Nigerian businesses are battling to stay afloat as operating costs continue to surge.
Africa’s most populous country has been grappling with double-digit annual inflation since 2016, with the consumer price index hitting 20.5 percent in August – a 17-year high, according to the National Bureau of Statistics (NBS).
Globally, countries are faced with rising energy and food costs, largely driven by the Russia-Ukraine war. But in addition, worsening insecurity in Nigeria and climate change have combined to reduce food production with a consequential rise in the prices of commodities.
Fuel prices have soared by over 150 percent from January to date, raising costs for firms in Nigeria, where businesses rely on diesel-fired generators amid unstable grid electricity.
Transportation costs have also doubled and further impact costs for businesses. BusinessDay spoke to a number of small businesses operators across the country. Here are their responses:
Yekinni Ayomidamope
Ayomidamope is the founder of Aviyacollective – a Ready to Wear (RTW) female clothes company that operates in Lagos State.
How are you coping with the rising input costs?
Inflation is every entrepreneur’s nightmare. The cost of production has tripled and it’s bound to negatively impact a business owner who may lose a loyal customer due to an increase in the price of products. So I make sure to find affordable materials but of quality so that by the time I include my profit the prices aren’t outrageous. So far, it’s been helpful.
Are you making more money compared to before?
Not so much money in terms of millions of naira because I am still young in the business. I know I’m off to a great start.
Are customers buying your products?
Family, friends, and people in my close circle are the ones patronising my business.
How is the worsening power supply affecting your cost of production?
To be honest, power supply in my area has been very great. I am surprised, but then, it doesn’t affect my business except when I need to iron. Aside from that, it’s all good.
What strategy did you adopt as a business to survive the COVID-19 pandemic?
I had not started my business at that point. I hadn’t conceptualised the idea at that time.
Is the Nigerian business environment improving?
Yes, there’s a lot of healthy competition. Knowing there are people that are willing to put in the hard work to get their desired results. That alone will motivate you to do better and be better.
Agoro Daniel
Daniel is the founder of The Eleventh
How are you coping with the rising input prices?
Our brand has been negatively impacted by the increase in input costs in several ways, including higher production costs for materials. However, to remain competitive, brands must either expand their production levels or maintain their current levels. Although the cost of doing business is high, our brand makes additional investments and sources products at extremely reasonable prices to give our clients the quality they are entitled to.
Are you making more money compared to before?
Of course, we are. In fact, they keep coming back to us for more products because of the distinctive designs and high-quality materials we provide them with. We take the time and care necessary to ensure that our clients receive the quality they deserve. There is, therefore, no doubt that more money is being made.
Are customers buying your products?
Sure. Let me let you in on a little secret: as a brand, we produce our clothes with love. We love the happiness that comes from customers when they buy clothes from us. That happiness is a result of the love that we produce our clothes with. Customers are buying our products. With our unique designs and the clothes we produce, we put in so much love and ensure that customers are delighted with what they buy to get more.
How is the worsening power supply affecting your cost of production?
Power supply has a significant impact on our cost of production. With the rise in petroleum prices and the deteriorating power supply, production has decreased in a particular way. We were able to produce more when electricity supply was a little more dependable, but now that petroleum cost has increased, we aren’t producing as much as we once did. As a company, we can only hope that the power supply will finally stabilise enough to raise production.
What strategy did you adopt as a business to survive the COVID-19 pandemic?
The company was established in 2020, and what we did to survive the pandemic was to market and sell online. As is common knowledge, social media has a significant influence on business, and the pandemic helped us realise just how significant that influence is. We then used that influence to our advantage by building a website and making sure that our customers could make purchases from it. Although it wasn’t always simple, you may now buy clothes online through Shop Eleventh.
Is the Nigerian business environment improving?
In my opinion, there has been a significant improvement in the business climate in Nigeria. Many companies are now aware of methods they can deploy to assist other companies and place them on websites where they can sell. As I indicated before, social media has a significant impact on businesses. In the same way that technology has benefited companies, it has also improved enterprises in the Nigerian market.
Read also: Nigerian students reject court judgement ordering ASUU to call off strike
Adegite Dideoluwakusidede
Dideoluwakusidede is the founder of the Beauty Vine.
Tell us a little about your business?
The Beauty Vine is a beauty brand that focuses on the beauty enhancement and self-care of women by offering services that range from makeup and semi- permanent makeup to nail enhancement, manicures, and pedicures. The Beauty Vine is currently a one-man business with plans to expand into a one-stop beauty spot, so her customers (which will also include men) can get a full pampering service without having to book multiple appointments to give a wholesome experience.
How are you coping with the rising input prices?
To be honest, I am barely coping and the business is suffering, especially because we operate in a nation where beauty and self-care are not prioritised by many. It is seen as a want and not a need, so it has been really difficult winning customers over and keeping them on. However, it isn’t all bad; I do have customers who are willing to spend a huge sum on their self-care and wellness. But when I hear such customers, I realise that the cost of equipment, tools, and other overhead costs like transportation eat into a large portion of the business profit. All in all, I love what I do and I will always be an advocate for beauty and self-care no matter what the economy throws my way.
Are you making more money compared to before?
No, I am not. As a service business, I make up to 80 percent profit but now I barely make 40 percent. There is almost no comparison, it isn’t fair but life itself is not, I know it is said that making money in Nigeria is easy but these days it doesn’t feel that way. Some days I feel like turning off the lights. I spend my days thinking about a million ways I could have done better and always end up going back even though I don’t earn as much.
Are customers buying your products?
Yes they are. When I started my business as a makeup artist, everyone wanted their “faces beat” by a professional makeup artist for every event for photo shoots or just to sit at home. I made a lot of money in my first two years as a makeup artist. By the third year, there were more makeup artists, and before I knew it, everyone was a makeup artist or even an influencer; so I went back to the drawing board to learn more and acquire new skills. Since then I feel like I have developed a formula to keep customer’s interest; so my answer is yes, customers (the right customers) still buy into my service.
How is the worsening power supply affecting your cost of production?
Well, for the sort of service I offer, I do not require a lot of power supply, so I am not directly affected. However, my customers that have to spend money on alternative power supply consider my business a second option and will rather spend money on electricity than on beauty enhancements.
What strategy did you adopt as a business to survive the COVID-19 pandemic?
Honestly, the COVID 19 pandemic caught a lot of us off guard, and for the first month, I had no idea what I was going to be doing. But as an entrepreneur that is always thinking, I was able to set up online classes for individuals that wanted to learn makeup as a new skill. I started a YouTube channel and I posted educational beauty content across my social media platforms to remain relevant in the beauty space as well as drive customers to my paid beauty and makeup classes. This gave me a lot of free time and I was able to update the skills I already had and acquire new skills.
Is the Nigerian business environment improving?
Yes it is. More people trust online-based businesses making it easy to access more customers. There’s an increase in grants both by the government and individuals for businesses which give more businesses the chance to grow and eventually help others by opening up job opportunities and contributing to the economy.
