Business Environment

The business environment is a marketing term and refers to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The word 'business environment' indicates the aggregate total of all people, organisations and other forces that are outside the power of industry but that may affect its production.

Every business or organization is not an island to itself; it subsists, endures and develops within the circumstances of the part and forces of its situation. While an individual enterprise makes effort to change or manage these forces, it has no choice to reacting or modifying according to them. Good knowledge of the environment by business managers allows them not only to recognise and assess but also to respond to the forces outside to their enterprises.

Challenges of Nigeria Business Environment

Nigeria's business environment in the recent years has been characterized by fear and uncertainty leading to collapse of some business outfits particularly, the small scale industries and the relocation of the big ones to other countries, this is majorly attributed to the various challenges experienced in Nigeria business environment. Such challenges include the following:

1.     Power Supply: There is insufficient energy generation and distribution in Nigeria. Electricity is the life wire of any manufacturing company particularly, large scale industries which use automation of different kinds. The supply of electricity in Nigeria is poor to the extent that companies are forced to quit business in Nigeria and relocate to other African countries. This is because, alternative power supply increases overhead cost of doing business, which is capable of affecting the overall purpose of doing business (Uffot, 2009).

2.     Poor Transportation Network and Connectivity: Nigeria roads are bad, some of the roads that link one town to the other are not motorable. Movement and delivery of goods is slow and sometimes unsafe on the Nigeria roads. Incessant accident, breakdown of vehicles are common features on Nigeria roads. This discourages investors and limit business opportunity.

3.     Insecurity: There is high level of insecurity in the country, particularly, in the Northern zone where (BokoHaram) has become a threat to business activities. No investor will be willing to invest where his investment is not secured. Many companies in the Northern part of the country have stopped operation due to “Boko Haram” scourge.

4.     Multiple tax system: Another factor that affect Nigeria’s business environment is multiple tax system. There is multiplicity of taxes by tiers of government which makes the cost of doing business higher the necessary.

5.     Unpredictability of Government Policies. Government policies are not stable in Nigeria, every government comes with his own policies, some good policies can be inconclusive, some jettisoned for political reason, while some are abandoned for selfish interest of those in power and government. This attitude breeds perpetual fear in the minds of investors.

6.     Lack of synergy among agencies of government: Lack of synergy among agencies of government, existence of obsolete practices, inadequate empowerment for agency responsible for investment promotion, facilitation and coordination for support of favourable business climate, prohibitive cost of land, transferability of land titles, land securitization, weak trade and business facilitation mechanism, poor economies of integration among industries low entrepreneurial capacity, lack of appropriate technologies by SMEs, Decline national values and educational standards, high incidence of corruptions among officials of government, poor quality of graduates of higher institutions, weak national value re-orientation, insufficient mechanism for public private dialogue.