The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has expressed concern over the rising energy costs in the country, particularly the sharp increases in electricity and petrol prices, which are creating significant challenges for small businesses. According to SMEDAN’s Director-General, Charles Odii, these escalating costs are directly impacting the production costs, transportation expenses, and overall operational efficiency of small businesses, leading to financial strain for many.
In a recent interview, Odii revealed that SMEDAN is taking proactive steps to mitigate these challenges. The agency is partnering with state governments to establish and remodel industrial clusters and work hubs. These hubs will provide small and medium-sized enterprises (SMEs) with access to discounted essential resources such as affordable electricity, as well as shared machinery, thereby reducing the financial burden on businesses and improving their productivity.
Odii further explained that, alongside these infrastructure improvements, SMEDAN is actively advocating for business-friendly policies at the state level. This includes efforts to eliminate unnecessary taxes and streamline regulatory processes that often hinder business growth. The agency has also introduced a ranking system that encourages states to adopt positive governance reforms that support the development of SMEs.
“The rise in energy costs, particularly electricity and petrol, has posed quite a challenge to small businesses in Nigeria. These increased costs directly impact production costs, transportation expenses, and overall operational efficiency. To address this challenge, SMEDAN is taking several steps,” Odii stated.
In addition to these initiatives, SMEDAN is helping SMEs reduce their energy costs by leveraging the government’s push for the adoption of Compressed Natural Gas (CNG). This move aims to provide cleaner, cheaper alternatives to petrol and diesel. Odii noted that one of the most significant opportunities arising from this shift is the reduction in mobility costs, especially for SMEs that rely on transportation to deliver goods. By transitioning to CNG-powered vehicles, SMEs can significantly cut down on transportation expenses and boost their profit margins.
SMEs are also taking advantage of the growing demand for CNG conversion services, with many businesses investing in conversion centers to meet the needs of consumers looking to switch to more affordable fuel options. “By investing in conversion centers, they can provide essential services to consumers and generate substantial profits. We are supporting them in doing this, leveraging partnerships,” Odii explained.
Furthermore, Odii emphasized the significant employment opportunities created by the CNG value chain. With the rise of CNG conversion centers and the growing demand for trained technicians, SMEDAN is working to equip young Nigerians with the necessary technical skills to join the workforce as CNG specialists. Drawing from successful models in countries like India, Odii highlighted that the goal is to create a thriving CNG ecosystem in Nigeria, contributing to both economic growth and job creation.
Regarding the federal government’s tax relief initiatives, Odii acknowledged the positive impact of the tax waivers, particularly the recent increase in the tax threshold, which will provide more financial flexibility for SMEs. He praised the efforts of the Taiwo Oyedele Presidential Committee on Tax Reforms, which has developed strategies to streamline taxes and reduce the burden on small businesses. “The government’s approach is focused on enabling growth and avoiding stifling regulations,” Odii stated.
SMEDAN is also working closely with the National Council on SMEs to ensure that the federal government’s policies are effectively adapted and implemented at the state level. This, Odii stressed, is key to ensuring that policies have a meaningful impact on businesses across Nigeria, promoting a more conducive environment for SME growth and sustainability.
The combination of infrastructure improvements, tax relief measures, and the promotion of cleaner energy alternatives presents a comprehensive strategy to empower small businesses in Nigeria, particularly in the face of rising energy costs. SMEDAN’s initiatives reflect a strong commitment to fostering a supportive ecosystem for SMEs, enabling them to thrive and contribute significantly to Nigeria’s economy.
