Small and Medium-sized Enterprises (SMEs) in Nigeria are cutting operating hours, reducing stock, and closing shops as surging energy costs, driven by high petrol/diesel prices and electricity tariff hikes consume up to 60 per cent of their profits. Many micro-businesses and manufacturers now operate at a fraction of their capacity to avoid passing unsustainable costs to consumers, findings by Weekend Trust has shown.
MSMEs, particularly artisans and operators in the informal economy, are said to contribute about 90 per cent of Gross domestic products (GDP) to Nigeria’s economy, according to conomic experts.
This group of businesses is increasingly facing existential threats over unfriendly policies and programmes. Nigeria interestingly, boasts of over 40 million MSMEs, unfortunately, they are caught in constant crisis of low energy transmission and persistent power outages, disrupting business models throughout the value chain.
A few with moderate capital salvage their businesses with generating sets, which also comes at a significant cost, thereby, increasing daily operating expenses amid low returns.
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Scores of traders and artisans who spoke to Weekend Trust expressed frustration over the harsh reality of energy costs on their businesses.
Petrol price N187 per liter in 2023has risento about N1,400 per liter in 2026 due to fuel subsidy removal, and further aggravated by the ongoing US-Iran war in the Middle East.
‘Our frustration’
For Toyin Adeniyia frozen food seller, prolonged power outages mean spoilt stock and wasted capital.
“Traders in this business face power outages and minimal profits due to the economic situation in the country. The erratic power supply has clearly pushed many of us into indebtedness. We have no electricity to chill our drinks, preserve our frozen foodstuffs, or operate our cold rooms.” She said.
“Cartons of frozen chicken, fish, and prawns get spoilt in a week of purchase. Some of us manage to salvage the situation with solar and generators, others aren’t as fortunate. It’a terrible experience. The unstable power supply is partly why the fish and other frozen foods prices increase daily.” she noted.
Also in Garki, Abuja traders lamented the impact of electricity tariff hikes and rising fuel costs on their businesses.
Baba Ahmed, a welder who needs constant electricity to carry out his job, notes that N1,000, which used to provide fifteen units of electricity, now produced just seven units.
“In three days, we exhaust five thousand naira on energy. After paying for energy, there’s barely anything left for food. We barely survive as saving money is out of the question,” he said.
Further checks showed that despite receiving little or no power, consumers are subjected to exorbitant estimated billing, they noted.
Similarly, a fashion designer stated that he spends thousands of naira daily on fuel to power his generator, yet the Abuja Electricity Distribution Company (AEDC) continues to issue him high electricity bills for power he does not consume.
“We are still paying for electricity we don’t use and there is nobody to hold the electricity companies accountable. It’s shameful.. The government can do their part, but electricity suppliers must also fulfil their responsibilities,” he said.
A barber who didn’t want his name in print said that he had to buy rechargeable clippers for his shop to enable him attend to customers’ to reduce the high cost of fueling his generator.
For a business centre owner in Jikwoyi, Abuja Emeka Eze continuous epileptic power supply disrupts operations and keeps customers away from his shop.
He notes that the constant increase in fuel prices have made it difficult for him to sustain the business,
“80 per cent of our income goes into buying of fuel”
According to him “my small shop is struggling to survive under this harsh business environment. Since fuel subsidy removal and other policies of the government, I don’t make significant profits anymore. Infact, I’ am now an agent as a way of engaging in other side hustles to enable me feed and provide for my family.” He said.
Henry Michael owns a laundry business in Orozo. He notes that inconsistent power supply makes life difficult and frustrating for many business owners, especially small business owners.
Henry said he plans to return home if the situation becomes unbearable for him.
“My business depends heavily on electricity and in the long run, I now have to rely on generators, especially since we use heavy washing machines. Again, constant increase in fuel prices have made it impossible for me to operate my generator daily”.
“I’m thinking of buying charcoal irons as an alternative as I don’t want to disappoint my customers or lose business opportunities,” he said.
Similarly, in Kano many traders dealing in essential goods at the famous Singer Market are scaling down business activities due to the rising cost of transportation triggered by high fuel prices.
Secretary of the market’s traders association, Alhaji Hamisu Jingau notes that many traders in the market record losses daily on account of transporting goods from Lagos to Kano.
Jingau explained that transporters and those in the haulage business have significantly increased their charges for traders bringing essential goods into Kano from Lagos as the cost of fuel continues to rise in recent times.
“Traders no longer bring goods in bulk as before because of the cost of fuel which has significantly increased transportation cost.
“What happens is when traders pay for transportation nothing is left from the profit and so many hardly purchase goods that require movement from one location to another, and when they must, they buy in small quantity just to satisfy customers. Also, customers who used to buy goods in large quantities now buy little, it’s that bad,” said Jingau.
He explained that the cost of bringing goods from coastal areas to the hinterland now runs into millions of naira with many traders unwilling to pay exorbitant transportation costs only to record losses or very low profit margins.
Jingau also noted that customers outside the state no longer come to the market, instead send purchase orders and make online transactions for traders to waybill the goods, which they consider way cheaper and better.
Explaining further, to save transportation cost, Jingau said, traders sometimes deliver goods from the point of purchase directly to customers outside Kano, adding that some traders now pool resources together to share the cost of transporting goods.
According to him, two to three traders now share the cost of bringing a single container to Kano where the market is experiencing low activity.
Traders from neighbouring states like Katsina, Zamfara, Bauchi as well as neighbouring Niger,Chad and Cameroon transact businesses with the Singer Market traders.
Similarly, Mustapha Muhammad, runs a provisions store, said he only stocks up his shop with essential food items like rice, flour, sugar, cooking oil, soaps and detergents because these items move as people must eat.
Muhammad said he no longer restocks kitchen utensils, cosmetics, plastic items and electronics because people are after essential goods and not luxury anymore.
“I rely on my loyal customers who buy their foods and other essential goods here because the cost of transportation has disrupted the market with a lot of uncertainties and low profit margins.
“Before now people from all over used to come here to patronise us because there was no price difference from what you got in the market and here, but that has changed now because transportation is an added cost which customers always factor in before coming,” he said.
A perishable items dealer, Haladu Ali,narrates similar experience, noting that scarcity of perishable items like tomato and pepper coupled with high transportation cost has left him with no option but to focus on selling small quantities of yam which he usually buys from the same Yankaba market.
“Because of the scarcity, the prices have more than doubled. Perishable items are seasonal and we also face transportation challenge. In this business you can easily incur losses because the items can easily get spoilt. I can’tafford refrigerators to preserve them, and even if I could, public power supply isnt constant though expensive.
“So honestly when you overcome one challenge, another one springs up. I visit my village regularly, getting ready for the farming season to complement my earnings,” said the trader.
Suleiman Bala who runs a business centre along Naibawa road, however faces a different challenge.
Bala said rise in rent and cost of electricity are his major problems.
“They just increased the rent to about N250,000 when we are battling with rising production costs.
“First, this business relies heavily on power. You either get public supply of electricity or use your generator which uses fuel, an expensive commodity if you ask me. KEDCO gives me a monthly bill of about N15,000 even when supply isn’t regular. When I factor money spent on fuelling the generator I realise that I’m running at loss, “said Bala.
To mitigate the cost, he said he uses a small solar inverter to run photocopies when clients are in a hurry and cannot wait longer than necessary for electricity to be supplied .
Bala also said he brought a POS operator to the shop to share part of rent payment, a move he believes helped reduce cost.
Mudatex, a textile dealer at Kantin Kwari market, introduced installment payment for his goods to enable residents buy textiles. His noble idea is believed to be an innovative way of surviving in the market being squeezed by rising transportation costs.
Meanwhile, another textile trader, Abubakar, Danzaria applied a different idea. He relinquished his rented shop to become a mobile trader … [truncated]
This news development was originally reported by our media partner DailyTrust Home .
