In the aftermath of the reforms in the petroleum and foreign exchange sectors of the economy, small business owners have reported significant losses and setbacks in their operations.
President, Association of Small Business Owners of Nigeria (ASBON), Dr. Femi Egbesola, disclosed this in an exclusive interview with Vanguard.
He noted that the consequent hike in the pump price of fuel has led to sharp drop in sales resulting to decrease in liquidity.
Recall the President Bola Tinubu, in his inaugural address on May 29, 2023, announced the removal of fuel subsidy and plans to unify the foreign exchange (forex) market, based on which the Central Bank of Nigeria (CBN) subsequently liberalised the forex market.
Commenting on the impact of these policy measures so far, Egbesola stated: “Small businesses have suffered significant losses and setbacks due to the fuel price increase as a result of subsidy removal.
“Many small businesses are no longer running at profit levels. Sales had dropped sharply and turnover is in the downside.
‘‘This has inadvertently resulted to drop in production/sales below capacity, job losses, decrease in cash availability and ultimately a handful of businesses had gone moribund or experienced total closure. It is indeed a sorry case.”
He noted that the resultant effect of the action is already manifesting in increases in the prices of goods and commodities.
“This is already evident as prices of goods and commodities have risen and it will remain on the upward.
“The reality has downed on us as many of our MSME (Micro, small and medium enterprises) members complained bitterly of low sales or no sales.
“It is unfortunate that there aren’t palliatives put in place to cushion the negative effects of subsidy removal, particularly on poor households and small businesses before it’s eventual implementation. This has added to the myriads of challenges beseeching MSMEs at this time’’.
On the impact of the reforms in the forex market on small businesses, the ASBON president said: “There isn’t any significant positive effects recorded at the moment by operators of small businesses. Maybe soon, we don’t know but at the moment, it’s not.
“We expect that the forex should be more liberalized to support the growth and sustainability of small businesses.”
How small businesses can cope
He recommended ways that small business owners can navigate the situation to ensure survival of their operations.
His words: “I recommend that businesses should downsize to the capacity of the current income. Businesses should begin to look at other innovative ways to expand their market beyond the present. and online media is a veritable tool in this regard.
“Manufacturers should begin look at sourcing alternative raw materials locally. Production should no longer be capacity driven but solely demand driven. Where possible, remote workers that will get less salary pay should be engaged rather than the physical 9am – 5pm employees.
“Diversification of business should be embraced at all cost. Value addition and creative packaging/branding should be considered in improving the sales of products/service.”
Egbesola further suggested that small businesses can mitigate the impact of the policies by, “relearning new ways of managing funds, avoiding bank loan for reason of it’s high interest rate’’.
He added that they should look for ‘‘creative ways of adding value to products/service, expanding existing markets, keying in to available government support services, intervention funds, waivers etc for small businesses will help”.
SOURCE: VANGUARD
