The Organised Private Sector of Nigeria is deeply concerned about the potential complete closure of numerous small businesses and the subsequent job losses resulting from the recent hike in fuel prices caused by the removal of subsidies.
The recent fuel price hike has dealt a severe blow to small businesses in Nigeria, and many are now facing the risk of shutting down, leading to a surge in job losses. The situation is exacerbated by the lingering effects of the COVID-19 pandemic and the Russia-Ukraine war, which have already left nano, micro, and small businesses struggling to survive.
Small businesses are particularly vulnerable to economic shocks and are currently grappling with a myriad of challenges, including inadequate power supply, rising borrowing costs, soaring inflation, restrictive economic policies, foreign exchange volatility, and multiple taxes. The increase in fuel prices has added to their burden and poses a significant threat to their survival.
The impact is not limited to manufacturing and small businesses alone; it has also affected the transportation sector, leading to higher fares and an overall increase in the cost of living for people.
News platform, The Sun reported that Segun Kuti-George, the National Vice President of the Nigerian Association of Small Scale Industrialists (NASSI), has expressed concern that the situation would force small businesses to find alternative sources of energy, further straining their operations. He also lamented the unpredictability of Nigeria’s economic landscape, which does not always respond to market forces.
Ide John Udeagbala, former National President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), acknowledged the need for subsidy removal but highlighted the negative impact it could have on already burdened businesses. He warned that failure to mitigate the consequences could lead to more closures of micro, small, and medium enterprises, exacerbating the country’s unemployment rate.
Udeagbala emphasized the urgency of reviving Nigeria’s dormant refineries to end petroleum products’ importation and alleviate the impact of fuel subsidy removal without adding to the nation’s debt burden. He also stressed that domestic production of essential raw materials would enhance the country’s industries’ competitiveness and enable them to benefit from the African Continental Free Trade Agreement.
Gabriel Idahosa, Deputy President of the Lagos Chamber of Commerce and Industry, predicted severe hardships for businesses in the near-term due to the petrol price increase. He expressed concern that small and medium enterprises would struggle to recover from such economic shocks, especially as many of them operate in the informal sector and rely on goods from across the borders.
The recent fuel price hike in Nigeria has placed an overwhelming burden on small businesses, threatening their existence and contributing to job losses. Urgent measures and support are needed to alleviate their plight and foster a conducive environment for their growth and sustainability.