Businesses in Nigeria are grappling with the twin challenges of epileptic power supply and hike in cost of fuel. Nigeria’s more-than-200-million people depend on just 3,500 megawatts of energy generated. As a result, there is not enough to go round. Even when power is supplied, it is very expensive. Recently, the power distribution companies have proposed a hike in tariffs to the National Assembly. In addition, businesses rely heavily on generators to run. The recent increase in the price of petrol (premium motor spirit) has affected them so much that the burden is being transferred to the masses.
Frequent blackouts and power outages amid high tariffs have become a routine part of life for businesses, disrupting production schedules, leading to losses, and making it difficult to meet consumer demands. Citizens who spoke to the media said that Nigeria is at a critical crossroads and people face a dire economic situation. Because of all these, businesses are shutting down. The commenters said that the impact on the economy and the lives of ordinary citizens was severe and required immediate attention.
Government provides subsidies in other countries.
Against the popularly held belief that subsidy is an enigma and should be done away with, an expert has said that it is a part of government policies in saner climes. Umar Mohammed, an economist who works in a multinational company in the United States, said, “there is nowhere in the world where there is no subsidy.” This will definitely sound strange to Nigerians who have clamored for its removal on petrol. However, it seems that Mohammed means that the price of gas in developed countries may not be subsidized, but the government provides it via other means.
He revealed that small and medium enterprises (SME) are collapsing in Nigeria because there is no subsidy for them at all. These businesses pay a lot of money for electricity, which is not even available in most cases. So, they resort to using diesel or petrol. They also provide their own security for their business premises. Most importantly, they pay multiple taxes. That is not the case elsewhere – in at least four countries that he has worked, which are Germany, Russia, and the United Arab Emirate (UAE). “Governments provide the enabling environment, constant electricity with various options, all in an effort to make people live a fulfilling life,” he said.
Electricity tariff was to rise through Multi Year Tariff Order.
Barely two months after Bola Tinubu was sworn in as president, the price of petrol has jumped from N187 per liter to N617 without a commensurate increase in the income of citizens. In many parts of the country, residents rarely get up to 12 hours of electricity. Some communities live for days in darkness, with only a few capable of buying petrol or diesel. Amidst all these, the House of Representatives had to intervene in the planned increase in electricity tariff by calling on the Nigeria Electricity Regulatory Commission (NERC) to stop it. Distribution companies (DisCos) had alerted customers of this increase, which was based on the Multi Year Tariff Order (MYTO).
If DisCos had had their way, the previous exchange rate of N441 per dollar would be revised to approximately N750. Reportedly, under the planned hike, consumers within “B” and “C” bandwidth with supply hours ranging from 12-16 hours per day would pay N100 per KWh, while Bands ‘A’ with 20 hours and above and ‘B’ with 16 to 20 hours would experience comparatively higher tariffs. So, according to the MYTO, which the NERC approved to run from 2022 to 2026, consumers who were paying about N16 per kilowatt per hour in 2015 now pay about N55, while maximum demand customers under Band A, who were expected to enjoy electricity for 20 hours per day, are paying about N71 to N80 for one kilowatt per hour.
SMEs struggle to stay afloat in this economic situation.
Vulnerable SMEs, which form the backbone of the country’s economy, have been struggling to break even due to the impact of the power crisis. Continuous power disruptions force businesses to turn to expensive alternative power sources, such as diesel generators to maintain operations. Running these is exorbitantly costly and many businesses close up, causing significant job losses and reduced economic growth. An example is Inuwa Muhammad who sells soft drinks in Kano. He said that he closed his shop due to lack of electricity and cannot afford powering his refrigerators with generators.
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SMEs shut down due to fuel cost, poor power – Expert says government should provide enabling environment for businesses. – Express your point of view.
I completely agree with you. It’s really unfortunate that small businesses are shutting down due to the high cost of fuel and poor power supply. The government needs to step in and create an enabling environment for SMEs to thrive. Providing incentives and support to small businesses can make a huge difference in their ability to succeed. Small businesses are the lifeblood of the economy, and it’s important that we work together to support their growth and create a more prosperous society. By taking action to support SMEs, we can help to build a better future for everyone. I think that it’s important for the government to take a long-term view and create policies that encourage the growth of small businesses. This can include tax incentives, access to financing, and other measures that can help small businesses to succeed. We need to work together to create a more vibrant and dynamic economy that supports the growth of SMEs and helps to create a brighter future for everyone.
It is unfortunate our small and medium enterprises are shutting down. This is because there is no power supply and fuel cost has gone up. There is a serious problem of good enabling environment for businesses to thrive in Nigeria.
A lot of small and medium scale businesses are truly shutting down. The expert’s suggestion about government subsidies providing an enabling environment for businesses is a valid point to consider. Subsidies can help reduce the burden of high energy costs for businesses, especially small and medium enterprises (SMEs) that often face financial constraints. By providing subsidies or other forms of support, the government can potentially improve the business environment, encourage growth, and mitigate the negative impacts of the power crisis.
However, it’s essential to note that implementing subsidies requires careful planning and consideration of various factors, such as budgetary constraints, the impact on public finances, and ensuring that subsidies reach the intended beneficiaries. Moreover, addressing the power crisis in Nigeria might involve a more comprehensive approach that includes investing in infrastructure development, promoting renewable energy sources, and tackling issues related to fuel pricing and distribution.
It is regrettable that so many of our small and medium-sized businesses are closing. This is due to the lack of a power supply and rising gasoline prices. In Nigeria, there is a severe issue with creating a climate that is conducive to corporate success
The small enterprises are closing down as a result of high fuel prices and unstable electricity supplies. The government must intervene and establish a supportive climate for SMEs to flourish. Small firms can prosper to a great extent if they are given incentives and support. We must cooperate to build a more thriving and dynamic economy that fosters the expansion of SMEs
High fuel prices and unreliable power supplies are forcing small businesses to close. The government must step in and create an environment that is conducive to SMEs thriving. The small businesses should be given fully support in this issue so to afford been close down