After spending years developing a product, securing investors, and finally launching to market, you wake up to a government circular that renders your business model illegal overnight. This, among other challenges in business, has been the fate of many entrepreneurs in Nigeria.
Entrepreneurs here don’t just contend with the market; they contend with the state itself. Sudden tax reforms, unpredictable import bans and contradictory regulations hit them; the environment is usually more like a minefield than a marketplace.
The question is no longer whether you can compete with other businesses, but if you can survive policy shocks long enough to compete at all.
The Context & Stakes
The country’s business environment is high-potential but high-risk. Reforms are truly designed to improve revenue, regulate emerging industries, and boost infrastructure. But in practice, the unpredictability of these changes usually destabilises businesses before they can adapt.
With a tax-to-GDP ratio of just 9%, one of the lowest in Africa, the government is having challenges in widening the tax net. The Nigeria Tax Act 2025 introduced a 4% Development Levy on assessable profits, consolidating several existing levies. While aimed at simplifying compliance, such measures often arrive with little transition time, leaving businesses struggling to rework budgets overnight.
This is not a problem unique to big corporations, as small businesses, which form the backbone of Nigeria’s economy, face their own version of this challenge. Those with turnover under ₦100 million are exempt from Companies Income Tax, but exemptions exclude professional service firms, creating uneven relief and distorting competition.
When the rules change faster than you can adapt, even the most promising venture can collapse.
The Four Big Obstacles
a) Ever-Changing Tax Regimes
Tax changes here are not occasional; they’re constant. Beyond the new Development Levy, digital asset taxation is now law. Profits from crypto and virtual assets are taxable under the new framework, but enforcement is still tricky due to valuation gaps and anonymity challenges.
The speed and frequency of such reforms mean businesses are perpetually in a state of adjustment, burning resources on compliance rather than growth.
b) Lack of Infrastructure
Nigeria’s infrastructure stock stands at just 30% of GDP, far below the World Bank’s benchmark of 70%. This gap, projected to reach $878 billion over the next 26 years, is the reason SMEs spend twice as much producing goods as their peers in better-served economies.
Unreliable power forces reliance on generators. Overstretched ports and congested roads delay shipments. Even with 35 governors planning to spend ₦17.51 trillion on infrastructure this year (a 54% increase from 2024), execution is still not certain.
c) Regulatory Whiplash
Few sectors illustrate this better than crypto and fintech. In 2021, the CBN banned crypto transactions, but by 2023, the ban was reversed. Now, under the Investments and Securities Act 2025, crypto is recognised as a regulated digital asset under SEC jurisdiction.
Fintech companies are caught between overlapping oversight from the CBN and SEC, creating compliance confusion that slows innovation and drives some startups underground.
d) Corruption & Rent-Seeking
The UNODC’s 2024 Nigeria Corruption Survey shows over 70% of Nigerians refused to pay a bribe at least once, a sign of commendable resistance. But corruption still ranks among the country’s top three challenges.
From procurement to licensing, rent-seeking behaviour inflates costs and wastes time. Many entrepreneurs silently admit that bribes remain “the price of getting things done,” even when they affect trust in institutions.
Survival & Growth Strategies
- Diversify Revenue Streams: Relying on a single source of income is dangerous when a policy change can erase it overnight.
- Stay Policy-Aware: Join trade associations, attend policy briefings, and actively monitor regulatory developments. Being caught off-guard is expensive.
- Build Flexible Models: Design operations that can shift quickly, for example, businesses that can toggle between import and local sourcing depending on customs rules.
- Invest in Digital Agility: E-commerce, remote service delivery, and cloud-based operations can help bypass some infrastructure constraints.
- Collaborate for Scale: Partnerships reduce exposure. Shared logistics, pooled procurement, or joint advocacy can soften the blow of policy changes.
An SME owner in Lagos recently told me:
“Every time I hear ‘new policy,’ I don’t think about how it will help. I think about how much it will cost me this time.”
Another, a fintech founder, described the constant pivoting as “building on shifting sand.” The frustration is the unpredictability, not limited to the cost.
Macro Takeaway
In Nigeria, policy is a central player, not just the background noise of business. And for many, it feels less like a referee and more like a competitor.
Scaling through goes beyond market fit; it includes policy resilience. Entrepreneurs need to be as skilled at reading government gazettes as they are at reading balance sheets. The prize for those who adapt is a market with huge potential, and the cost for those who can’t is early extinction.
So, I leave you with this:
If you could design one policy to protect Nigerian entrepreneurs from sudden shocks, what would it be?
