Energy crisis buffet Nigeria’s small businesses

The recent hike in fuel price is dealing a crude blow on businesses, which are dependent on electricity for survival, JULIANA AJAYI reports

Small businesses in Nigeria that depend majorly on electricity to keep going have been counting losses due to the scarcity of fuel and the recent increase in diesel price. Among those whose businesses have been badly affected are bakers, laundry service providers and salon owners.

Bread, which had always been seen as a staple food to most households, continues to be a luxury for the common man. Some bakers have expressed displeasure and frowned on the increase in the cost of Premium Motor Spirit, known as petrol, and diesel, which provide electricity to run their machines.

The President, Premium Breadmakers Association of Nigeria, Emmanuel Onuorah, explaining the challenges breadmakers are battling, said, “It is a very tough one for us bakers because we use a lot of electricity to power our machines. Part of it runs on diesel, part on electricity. The energy impact on the cost of our business is humongous. Businesses are shutting down, leading to loss of jobs and all that. It is a very tough one.

“The tariffs are so high, and there is no power; we heard that there was a system collapse from the Transmission Company of Nigeria, that the generated power has dropped to less than 4,000 megawatts. This has a very negative impact on the premium breadmaking industry.”

The TCN, in a recent report, was quoted as saying that it could only transmit the quantum of power made available by electricity generation companies, through the national grid, to distribution centres nationwide.

It added that from March 1 to 4, 2022, there was a generation shortfall due to water management in Shiroro and Jebba hydro, with the loss of 307MW and 125MW respectively from both stations.

Onuorah, lamenting the plight of bakers, said, “In the past six months, we have not increased prices and it is affecting our business negatively. The prices of energy – both diesel and electricity – have skyrocketed. Our input components are majorly imported into the country.

“I spend no less than N4m on fuelling my diesel generator, excluding the cost of running my six vehicles for business. My monthly electricity bill is N500,000 or more. I have been running on diesel for days.”

He tried to put himself in the shoes of consumers.

“We feel for Nigerians, the expendables in the pockets of Nigerians dwindle significantly. There is no money in people’s pockets. As an industry, we look at these factors and make adjustments. Sometimes you look at how you can remain in business, instead of passing on the cost. We do it in such a way that people can still afford bread, which is supposed to be food for everyone. It is tough for everybody.

“As much as we feel for Nigerians, we hope that Nigerians will understand too that we are not the ones causing all this; it is the unfriendly government policy. No manufacturer likes to increase the prices of goods anyhow because it is not a good business model. The moment you increase your price, you tear it up. It is better to have more sales, with small profit. So, profitability is out of it for us,” he said.


SOS to government

According to the Onuorah, the Federal Government can do a lot to help the breadmakers’ situation.

For him, the import duties charged by the government on wheat is too high for millers, as the charges determine the price of flour used in baking.

Onuorah explained, “We have engaged the Federal Ministry of Industry, Trade and Investment severally. The government is charging 30 per cent import duty on wheat into Nigeria. We have told the Federal Government that there was a 15 per cent development levy introduced in June 2012 as a stopgap to enable us see how we could do backward integration of wheat in Nigeria. They said they were going to do it for two years and stop, but the present government is now using it as a cash cow. If the government removes the percentage being charged on the importation of wheat, it will help the millers scale down the prices of flour, knowing well that flour is about 65 to 70 per cent of our input.

“We talk about electricity bills and diesel, before we even talk about those working for us and materials increase. Last week, flour increased by N1,000, sugar increased by N1,500. Nobody gives you any notice. The roads are bad, the prices of spare parts are rising too. At the ports, the operators tax Nigerians the way they like.”


Running at zero profit

Meanwhile, some of those in the beauty industry, who operate different salons in Lekki, Tafawa Balewa Square and Lagos Mainland, have retained their prices to keep their customers, even if it means profiting little or nothing.

Among those who frowned on the increase in fuel price was a hairdresser, Mrs. Bridget Godwin, who runs several beauty outlets in Lagos.

“We are praying God to make the economy of Nigeria okay. We are not happy the way things are; the fuel scarcity and price increase are really affecting our business because if there is no light and everywhere is hot, you have to turn on the power generator. The money the customers will pay you for the services rendered will not even be enough to buy fuel. If you decide to economise, the customer will complain about the heat.

“We are just managing everything, so that we will not just sit idle. The situation is really affecting us. Not to mention that we do not have constant power supply as we used to. We are praying God to touch the heart of our leaders to make things easy for us,” she offered.

Another salon owner, identified as Ms Favour, said that more customers had been to her shop to wash and set their hair these past weeks than since she started her hair business. She explained that other hairdressers visit different salons to set their customers’ hairs, as the fuel crisis persists.

She noted that despite the increase in fuel price and other hair products, hair-dressers around her retained their prices for washing and setting.

Opayemi Temitope, who runs a laundry shop, said, “The fuel crisis has slowed down the rate of work. We have started apologising to clients for the delay in deliveries. The positive side of it is that it has really taught me to make good use of the power supply whenever it is available.

“We go out of our way to get diesel, which, price has been on the rise for a while now. We can’t complain because we don’t want to lose our clients due to the economic situation.”

But, according to him, in a situation where there is shortage in power supply, and business owners have to depend on diesel, they make good use of it.

“We maximise, in the sense that whatever that needs to be done in the space of time has been carefully converted into a way that it doesn’t consume much diesel. We now work with time unlike before when customers would come with their laundry needs that we would attend to them one after another.

“Now, we have to wait for more customers to bring their laundry. We dispatch in batches. The way we dispatch in batches now is different from the way we did when power supply was constant.,” she said.


Transportation versus beauty

Majority of the respondents on this issue attested that hairdressers maintained the old price of their services, despite the fuel crisis. Their major concern, however, was the cost of moving from one place to another.

Ogunyinka Kehinde, a fresh graduate of Olabisi Onabanjo University, resident in Akute, on Lagos and Ogun states border, said, “The transport fare has increased, but not like me going from my house to Lagos. I must have three times the amount. But if it’s within Akute, I will still hold double the amount due to fuel price.

“If I want to go to my friend’s house within Akute, N200 can take me to and fro, although the place is far; but now, it is N500 or N600. I rarely go there due to the cost.”

Speaking on the price charged for a haircut in the salon, Kehinde explained, “It has been since I cut my hair. I would rather wash it with shampoo than spend N500 like that. Men are advised to cut their hair every two weeks. That’s N1,000 a month. Please what job am I doing?”

Another respondent, Kenneth Okpara, a resident in Ajah, Lagos, said he sometimes cut his hair for N700 or N1,000 in different salons. He, however, noted that the prices had been like that, even before the fuel crisis.

“They are still the same despite the power supply and fuel crisis,” he said. “From Ajah to Badore increased by N100; it was N200 before, now it is N300.”

Mr. Adebola Adeshina, a resident of Iyana Oworo, Lagos, said that in his neighbourhood, barbers also retained their old prices.

Like other respondents, he identified transport fare as the major thing that had been consistently expensive since the fuel crisis.

He said, “From Iyana Oworo to Obalende, we usually pay between N100 and N150 before the fuel crisis. Now, we pay N200 most times; you would be lucky to get a bus to Obalende for N150 these days.”

Get in Touch


Please enter your comment!
Please enter your name here

Related Articles