Five states out of the 36 states of the federation: Kano, Kogi, Kaduna, Borno and Bayelsa have been ranked top performing states in terms of a good environment for entrepreneurship to thrive in Nigeria.
Published by The FATE Institute, the Research, Policy and Advocacy division of FATE Foundation, the report highlights how these businesses have fared in relation to business growth, job creation, technology adoption and across different lenses – age of entrepreneurs, gender, and size of businesses, among others.
Specifically for Kano, the state scored the highest in three pillars – business performance (0.72), innovation and technology adoption (0.93) and enabling business environment (0.81), relative to other states and the FCT.
At the bottom, Yobe, Niger, Taraba, Osun and Zamfara had the least scores. Compared to last year, 19 states declined while 17 states and the FCT improved their rankings. Akwa Ibom maintained the same spot (32nd) in 2023.
Further breakdown of this year’s ranking, shows that Kano State came on top with a score of 0.75, well above the national score of 0.52.
The five best-performing states with their scores are Kano (0.75), Kogi (0.73), Kaduna (0.70), Borno (0.68) and Bayelsa (0.64). Two of these five states are in the North-West (Kano and Kaduna), one in the north-central (Kogi), one in the North-East (Borno) and Bayelsa in the south-south.
For the third year in a row, the State of Entrepreneurship (SoE) report examines the performance of Nano, Micro, Small and Medium-sized Enterprises (NMSMEs) in the last year in Nigeria.
As with previous editions, the State of Entrepreneurship report for 2023 tracks key indicators of entrepreneurship along five pillars – business performance, skills acquisition, innovation and technology adoption, perception of opportunities and enabling business environment.
Furthermore, the report points out persistent and new challenges entrepreneurs face, their perception of opportunities and policy recommendations to improve the state of entrepreneurship in Nigeria.
This year, the SoE survey, which provides the foundational data of this report, covered 10,377 businesses across the 36 states and the Federal Capital Territory (FCT) in Nigeria.
The FATE Institute also held Focus Group Discussions (FGDs) with entrepreneurs, policymakers, and other stakeholders to gauge their experience and perception of the business environment and the performance of NMSMEs across sectors and states in Nigeria.
Nigeria had an entrepreneurial index score of 0.52 out of 1.0. Although slightly above the average of 0.5, this year’s score is lower than 0.58 recorded in the previous year, indicating a marginal deterioration in the state of entrepreneurship in Nigeria based on tracked indicators.
In the last year, entrepreneurs have faced the high cost of doing business in Nigeria, occasioned by the Naira scarcity, fuel scarcity, fuel subsidy removal, exchange rate reforms, and poor power supply, among other factors. Across the five pillars of the index, perception of opportunities had the highest score of 0.64, although lower than 0.80 for 2022.
This implies that while businesses are still optimistic about the future, their optimism level is weak compared to last year. Consistent with previous editions, the enabling business environment pillar had the lowest score of 0.36, highlighting that it is increasingly tougher to do business in Nigeria.
The share of entrepreneurs that created businesses in the last year was 30 percent, a decline from 32 percent in the previous survey.
Essentially, this implies that new businesses were created in the last year, but at a slower rate relative to the previous year.
“This is unsurprising given the heightened difficulty of doing business in Nigeria in the last year. Females created 42 percent of new businesses, a higher share when compared with 40 percent in the previous survey.
” States with the highest business birth rates include Borno (58%), Kaduna (49%), Kogi (48%), Rivers (48%) and Kano (46%). Four are among the top five states in the entrepreneurial index, ” the report read in part.
According to the report, in 2023, female-led businesses outperformed male-led businesses in terms of business growth. 73.6 percent of female-led businesses recorded growth in the past year, higher than 70.6 percent for male-led businesses.
These female-led businesses’ most common growth driver was access to new markets and opportunities. Other factors, such as increased demand and technology adoption, were also essential growth drivers.
Among the numerous challenges facing female-led businesses, limited finance access remained the top challenge. Fewer female entrepreneurs (26.9%) could access finance from financial institutions in the last year – 27.3% for male entrepreneurs.
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