"Petrol price hike puts millions of businesses on edge"

" Petrol price hike puts millions of businesses on edge \r\nThe surge in petrol prices occasioned by the removal of subsidy is the latest headache facing millions of small businesses in Nigeria, a couple of months after a cash crisis caused economic activity to shrink for the first time in almost three years.\r\n\r\nMany of the country\u2019s 39.6 million nano, micro, and small businesses have been struggling to survive in recent years owing to the fallout of the COVID-19 pandemic and the Russia-Ukraine war.\r\n\r\nSmall business operators in Africa\u2019s biggest economy have been grappling with a combination of issues, including poor power supply, rising borrowing costs, soaring inflation, restrictive economic policies, foreign exchange volatility, and tax multiplicity. The recent petrol price hike is already taking its toll and threatening to keep many out of business.\r\n\r\n\u201cI started my business in 2019 and I process fruits and vegetables. I have three generators and often buy five to 10 litres of petrol daily to power my two deep freezers,\u201d Toyin Oladimeji, chief executive officer of Ola Foods, said.\r\n\r\n\u201cI bought a litre of petrol for N190\u2013N210 last month, now I buy a litre for N500\u2013N550 since the subsidy removal. My production cost has doubled owing to this amid declining sales,\u201d Oladimeji said.\r\n\r\n\u201cAll this is already threatening my business which has been struggling for survival. Right now, it is really difficult for small business operators who rely on petrol to power generators,\u201d she added.\r\n\r\nLast week, President Bola Tinubu had in his inaugural speech announced the removal of the petrol subsidy. This triggered petrol queues in several parts of the country a few hours after as some fuel stations stopped dispensing the product.\r\n\r\nThe price of petrol in Africa\u2019s biggest economy was raised to an average of N526.7 per litre from an average of N191.8 per litre a month ago, according to BusinessDay\u2019s calculations.\r\n\r\nAdenike Fagbemi, founder of BrandTell Nigeria Limited, a digital marketing company, said she usually put on her generator daily for at least five straight hours owing to poor power supply from the national grid.\r\n\r\n\u201cBut now, I switch it on only when the need arises and put it off afterwards since the recent hike in fuel prices,\u201d Fagbemi said. \u201cThe situation has made our work environment less conducive as we have to work without putting on air-conditioning when there is no power supply.\u201d\r\n\r\nEnergy is a key element of the production process. Nigeria\u2019s inability to supply and distribute sufficient electricity has left businesses at the mercy of alternative energy sources such as the use of generators that consume diesel and petrol.\r\n\r\nAccording to the Manufacturers Association of Nigeria, manufacturers spend 40 percent of their total production cost on generating energy for their businesses.\r\n\r\n\u201cWith the increase in petrol prices, small businesses will see their production costs double. This will suffocate many who are already struggling daily for survival,\u201d said Femi Egbesola, national president of the Association of Small Business Owners of Nigeria.\r\n\r\n\u201cThere seems to be no end in sight for small business operators as things continue to get harder for them,\u201d Egbesola said.\r\n\r\nEgbesola noted that more businesses are going to shut down their operations amid the worsening cost-of-doing-business crisis in the country.\r\n\r\nJohn Udeagbala, national president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said in a statement that the association is not against subsidy removal but is concerned about the impact on businesses already burdened with several economic shocks.\r\n\r\nAccording to him, if nothing is done to cushion the negative impact of the subsidy removal, more micro, small and medium enterprises will shut down operations, thus accelerating the country\u2019s unemployment rate.\r\n\r\nWith the high energy spend, small business owners often transfer the burden on cash-strapped Nigerian consumers, who have to bear the brunt.\r\n\r\nAfrica\u2019s most populous country has been grappling with double-digit annual inflation since 2016 but with a faster acceleration since last year, with the consumer price index hitting 22.22 percent in April, according to data from the National Bureau of Statistics (NBS).\r\n\r\nThe recent hike in petrol prices across the country will further cause another round of increases in the prices of goods and services and worsen the cost of living crisis, with fixed-income earners most hit, say experts.\r\n\r\nAyodeji Ebo, managing director and chief business officer at Optimus by Afrinvest Limited, said the subsidy removal would increase the cost of production for businesses in the medium term.\r\n\r\nHe urged the government to make provisions for power infrastructure to reduce production costs for businesses in the long run, while also calling for some sort of tax holiday to cushion the effect.\r\n\r\nSimilarly, NACCIMA called on the Federal Government to urgently fix the country\u2019s four refineries, which have remained comatose for the past 16 years, to end petroleum products importation.\r\n\r\n\u201cIt will also address the impact of fuel subsidy removal without adding additional debt burden on the nation,\u201d said Udeagbala. \u201cBesides, our ability to provide some basic raw materials internally will help our industries to compete better to benefit from the African Continental Free Trade Agreement.\u201d\r\n\r\nNBS and the Small and Medium Enterprises Development Agency of Nigeria said in a 2022 report that 1.9 million small businesses exited the Nigerian business landscape.\r\n\r\nExperts say the numbers will be higher when the figures for 2022 and 2023 are released.\r\n \r\n \r\n \r\n "

"Petrol price hike puts millions of businesses on edge"

Nigerians devise coping strategies as electricity cost surges by over 300%AMP

Zimbabwe’s FBC Holdings acquires Standard Chartered UnitAMP

Ivory Coast’s credit rating affirmed by S&P after eurobond saleAMP

Oleksandr Usyk defeats Tyson Fury, become undisputed championAMP

Saturday GPL wrap: Berekum Chelsea beat Kotoko, Great Olympics in troubleAMP

Pierre Gasly to auction his 2024 Senna Tribute HelmetAMP

Nigeria will have no need to import petrol from next month – Dangote saysAMP

TotalEnergies strikes supply deal with Dangote on Nigerian refineryAMP

Zimbabwe to get over half of $60m payout for El Niño-hit African nationsAMP

Nigerians devise coping strategies as electricity cost surges by over 300%AMP

Zimbabwe’s FBC Holdings acquires Standard Chartered UnitAMP

Ivory Coast’s credit rating affirmed by S&P after eurobond saleAMP

Oleksandr Usyk defeats Tyson Fury, become undisputed championAMP

Saturday GPL wrap: Berekum Chelsea beat Kotoko, Great Olympics in troubleAMP