Eight Things Business Owners Can Do To Reduce Negative Impact Of Petrol Subsidy Removal– Steve Ogidan
Nigeria’s fuel subsidy removal is already putting significant pressure on businesses, particularly small and medium enterprises battling double taxation and high operating costs.
The Bola Ahmed Tinubu-led government effectively implemented the removal of fuel subsidy as enshrined in the Petroleum Industry Act 2021. Just as expected, the prices of transportation and commodities have surged.
Prices of petrol in Abuja and Lagos are sold at the average of N520 and N480 respectively and in state like Borno, petrol cost over N550. Foreign exchange reforms that would drive the naira to trade over N600/USD is also imminent.
An expert, Dr. Steve Olusegun Ogidan MNI, who is the Managing Director and Chief Executive Officer of Successory Team, admitted that irrespective of the merits of the subsidy removal, businesses will have to adjust to rising prices.
It is estimated that inflation would surge to 30 per cent according to KPMG while other analysts argue that it may hit 50 per cent.
In an advisory post targeted at business, Ogidan, the CEO of Global Knowledge Consulting Group, is helping businesses map out ways to mitigate the effects and ensure the effective running of businesses.
๐๐๐ฎ๐น๐๐ฎ๐๐ฒ ๐ฎ๐ป๐ฑ Ad๐ท๐๐๐ ๐๐ฟ๐ฎ๐ป๐๐ฝ๐ผ๐ฟ๐๐ฎ๐๐ถ๐ผ๐ป C๐ผ๐๐๐
Ogidan said with “increased fuel prices, transportation costs have been on the increase too. Therefore, you need to optimize delivery routes, use more fuel-efficient vehicles, and negotiate favorable contracts with transportation providers.
“You can also consider having your employees work remotely or take shifts or consider passing on a portion of the increased costs to customers through adjusted pricing.”
๐๐บ๐ฝ๐น๐ฒ๐บ๐ฒ๐ป๐ E๐ป๐ฒ๐ฟ๐ด๐-E๐ณ๐ณ๐ถ๐ฐ๐ถ๐ฒ๐ป๐ P๐ฟ๐ฎ๐ฐ๐๐ถ๐ฐ๐ฒ๐
According to the CEO, fuel costs may lead to increased electricity tariffs in Africa’s biggest economy.
He said, “You can minimize the impact by using energy-saving appliances, optimizing lighting systems, and properly insulating buildings. This can help reduce electricity consumption and lower energy bills.”
๐๐ ๐ฝ๐น๐ผ๐ฟ๐ฒ A๐น๐๐ฒ๐ฟ๐ป๐ฎ๐๐ถ๐๐ฒ E๐ป๐ฒ๐ฟ๐ด๐ S๐ผ๐๐ฟ๐ฐ๐ฒ๐
He noted that, in addition to energy efficiency, businesses could consider investing in renewable energy sources such as solar panels or wind turbines.
He acknowledged that “initial investment may be significant, but the long-term benefits can help offset rising fuel and electricity costs.”
๐๐บ๐ฏ๐ฟ๐ฎ๐ฐ๐ฒ T๐ฒ๐ฐ๐ต๐ป๐ผ๐น๐ผ๐ด๐ ๐ฎ๐ป๐ฑ A๐๐๐ผ๐บ๐ฎ๐๐ถ๐ผ๐ป
On embracing technology, he said “You can consider using technologies and automation to streamline processes such as online collaboration and communication tools, inventory management software and e-commerce platforms, cloud computing and storage which promote remote work capabilities, etc.
“While this is getting too long, I will share other contingency plans in my next post. However, kindly note that these plans vary depending on the nature of your business.”
๐ก๐ฒ๐ด๐ผ๐๐ถ๐ฎ๐๐ฒ W๐ถ๐๐ต S๐๐ฝ๐ฝ๐น๐ถ๐ฒ๐ฟ๐ ๐ฎ๐ป๐ฑ V๐ฒ๐ป๐ฑ๐ผ๐ฟ๐
He said businesses should open discussions with suppliers and vendors in a bid to negotiate better terms and prices.
“Exploring alternative suppliers or consolidating orders with fewer vendors can result in bulk discounts or better pricing arrangements,” he added.
๐๐ถ๐๐ฒ๐ฟ๐๐ถ๐ณ๐ P๐ฟ๐ผ๐ฑ๐๐ฐ๐ O๐ณ๐ณ๐ฒ๐ฟ๐ถ๐ป๐ด๐ ๐ผ๐ฟ T๐ฎ๐ฟ๐ด๐ฒ๐ N๐ฒ๐ ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐๐
According to him, businesses should identify untapped customer segments and diversity their product offerings to increase revenue.
๐ ๐ผ๐ป๐ถ๐๐ผ๐ฟ ๐ฎ๐ป๐ฑ M๐ฎ๐ป๐ฎ๐ด๐ฒ In๐๐ฒ๐ป๐๐ผ๐ฟ๐ E๐ณ๐ณ๐ฒ๐ฐ๐๐ถ๐๐ฒ๐น๐
For him, businesses should monitor inventory levels and implement efficient inventory management systems.
“This means that you need to minimize stockouts and avoid overstocking. This way, you can optimize cash flow, reduce storage costs, and avoid unnecessary losses.”
๐๐ผ๐ฐ๐๐ o๐ป C๐๐๐๐ผ๐บ๐ฒ๐ฟ R๐ฒ๐๐ฒ๐ป๐๐ถ๐ผ๐ป ๐ฎ๐ป๐ฑ Lo๐๐ฎ๐น๐๐
The Successory Team CEO noted that it is paramount for businesses to retain existing customers.
He also said businesses must look for means to foster brand loyalty which could “help you minimize the impact of price increases and maintain a stable customer base.”