Hike in electricity tariff, fuel prices hurt small scale businesses
Daniel Oyelesi, who runs a laundry business in Nigeria’s capital Abuja, is reeling from the double whammy of price rises for petrol and electricity imposed in recent weeks that he says will harm his two-year-old business.
Earlier this month Nigeria’s president said the increases, announced days apart in early September, were needed to bolster Africa’s biggest economy, which for years has been urged by multilateral lenders to remove costly fuel subsidies and change electricity tariffs, both of which held prices artificially low.
Before electricity price rises were implemented, Oyelesi – who works out of a cramped kiosk filled with piles of clothes, a washing machine, tumble dryer and ironing board – spent 20,000 naira on power each month. He said that sum was now likely to last two weeks.
“I won’t say I’m coping… it has not been easy for us,” said Oyelesi. He added that he feared losing customers if he raised his prices.
Ochuko Kosefe, a barber, also lamented price hikes that made him feel “sick”.
Sat behind a cash desk where he watches one of his two hairdressers cut the hair of a young boy, Kosefe said higher fuel costs meant he rationed the use of his diesel powered generator which, like many businesses in Nigeria, is used to make up for the patchy power supply provided by the national grid.
Nigeria’s economy contracted by 6.1 percent in the second quarter due to the impact of the coronavirus pandemic and low oil prices. Africa’s top oil exporter relies on crude sales for 90% of foreign exchange earnings.
Last month sources said a much-needed $1.5 billion World Bank loan was held up due to concerns over the implementation of reforms such as the fuel and electricity price changes.
But galloping inflation, which the central bank expects to rise to 14.15 percent by the end of the year, is increasing costs for businesses and their customers.
Oyelesi, whose words float above the constant hum of a washing machine and the din from the busy Abuja Street outside, believes the future is bleak.
“If the government does not do something, we might be forced to quit the business,” he said.
-With Reuters report