile economic climate.
The goal isn’t to build a legacy; it’s to earn a living. Once that living is secured through a less stressful means, the business, along with the jobs it created, simply ceases to exist or is poorly delegated, leading to its eventual collapse.
The second and more devastating form of abandonment is fueled by the ‘Japa’ syndrome, the mass exodus of skilled and educated Nigerians seeking stability abroad, primarily in the UK, Canada, and the US. This phenomenon is a direct indictment of the challenging Nigerian business environment.
Entrepreneurs are not just leaving jobs; they are closing down viable, sometimes successful SMEs to pursue a life where their efforts yield more predictable returns. The crippling challenges they face at home, rapid naira devaluation, high inflation, difficulty accessing foreign exchange, and chronic power deficits that necessitate expensive private power generation have eroded their profit margins and mental resilience.
Why would a successful founder give up a business they built? Because the emotional and financial cost of constantly battling systemic infrastructure deficits and widespread insecurity becomes too high. The entrepreneur chooses to trade the role of a job creator in a hostile environment for the stability and certainty of being an employee in a functional economy. This exodus results in a crippling brain drain, a hemorrhage of both human and financial capital that depletes the nation’s capacity for innovation and job creation.
Until the rewards of building a business in Nigeria clearly and consistently outweigh the security of a stable paycheck or the promise of a functional life abroad, the country will continue to rely on a vast, fragile network of temporary hustles, a survival mechanism, not a sustainable economic strategy.