Business Incubators and Small
The Nigerian Experience
Small Business Economics
17: 157–166, 2001.
2001 Kluwer Academic Publishers. Printed in the Netherlands.
ABSTRACT. The article reviews the development of business
incubators in a developing country, namely Nigeria.The
current operational status of the seven existing incubators are
highlighted as well as the successes and shortcomings asso-
ciated with the implementation of the programme. This is
followed with an assessment of the needs to be addressed
before incubators can make the desired impact in stimulating
entrepreneurship development and technological innovation.
Finally, policy recommendations are made to guide the future
development of business incubators in Nigeria so that they can
make effective contribution to the goal of promoting small and
medium scale enterprises.
Business incubators are now recognised in both
developed and developing countries as important
instruments for promoting entrepreneurship
development and technological innovation at the
small and medium enterprise level. Pioneered in
Western Europe and North America there are now
thousands of business incubators all over the
world established with the primary objective of
stimulating the emergence of a steady flow of
successful small and medium scale enterprises,
thereby promoting entrepreneurship and innova-
tion in particular and socio-economic development
Within this context, business incubators have
established a successful track record in Western
Europe and North America over the past two
decades and are now recognised as being one of
the most effective ways of promoting entrepre-
neurial activity and local economic development.
Studies to evaluate their performance indicate that
they can reduce the failure rate amongst new
business start-ups to below 10 percent over a three
year period, as compared with 60 to 80 per cent
for small business generally.
It is against the foregoing background that
several developing countries, including Nigeria,
have adopted the business incubator approach to
accelerate the development and promotion of
small and medium scale enterprises.
2. Business incubation concept
It is useful at the outset to define and explain the
concept of business incubation. A business incu-
bator may be defined as an organisation that
facilitates the process of creating successful new
small enterprises by providing them with a com-
prehensive and integrated range of services,
a. Incubator space in fully built-up factory build-
ings on flexible and affordable terms.
b. The provision of a comprehensive range of
common services, including enterprise coun-
selling and training, shared secretarial support,
start up financing and assistance with product
development and marketing.
c. Strict admission and exit rules, which are
designed to ensure that the incubator concen-
trates its efforts on helping innovative, fast-
growth business start ups that are likely to have
a significant impact on the local economy.
Exit rules generally limit tenancy to a period
of between three to five years, thereby ensuring
a reasonable turnover of tenants.
d. Professional management, which involves
monitoring tenant businesses closely against
Final version accepted on 17 July 2000
Enterprise Consulting Group Ltd.
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