I-Naira founder decries Nigeria startups’ failure rate
Small and Medium Enterprises (SMEs) play imperative roles in most economies, particularly in developing countries like Nigeria, however, many of them exit the stage soon after launch.
As many as 80% of these SMEs, techpreneurs inclusive, fail within five years across Nigeria due to lack of experience and other bad business practices according to findings by Stanbic Bank in 2013.
Nodding in agreement, Mr. Hillary Nwaukor, founder & CEO, I-Naira Integrated Resources Ltd, told Nigeria CommunicationsWeek that, start-ups exit the market, because “people going to market very quickly with ideas”.
According to a report by the World Bank published on September, 2015 it was estimated that 600 million jobs are needed in the next 15 years to absorb a growing global workforce; while most formal jobs in emerging markets are with small and medium enterprises (SMEs), which also create 4 out of 5 new positions.
Yet, the report observed, more than 50% of SMEs lack access to finance, which hinders their growth, suggesting there are between 365-445 million micro, small and medium enterprises (MSMEs) in emerging markets: 25-30 million are formal SMEs; 55-70 million are formal micro enterprises; and 285-345 million are informal enterprises”.
“SMEs are less likely to be able to secure bank loans than large firms; instead, they rely on internal or ‘personal’ funds to launch and initially run their enterprises. Fifty percent of formal SMEs don’t have access to formal credit. The financing gap is even larger when micro and informal enterprises are taken into account.
“Overall, approximately 70 percent of all MSMEs in emerging markets lack access to credit. While the gap varies considerably between regions, it’s particularly wide in Africa and Asia. The current credit gap for formal SMEs is estimated to be US$1.2 trillion; the total credit gap for both formal and informal SMEs is as high as US$2.6 trillion,” the World Bank report said.