Nigerian entrepreneurs have demonstrated remarkable resilience and adaptability, employing innovative approaches to sustain their operations amid macro headwinds. The 2025 State of Entrepreneurship survey by the FATE Institute captures the entrepreneurial spirit that has helped businesses to navigate the complexities, GLORIA NWAFOR reports.

Recent economic developments and corresponding policy shifts have significantly impacted Nigeria’s business environment over the past year.

Though ongoing reforms signal a commitment to stabilisation and long-term growth, their short-term effects have strained the operating environment for entrepreneurs.

While navigating a period of intensive monetary, fiscal and tax reform – including significant monetary tightening, foreign exchange unification, subsidy removal and the passage of four recent tax reform bills, the survey said the ultimate success of the sweeping measures rests heavily on the resilience and adaptive capacity of Micro, Small and Medium Enterprises (MSMEs)

The edition offers timely insight on how entrepreneurs are adapting to economic reforms and what actions are needed to enhance the growth of small businesses in the country, especially with a high-cost operating environment shaped by the changes.

After two years of slowdown, the report stated that business formation improved modestly in 2025, signalling a recovery in entrepreneurial activity, with the improvement suggesting that entrepreneurs are gradually adapting to Nigeria’s reform landscape, striving to survive and scale.

The state of entrepreneurship index report, which identified three of five pillars on perception of opportunities, innovation, and digital technology adoption, and business performance, said they improved slightly, while enabling business environment and skill acquisition remained weak.

According to it, entrepreneurs continue to display optimism (0.72) and growing technological adoption (0.55), but business performance (0.46), enabling environment (0.39) and skills acquisition (0.22) remain below average, highlighting persistent structural and institutional challenges.

The report stated that addressing the constraints would be key to transforming entrepreneurial energy into broad-based job creation and productivity growth.

This year’s state of entrepreneurship index, calculated at 0.47 out of 1.0, reflects the first marginal increase from 0.46 recorded in 2024.

This is the first time the index has increased since its inception in 2022, reflecting a modest improvement in the entrepreneurial landscape.

The positive shift is driven by a subtle but important increase in the perception of opportunities and the wider adoption of digital technology.

The survey revealed that Nigeria’s entrepreneurial index stood at 0.46 in 2024, down from 0.52 in 2023 and 0.58 in 2022.

The index suggested that entrepreneurs are adapting through innovation and cautious optimism, but still require stronger policy support, especially in access to finance, skills training, and regulatory consistency.

Addressing these constraints, the survey said, would be key to transforming entrepreneurial energy into broad-based job creation and productivity growth.

Identifying challenges of access to finance, security and power supply as the most critical for the government to improve the business environment, entrepreneurs reflected on them as the priorities constraining enterprise growth across Nigeria.

The report argued that addressing them required coordinated efforts between policymakers, financial institutions and the private sector to create a supportive environment for small businesses in the country.

It stated that while lack of finance maintained its top position for the fourth consecutive year, poor access to markets, poor capacity building, and limited business support, as well as unstable government policies and regulations, made it to the top five, among others.

In her remark, Executive Director of FATE Foundation, Adenike Adeyemi, said findings from the report are expected to support the design and implementation of suitable policies and incentives for a more enabling entrepreneurial ecosystem where businesses could thrive despite the challenging operating landscape.

She said data used in the report covered 10,882 businesses across the 36 states and the Federal Capital Territory (FCT) in Nigeria, with a decline in innovation and digital technology adoption, business performance, and skills acquisition relative to last year, while that of enabling business environment remained the same.

Highlighting some of the key challenges and perception of opportunities, she said entrepreneurs in the year faced an evolving set of challenges with access to finance remaining the most binding constraint for the fourth consecutive year, followed by poor access to markets, weak business support and policy instability.

Adeyemi said while power supply issues dropped in ranking, 51 per cent of businesses still spent the most on grid electricity, reflecting both improved availability and high energy costs.

According to her, structural challenges are shifting from infrastructure bottlenecks to institutional and market-related barriers.

She said this calls for reform in credit access, regulatory coherence and capacity building.

Stating that despite the challenges, 91 per cent of entrepreneurs remained confident about business prospects, supported by early signs of macroeconomic stability.

She said that while half (54 per cent) rated the business environment as “good” or “very good”, they indicated cautious confidence in the country’s recovery trajectory despite persistent cost pressures.

The FATE boss lamented how Nigeria’s entrepreneurs continue to operate in a stabilising but high-cost environment shaped by high inflation, a weaker currency, and elevated interest rates. .

She said the challenges highlight clear policy priorities, such as access to finance, security, stable government policies, and power supply, as top areas requiring urgent government attention.

In strengthening enterprise resilience, Adeyemi said, would require targeted reforms that expand affordable financing, enhance infrastructure availability, and reduce policy uncertainty.

The report called for improving capacity building, market access, saying tax awareness would be essential to unlock productivity and competitiveness.

For entrepreneurs, the survey urged that success in the evolving environment depends on adaptation, embracing digital tools, formalising operations and collaborating through networks to scale impact and remain resilient.

On performance across sub-nationals, it stated that Kogi (0.65), Kwara (0.63), and Bauchi (0.60) emerged as the top performers, driven by improved business performance, innovation, and enabling conditions.

It stated that Lagos, Jigawa and Taraba also ranked high, reflecting stronger adaptation to reforms and better access to support systems.

It stated that the notable increase in business formation in northern states such as Kwara, Jigawa, and Yobe highlighted emerging regional dynamism and the growing participation of youth and women entrepreneurs in the region.

On female-led businesses, the report said female entrepreneurs accounted for 44 per cent of surveyed businesses in 2025, down slightly from 48 per cent in 2024, but still above pre-2023 levels.

It stated that women-led firms had continued to dominate the nano and micro segments, where entry barriers and capital requirements are lower, while their representation in medium and large enterprises remained limited.

The data points to growing and inclusivity but highlights the need for sustained financial and institutional support to strengthen the contribution of female entrepreneurs to economic growth and development.

On policy recommendation and looking at Nigeria’s macroeconomic environment, which has been challenging for businesses over the past year, and the ongoing reforms by the federal government in the long term, the report stated that they are likely to prolong the strain on businesses in the short term.

It said: “In this context, it is essential for the government to not only communicate a message of hope but also to prioritise short-term support for nano, micro, small, and medium-sized enterprises (NMSMEs). These businesses are fundamental drivers of job creation and income generation in the country, and they must be supported to achieve their potential.”

In the survey, entrepreneurs identified the top five areas the government should focus on to improve the business environment, such as security, power supply, access to finance, infrastructure, and training, as well as business support.

It said it was essential for the government to not only communicate a message of hope but also to prioritise short-term support for NMSMEs.