Nigeria is currently ranked 133 out of 183 countries in the Ease of Doing Business Report. This puts Nigeria amongst the worst when it comes to doing business in the world. On a brighter side, the same report also estimates the minimum capital required to do business in Nigeria at zero per cent. This means that it can take absolutely nothing to start a business in Nigeria, thus putting her amongst the best (82 countries) in the world. However, running a business in Nigeria can be onerous and expensive. So many costs can be incurred depending on your type of business, but the following cut across nearly every business.
Cash cost
Every business requires that you either receive or spend money. To do so would also require various levels of cost for those who spend the money and those who save it. No one is spared here, not even those who do not save their money in banks. The cost of handling money include bank charges, handling cost, security, opportunity cost etc. Businesses must constantly explore ways to manage this cost.
Transportation cost
This is a cost every business in Nigeria must also incur. Be it by road, air or sea, goods and services are moved from one location to the other and will always involve some form of payment. According to the National Bureau of Statistics, Nigerians spend about N517bn on transportation. There are no exceptions here making it very essential for companies to manage it efficiently.
Phone bills
Since the advent of GSM, phone bills have become a regular feature in our budgets. Small businesses must have effective controls in place to help manage the rising cost of phone bills. Phone bills are an everyday cost all Nigerian businesses incur, which is the reason why GSM companies make so much money.
Levies and taxes
Business in Nigeria of every size and function pay all sorts of levies or taxes to various regulatory authorities under which their businesses operate. According to the Federal Inland Revenue Service, Nigerians paid about N3.8tn in taxes in the first nine months of 2012. Taxes and levies are an everyday transaction cost, which every business must grapple with. You cannot avoid it even if your business warrants that you stay indoors and transact from your computer. As such, businesses must embrace tax efficiency by employing legitimate means to avoid taxes where necessary.
Power
Power is central to the functioning and survival of every business in Nigeria. Whether provided via the local authorities, generators, candles and lamps, every business must incur its associated cost to remain competitive. Nigerians spend over N635bn on power, making it an important cost, which businesses must learn to manage.
Rent
Rent is paid by every business in Nigeria, as there are no free spaces or accommodation no matter your kind of business. In fact, the National Bureau of Statistics reports that about N1.7tn was spent by Nigerians on rent in 2010. You are either paying to the state or a private authority or to both depending on where you find your self. Spaces do not come free in Nigeria
Printing and stationery
No matter your business, you must be ready to incur some form of printing and stationery costs. As businesses constantly need to record their sales and expenses, advertise and send out invoices, money is set aside regularly to fund this expense. The cost, of course varies from the operational size of one business to the other nevertheless it is a cost every business must incur.
Health cost
Health is wealth as the saying goes, which by all standards relates the economic survival of every business to the well being of its owners and employees. Businessmen and women spend billions of Naira annually on health care cost whether through orthodox medicine or alternative. The government is seriously stepping up efforts to ensure every Nigerian has health insurance as such businesses should be aware that this is an inevitable cost.
PR cost
Every business incurs this at some level of its operations whether they wish to admit it or not. From tipping the local transport authority just to get a transport license to obtaining planning approvals for a development project, every business incur this cost one time or the other. It’s one of the wonders of doing business in Nigeria. By the way, this is one cost that is not officially recognised by regulatory authorities despite its ubiquitous nature. But we do know it exists, don’t we?
Corruption cost
The government had to set up the Economic and Financial Crimes Commission and the Independent Corrupt Practices Commission, in addition to the police and other anti fraud agencies already in place to help fight it. Corruption affects every aspect of life, be it public or private. The banking sector crisis, for example, exposed Nigerians to the huge corruption in the private sector. Businesses must acknowledge this and frequently set aside cost to fight it within their organisations or risk losing money and image.
UGODRE OBI-CHUKWU (UGODRE@GOOGLEMAIL.COM)
Punch Nigeria
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