As Nigeria faces a fresh cost-of-doing-business crisis, a large chunk of the country’s 41.5 million small and medium enterprises (SMEs) are adjusting to survive with the current business realities.
Production costs have more than doubled for businesses in Africa’s biggest economy since Russia invaded Ukraine in February, amid FX scarcity and worsening insecurity.
BusinessDay in its usual manner interviewed some entrepreneurs who shared how they are coping with the recent surge in diesel price and input costs. And here are their responses:
Paul Akingbola
Akingbola is the CEO of Protransl8–a translation agency, and Co-founder of Transcript dot NG–a tech startup.
How are you coping with the rising input cost?
I believe there’s almost nothing individuals can do about the rising cost input. At best, we can only devise ways to mitigate the severity of its impact on our businesses. I often view things from a half-full mind-set. This way, instead of lamenting what’s not working, I focus on the working part.
One major coping mechanism that comes to mind was to start charging in dollars. This way whatever happens to the naira doesn’t impact much on my reflections. We also continue to review our business plans and strategy to ensure alignment with operating environment realities.
Are you making much more money compared to before?
For events, yes, because there are more and more events daily. We also haven’t revived from the backlogs of events from the Covid-19 lockdown. With event hosting being one of my reflections, I see there’s so much money on the event industry table. That’s why I often say event money is sweet. It’s why I’ve also been advocating for a lot more people to join the sector.
For Transcript dot NG, activities were stalled for months due to the ASUU and NASU strike actions as public tertiary institutions were shut down. And these happen to be a majority market. No way to get transcripts out for students culminating in revenue losses. We have also had to stall the application process to avoid piles and backlogs.
Are people buying your products?
We don’t sell tangible products. I think response two can sort this out. But for Transcript dot NG, people want to buy; as more and more Alumni want their transcript out of the Alma Mater. But we can’t sell because schools were closed for several months. Well, it’s all now opening up and it can only get better. We’d also be hoping NASU doesn’t go back on strike as the strike call-off/resumption was said to be temporary.
How is the worsening power supply affecting your cost of production?
Doesn’t apply.
What strategy did you adopt as a business to survive the covid-19 pandemic and how are you coping with the cost of doing business crisis?
Major strategies were besides, staying safe. For the costs of doing business crisis, we fell back on our savings, cut down on our budget and expenses, and lastly, focused on more important things to cope.
Is the Nigerian business environment improving?
Anyone saying yes to this question will be a liar. The sad answer is no. But then, we Nigerians are honest so incredibly resilient. So Businessmen or women and entrepreneurs are the ones getting stronger in the face of toughening business environment.
Gladys Bosu
Bosu is the founder of Gladyskitchen – a catering business that operates in Lagos, Ogun and Oyo states.
How are you coping with the rising input prices?
I do not think I have a choice when it comes to coping with the increasing cost of production. I have to find one way or another to adapt to the economy. As for me, a little increase in the price of my products is what I went for.
For example, I usually sell a bowl of soup for N7000 before, however, I have increased it to N9000. For my cakes, I increased each size by N1500.
Are you making much more money compared to before?
Am I making more money? No. This is because the things we are getting for a particular price back then are now four times the amount. The record high inflation and FX are limiting investment for my business.
With a higher investment, we are not even making up for the former profit we earned.
Are customers buying your products?
Despite the unbearable Nigerian economy, my local customers still purchase my products.
How is the worsening power supply affecting your cost of production?
In my area, Ipaja, Lagos, poor power supply affects the productivity of my business, as I stick to a petrol generator. The more power is stable, the more profit I can make, compared to the use of a generator.
Read also: How Nigerians are coping with rising cost of living
What strategy did you adopt as a business to survive the covid-19 pandemic and how are you coping with the cost of doing business crisis?
While supplying my products to my customers, I had to make sure social distancing and the use of nose marks are used by the people that supply products, so that my customers do not reduce. This helped scale through the pandemic era.
For the cost of doing business crisis, we are cutting down on our budgets and prioritizing our spending.
Is the Nigerian business environment improving?
I do not think doing business in Nigeria is improving because inflation keeps rising. This development demotivates business owners, especially start-ups.
Sharon Samo
Samo is the founder of Adetutu the brand – a clothing brand that manufactures women’s wear, operating in the Lagos metropolitan.
How are you coping with the rising input prices?
The current inflation has affected the effectiveness of our production. Materials are more expensive, making it difficult to purchase them in large quantities. Materials that used to be N1000 per yard are now sold at N1,500 per yard. This leads us to use low-quality materials that are more affordable.
Are you making much more money compared to before?
No. We are not making money compared to before due to the high cost of production. Most times, we are left with little or no profit.
Are customers buying your products?
When it comes to sales, the situation is frustrating. Inflation has both affected our business and customers. The increase in expenses on production has forced us to increase the price of our products.
Sadly, most of our customers end up leaving because they cannot afford my products.
How is the worsening power supply affecting your cost of production?
The poor power supply is affecting our cost of production, because as a fashion brand we make use of a lot of electronics like sewing machines, iron, and weaving machines, among others. However, we have no choice but to make use of our petrol generator, which is another expense.
What strategy did you adopt as a business to survive the covid-19 pandemic and how are you coping with the cost of doing business crisis?
Lucky for me, my business started after the covid-19 pandemic. For the cost of doing business crisis, we are sourcing locally now and cutting down on costs.
Is the Nigerian business environment improving?
In my opinion, I do not think the Nigerian business environment is improving, because they are different factors negatively affecting the growth of business in Nigeria, like FX, Inflation, unstable light, and funding.
Ugah Chukwuemeka
Chukwuemeka is the executive director of Legacy Building Solutions -a supplier of aluminum composite panels, operating in Ibadan, Oyo state.
How are you coping with the rising input prices?
The current cost of doing business is as difficult as starting up. Last year we experienced four price increases from our suppliers. It created some strain on our finances and reduced our profit margin since we have to add up money to repurchase.
In other to manage these regular price increases, we are more vigilant in the market, follow economic trends and effect a price increase when necessary.
Are you making much more money compared to before?
Compared to last year, we are making about 40 percent less profit per good.
Are customers buying your products?
At the moment, customers still patronize. They understand the situation in general.
How is the worsening power supply affecting your cost of production?
Our business does not rely on the use of power, because we just supply aluminum composite panels.
What strategy did you adopt as a business to survive the covid-19 pandemic and how are you coping with the cost of doing business crisis?
We deal in majorly supplies and had to keep a good rapport with our suppliers and the logistics company. Construction workers were still ongoing therefore customers needed goods. We increased the prices of our products to cope with the cost of doing business crisis.
Is the Nigerian business environment improving?
The Nigerian business environment is worsening because many start-ups from 2020 have not been able to survive. One would need strong capital with a good business strategy to cope now.
