Despite a 3.19% year-on-year growth in real terms for the second quarter of 2024, many Nigerians, especially economists, view the nation’s economic situation as precarious. This perspective holds considerable weight given the broader economic indicators.
According to the Q2 2024 GDP report, Nigeria’s economy has seen fifteen consecutive quarters of growth, largely driven by a 10.15% increase in the oil sector and a 2.80% increase in the non-oil sector. However, key sectors like Agriculture and Manufacturing, which are significant employers, experienced minimal growth. Agriculture only saw a slight increase from 0.18% to 1.41%, while Manufacturing declined from 1.49% to 1.28%. Analysts interpret this trend as a sign of an ailing economy.
Big businesses are struggling under the weight of government reforms and some are even considering relocating abroad. However, small and micro businesses are not exempt from these challenges. Otunba Francis Meshioye, President of the Manufacturers Association of Nigeria (MAN), stated, “The high and rising cost environment continues to shrink profitability and, in many cases, threaten the existence of many operators in this critical sector of the economy.” He pointed out that the challenges facing small businesses hinder their ability to contribute meaningfully to GDP.
The impact of soaring petrol prices is evident. Makinde Adams, a Lagos-based fashion designer, lamented, “Our hands are in the air. We are at a crossroads, with neither the means nor the clout to relocate elsewhere.” He noted a drastic reduction in his clientele, which has affected his holiday sales.
In Alimosho, Lagos, vulcaniser Ahmed expressed frustration over petrol prices exceeding N1,000 per litre. “How do I tell my customers now that I will, again, need to adjust my price template to remain in business?” he asked. He fears many artisans might have to shut down if urgent action isn’t taken. Similarly, Esther, a grocery seller in Ota, struggles to restock due to market volatility, stating, “What I have now is not as much as what I used to have in the past.”
Experts emphasize that the plight of small businesses should be a pressing concern for all Nigerians. The MAN warned that an unfriendly business environment threatens 84% of Nigerians and their businesses. The association’s Director General, Segun Ajayi-Kadir, identified poor power supply, high energy costs, and unfavorable credit conditions as contributing factors to small business vulnerability.
Public Affairs analyst Adebisi Adesuyi highlighted the severity of the current economic landscape. “Inflation is over 33% and unemployment is above 30%… Over 70 million Nigerians are caught in the poverty trap.” He noted that the naira’s undervaluation, now at N1,650 to $1, exacerbates production costs for a country that imports about 70% of its industrial inputs.
Adesuyi also stressed that the rising cost of fuel, now at N1,070 per litre, is pushing small business owners reliant on petrol generators to the brink of closure. Workers are struggling with daily transportation costs, and even minimum wage increases have not alleviated the burden of inflation.
However, Adesuyi believes there is hope if authorities take action. He calls for effective monetary and fiscal policies to restore the naira’s value and lower inflation. “The government should think outside the box to bring down the cost of PMS without corruptly enriching individuals with fraudulent subsidies,” he asserted.
Echoing similar sentiments, Dr. Paul Alaje, Chief Economist at SPM Professionals, criticized the federal government’s decision to float the naira in an import-dependent economy. He suggested pegging the naira at N1,000 to stabilize prices.
The MAN advocates for special intervention programs to boost sectors such as agriculture, manufacturing, and ICT. They also propose licensing artisanal refineries in areas plagued by illegal oil bunkering to create jobs and generate revenue.
The Lagos Chamber of Commerce and Industry (LCCI) calls for increased funding in agriculture and better credit allocation from banks to enhance productivity. LCCI President Gabriel Idahosa emphasized the need to address insecurity and improve agricultural output.
As stakeholders propose various solutions to revive the economy, many Nigerians are left wondering if the government will act on these recommendations to support the nation’s struggling SMEs.Businesses in Nigeria
