Telecom Sector’s Role in Supporting Small Businesses in Nigeria

Digital technology has become essential for businesses since the late 1990s. Today, companies use digital tools to improve customer service, operations, and employee productivity. Research shows that businesses embracing digital transformation are more likely to survive and succeed in the modern world.

In Nigeria, small businesses and digital entrepreneurs play a major role in driving the economy. According to the 2022 MSME report, there are about 39.7 million Micro, Small, and Medium Enterprises (MSMEs) in the country. These businesses contribute nearly half of Nigeria’s GDP, make up 96.7% of all companies, and provide 84% of jobs.

Government Support for Digital Growth

The government has introduced policies to help digital businesses grow, such as:

• The National Digital Economy Policy and Strategy (NDEPS) 2020–2030.

• The National Digital Innovation, Entrepreneurship, and Startup Policy (NDISEP).

• The Nigeria Startup Act of 2022.

These policies aim to make Nigeria’s business environment more favorable for startups.

Why Many Startups Fail

Despite these efforts, a lot of startups in Nigeria fail due to tough business conditions. A 2024 study by the Nigerian Communications Commission (NCC) found several reasons for this.

The study surveyed over 10,000 businesses in major cities like Lagos, Abuja, Port Harcourt, and Kano. Key findings include:

• Most startups are formally registered, but only 30% have websites, and fewer than 30% own trademarks or patents.

• Funding is a major problem. Over 34% of businesses have never received any funding, while most others secured less than ₦10 million since they started.

• Startup launches have slowed down in recent years due to economic challenges like inflation, high costs, and security issues.

Common Reasons for Startup Failure

The NCC study revealed that 60% of startups fail within their first five years. The main reasons include:

1. Cybercrime and fraud.

2. Economic instability and inflation.

3. Poor government policies.

4. High costs of running a business.

5. Lack of funding.

Other issues include poor infrastructure, insecurity, and weak business management.

How the Telecom Industry Supports Businesses

The telecommunications sector is critical in helping digital businesses thrive. The NCC has implemented several initiatives, such as:

• Expanding broadband access to improve internet availability nationwide.

• Funding research: Over ₦500 million has been invested in research to support telecom innovations.

• Building Digital Industrial Parks: These parks, located in six regions, aim to provide skills training, promote innovation, and create jobs.

Recommendations to Help Startups

The telecom industry can do more to support small businesses, including:

1. Offering funding and research grants for startups.

2. Providing cheaper internet and telecom services in rural areas.

3. Running training programs to improve digital skills.

4. Promoting the use of modern technologies like AI and Blockchain.

5. Supporting innovation through competitions like hackathons.

With these steps, the telecom sector can help more startups succeed, boost the economy, and reduce unemployment in Nigeria.