High Inflation Fuels Entrepreneurship Growth in Nigeria

Inflation in Nigeria is driving a rise in entrepreneurship as individuals seek alternative income sources. A PiggyVest survey indicates 31 percent of citizens prioritize business ventures as savings goals. The economic landscape necessitates this shift, with increased debt among entrepreneurs and a notable opportunity for women in business ownership. Financial institutions are adjusting offerings to align with these emerging entrepreneurial trends.

In Nigeria, the rising inflation is prompting a significant change in economic behaviors, with a notable shift toward entrepreneurship as a survival strategy. A recent survey conducted by PiggyVest, which involved over 10,000 Nigerians, found that 31 percent of respondents are prioritizing business ventures as their immediate savings goal due to economic pressures.

Odunayo Eweniyi discussed this trend, emphasizing that many individuals are becoming entrepreneurs not merely out of ambition but as a direct response to soaring costs and declining purchasing power. The survey highlighted that starting or expanding a business ranks as the second most common short-term savings objective among participants.

The report indicated that 26 percent of Nigerians own a business, with women exhibiting a higher ownership rate than their male counterparts. However, this pursuit of entrepreneurship often leads to financial challenges, as nearly one in four Nigerians incurs debt related to sustaining or starting a business.

In January 2024, Nigeria’s headline inflation reached 29.90 percent, culminating in a staggering 34.80 percent by the end of the year. This sharp increase has severely impacted purchasing power, necessitating the exploration of additional income sources. The economic landscape is marked by alarming food prices and a volatile currency.

Many Nigerians have expressed that their venture into entrepreneurship is driven by economic necessity rather than choice. As one individual remarked, “Most Nigerians aren’t entrepreneurs by choice. It’s a necessity to supplement income from a job, or if no job is available to make some money.”

According to estimates from PricewaterhouseCoopers (PwC), small and medium-sized enterprises (SMEs) constitute 96 percent of businesses in Nigeria and 84 percent of employment, making significant contributions to the national GDP. Eweniyi noted the crucial role of women in entrepreneurship, attributing their higher business ownership rates to workforce exclusions linked to family responsibilities.

PiggyVest utilizes data from such surveys to inform its product development. Eweniyi indicated that the company is now focusing more on assisting users in beginning businesses and achieving financial independence. She stated that trends in consumer priorities have influenced adjustments in the company’s offerings, such as an increase in SafeLock interest rates and the introduction of PiggyVest Business for better financial management.

The relentless inflation in Nigeria is stimulating a wave of entrepreneurship as citizens seek alternative income streams to cope with economic hardship. This necessity-driven shift underscores the importance of supporting small businesses, particularly those owned by women, as they represent a significant component of the economy. Furthermore, financial products are evolving to meet the changing needs of aspiring entrepreneurs, reflecting an adaptive response to challenging circumstances.

Original Source: businessday.ng