Since taking office, President Bola Ahmed Tinubu has introduced a range of policies with the promise of placing Nigerians at the forefront of government decisions and addressing fiscal and monetary practices unfriendly to businesses. However, these policy shifts have sparked particular concern among small businesses, raising issues regarding their economic sustainability and operational stability, writes Jumoke Olasunkanmi.
In the last 4 months, policy changes by the President Bola Tinubu administration are the removal of fuel subsidies, the floatation of the naira, and the lifting of foreign exchange restrictions. While these measures were touted as essential for achieving economic reform and growth, their profound impact on both citizens and businesses has cast doubt on their overall effectiveness.
The removal of fuel subsidies stands out as a contentious move, resulting in a surge in fuel prices and a subsequent rise in the cost of living for Nigerians. Despite government arguments that this would benefit the economy by reducing financial strain, the sudden increase in expenses left many Nigerians struggling to make ends meet.
The floatation of the local currency, another significant policy shift, introduced exchange rate fluctuations that reverberated throughout the business landscape. While this move aimed to provide flexibility in the foreign exchange market, it led to heightened operational costs for businesses relying on imported goods and materials, amplifying their existing challenges.
Furthermore, the lifting of foreign exchange restrictions had mixed consequences. On one hand, it expanded access to foreign exchange, welcomed by businesses involved in international trade. On the other hand, this policy change introduced market uncertainty, hindering businesses’ ability to plan for the future.
Collectively, these policy adjustments have created an environment of economic uncertainty, severely affecting small businesses. Small and medium-sized enterprises (SMEs), the backbone of the Nigerian economy, have grappled with heightened operational challenges. Adapting to rapidly changing economic conditions, they have faced increased costs, reduced consumer spending power, and a volatile business environment.
This uncertainty manifests in various ways for business owners and consumers alike. Mr. Olalekan Sunkanmi, a logistics operator, bemoaned the removal of fuel subsidies, citing the challenges it poses to running his business and maintaining his livelihood. Varying fuel prices at different stations have made it impossible to set fixed service prices, often leading to conflicts with clients.
“The uncertainty about fuel prices across different fueling stations makes it difficult to set prices. Secondly, the buying power of the citizens has been grossly eroded, affecting the logistics sector since there are fewer sales and fewer goods to dispatch,” he added.
Mrs. Aisha Rufai, a retired civil servant running a grocery store, also expressed discontent with the administration’s policies, especially the removal of fuel subsidies. She remarked, “The prices of goods increase daily, and when you factor in transportation costs, there’s almost no profit left. My shop is nearly empty because I can’t keep up with the soaring costs of restocking. Sometimes, I contemplate closing down.”
These frustrations echo those of countless business owners in the country. Despite the escalating costs of doing business, sales continue to decline as more Nigerians grapple with poverty, eroding their purchasing power.
Mrs. Tope Oyenuga highlighted her experience, closing her food store two months after the removal of the fuel subsidy due to the rising cost of foodstuff. She explained, “The price of food items went up over 200 percent, and at the end of the day, I was not making any profit.”
“Sales also reduced because not many people could afford to eat out twice or three times a day; the ones that were buying were buying on profit. I just had to close the shop and look for something else to do,” she added in frustration.
These concerns are not unfounded, with recent data from the National Bureau of Statistics pegging food inflation at 31 percent—a dire situation for a country with over 133 million people living in multidimensional poverty.
For people like Mr. Emmanuel Babalola, a motorist in Abuja, Tinubu’s policies, especially fuel subsidy removal, all but crumbled his business. He explained that prior to the change in pump price, he could fill his car tank with less than N10,000 but now he needs around N47,000 to fill the same car.
“Transporters are mostly affected because the new petrol price is not proportionate with the increase in transport fare. This means you can work for a whole day and make less than N4000 in profit. You still have to worry about the inflation rate on every other thing especially food stuff.
“I can no longer put money aside for saving because how do you save when you are barely eating?”
Segun Rahmon, a young barber, in an interview with AHR, stated that of all of Tinubu’s policies affected his barbing business, especially the fuel subsidy removal as he does not rely on the irregular power AEDC supplies to work. He disclosed that he spends a greater portion of his income on fuel despite the fact that he tries to cut cost by reducing the amount of time he leaves his generator on.
“Before the subsidy removal, I’d leave my generator on to play music so that my shop will be lively and attract customers but now I cannot afford to do that; I already spend too much on fuel as it is.
“Petrol went from N190 to N650, thats almost N500 difference but I cannot add more than N100 to N200 to my price if I dont want to lose all my customers.”
As Nigeria marks its 63rd Independence Day, the evolving policy landscape under the Tinubu administration remains a hot topic. While some argue that these changes are crucial for the country’s long-term economic growth, others emphasize the need for thorough consideration of their impact on small businesses and the wider population. Balancing economic reform with the welfare of citizens and businesses poses a formidable challenge that demands thoughtful and comprehensive policymaking.
