Following the recent hike in the price of premium motor spirit (PMS), otherwise known as petrol, small business owners, under the aegis of the Association of Small Business Owners of Nigeria (ASBON) have decided to adopt survival strategies that will ensure that they do not go into extinction.
This is coming on the back of warnings by the Manufacturers Association of Nigeria (MAN) and ASBON that the fuel price increase could lead to scaling down of operations and possible shutdown of more manufacturing companies and micro, small and medium enterprises (MSMEs) in the country.
In an exclusive chat with Vanguard, ASBON President, Dr. Femi Egbesola, stated: “For us in the MSME sector, the way out now is focusing not on what the government will do for us, for we don’t have control over that but rather focusing on what we have control on, that is, what we can do for ourselves.
So, we as an association has been building the capacity of our business community to be more innovative and creative with our products, business and business models, diversify to basic needs products, particularly food and its value chain, work on standardisation as it makes us more competitive, particularly with the imported products, explore exports to open up more markets and earn foreign currency, improve on our packaging with special focus on small and light packages, adopt technology to reduce transportation, general costs, logistics, use of
manpower/staff and to use technology to improve productivity, visibility, marketing, etc.
“We in the MSME community are determined to keep navigating these uncertainties with the clear goal and focus to survive, grow and scale.”
Meanwhile, MAN and ASBON told Vanguard that the increase in fuel price could lead to further rise in inflation, increased costs of production and logistics, low demand, rising inventory, and consequent loss of jobs.
Director General of MAN, Segun Ajayi-Kadir, said: “In terms of what the impact might be and judging from what we have witnessed in the past, the cost of transportation may increase, and so would the prices of goods and services. These are pointers to the high possibility of a rise in inflation figures, impacting household budgets.
“One is naturally worried about the impact on the already lackluster performance of the manufacturing sector. In particular, there is no doubt that it will add to production input and logistics costs. These will lead to higher prices and in the face of dwindling disposable income of the average Nigerian, a further deep in consumer demand will see manufacturers’ unplanned inventory rising and reduction in capacity utilization.
“Manufacturing performance would be negatively impacted. Businesses may need to adjust their pricing strategies, which could lead to reduced profit margins if consumer demand weakens. SMEs, which often operate on thin margins, could be particularly hard-hit. The increased costs could force some to scale down operations or even shut down if they are unable to pass on the additional costs to consumers.”
On his part, Egbesola, stated: “For MSMEs, this increase is another big blow. Quite a number in millions of small businesses are dead already. Many more are ailing and struggling to survive. This development will definitely cause more deaths of MSMEs and reduce the profitability of the existing ones.
“It’s impossible to pass the bulk of the price increase to consumers whose disposable income is already depleted to a breaking point.”
