The global COVID-19 pandemic has dealt serious damage to the global economy, enforcing supply shortages as well as increasing commodity and energy prices. The increased internal and external debt of governments trying to keep the situation stable resulted in decreased availability of credit as a result of major adjustments of the stock market (Altman 2020; Yin et al. 2022). The inability to loan finances at preferential rates makes it difficult for new businesses to enter the scene, because of additional risks, expenditures, and debt (Adhikari et al. 2021). This analysis will evaluate the influences of the decreased availability of credit on a prospective cinematography and animation start-up business in Ibadan, Nigeria.
The prospective start-up involves the creation of cinematography and animation courses in Ibadan, Nigeria. Ibadan is one of the largest cities in the country, with over 2.5 million people, which presents a potential for finding customers (Aruleba and Adediran 2022). At the same time, the costs of living in here are some of the cheapest in all of Nigeria. The country’s economy is developing, as it slowly becomes diversified and less reliant on oil export. As it stands, Nigeria has the highest GDP in all of Africa. Thus, it has a high demand for businesses that allow the country to develop its human capital (Abina and Maria 2019). The start-up seeks to answer that demand by providing education to individuals and helping them find their place in the burgeoning cinematography and animation industry, both domestically and abroad.
Potential Impacts on the Business, the Choice of Ibadan, and the Geographical Location
Decreased availability of credit would have numerous influences on the proposed start-up. In terms of business, the four major impacts would include the increased risk of launching the enterprise, the reduced scope of it at the beginning, the reduced availability of customers, and the increased difficulty of acquiring and paying loans from a bank (Włodarczyk et al. 2018). These conditions, together, mean that the enterprise would start smaller, have fewer sources of income, and would be more difficult to get off the ground.
The choice of Ibadan as the location of the business in Nigeria would help counterbalance some of these negative effects. While decreased availability of credit means that banks are less likely to approve loans, Ibadan has a large number of banks when compared to other locations in the country. It would be possible to find potential investors, even if it would take longer. The population of 2.5 million people would help make up for decreased availability of customers through greater exposure (Aruleba and Adidiran 2022). The increased risks of launching an enterprise would still be there, but they are inherently reduced when running in a big city, since the overall business climate here is much better than in the rural or unstable areas (Bairagya et al. 2020). Finally, the decreased initial scope of practice would provide certain advantages when working in Ibadan. Namely, it would be easier to rent a smaller space, and a decreased number of pupils would need fewer specialists to work with them (Misra 2021). The plan of adaptation is, thus, to downsize and weather the economic storm until better opportunities present themselves.
Decreased availability of credit has a negative effect on the proposed animation and cinematography courses start-up. It affects the ability of the company to get funding early on and grow into a large and independent entity. These effects can be mitigated by the choice of location. Starting the business in Ibadan, Nigeria, would help alleviate some of these issues, by providing greater access to housing, credit, and potential customers.
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