The idea of “entrepreneurship” is not entirely new to Nigeria. Within the last 10 years, there has been a rise of small and medium enterprises. Many have since moved on from the constraints of the 9-5 and built their own start-ups, and there seem to be a deep value in the entrepreneurship culture. Even more, disruptive innovation has empowered many to earn money working for such companies as Uber, Taxify, e.t.c. Generally, there is an increased demand for innovation, sustainability and social inclusion.
In light of this, it is expected that the government would seize this opportunity to stimulate economic and job growth through the application of entrepreneurship and innovation. However, there needs to be policies in place to support high-impact entrepreneurship. Shouldn’t it be in the government’s interest to keep the economy healthy by, among other things, ensuring an encouraging environment for small and large businesses?
The government and private sector are indistinguishably linked; the actions of one often impose consequences on the other. The governments, by standards, provide the rules of the game – regulations, institutions, judicial systems that give businesses (and investors) the stride to act. The government should be invested in the promotion of entrepreneurship. There should be an encouragement of business activity, throughout the economy or in specific industries, critical to generating gains in income, employment, productivity, and competitiveness.
By enacting policies with a greater focus on the development and scaling of high-impact firms, the government will foster and build a positive entrepreneurship culture amongst the people. Some of these policies include:
Long-term education policies that will develop lasting entrepreneurial culture and encourage international networking
As cliché as it sounds, education is the key, to not only powering and strengthening entrepreneurship in Nigeria, but also building the culture. Of course, real and lasting changes in education systems take time, but a highly coordinated, multi-faceted strategy for endowing current and future generations of young entrepreneurs, real improvements can be channeled.
The government needs to create policies that will support entrepreneurship education from as early as in primary schools on to secondary/tertiary education. The aim is to create an entrepreneurial mindset, deepen students’ entrepreneurial mindset and convert this thinking into commercial practice, essentially expanding an entrepreneurial culture. If the youth are engaged and trained to focus on alternative forms of income generation to the traditional formal employment, it will certainly drive a solid entrepreneurial culture.
Even more, these policies should also encourage international networking during this period of education. New and young entrepreneurs will benefit from opportunities to expose them to international markets, as well as the chance to network and collaborate with other foreign entrepreneurs. It allows them to exchange knowledge, mentor each other and transmit entrepreneurship culture.
Tax incentives for entrepreneurs
It is no secret that every government needs at least a minimal level of taxation to function. But while the government may benefit from taxes, these taxes tend to increase the cost of the activity being taxed, thereby discouraging the activity. One of such activities could be entrepreneurship. There is a trade-off that exists between entrepreneurial growth and taxes. Entrepreneurship requires investment, consumption and income generation to be successful and these are things that can be discouraged by heavy taxing.
For instance, a sales tax diminishes personal consumption, higher personal income taxes decrease the incentive to work, corporate income taxes lessen the incentive to start or grows a business, and capital gains taxes reduce the spur to invest. To power entrepreneurship, the government needs to tweak taxation policies based on feedback received from the industry, give tax incentives and generally, make the country’s tax structure more favourable for start-ups. Targeted tax breaks, tax reduction, and subsidies will certainly contribute to the entrepreneurial environment. Several other African countries like Kenya, e.t.c have already reduced or eliminated some of their taxes to favour entrepreneurship. Even India, just last year, reviewed their tax regime for start-ups with the aim of integrating exemptions and incentives to attract more entrepreneurs. Nigeria’s government needs to take follow in these steps.
Policies that positively influence start-up costs and capital access
Before anyone embarks on any entrepreneurial activity, they must first consider the start-up cost. The start-up costs usually would include the number of procedures and days it takes to form the business entity, the fees required to establish the business, and the minimum level of required capital. Different countries have different costs, and in some countries like Denmark, there is no fee payment for a start-up. Prospective Nigerian entrepreneurs tend to find the heavy burden of costs a limiting factor as besides start-up costs. The government can develop fiscal and monetary policies that will aid start-up entrepreneurs through the provision of grants, lowering borrowing rates, combating inflation, e.t.c.
Budding entrepreneurs are unable to operate or expand their ventures without access to capital markets. To power entrepreneurship, the government can enact policies that will yield unfettered access to adequate capital markets. This will provide the greatest opportunities for entrepreneurial expansion.