Mrs. Patricia Nwama started her small business, Devine Grace Provision Stores, around 2012 which she built from scratch, but the entrepreneur is highly indebted to her suppliers who are demanding their money.
Patricia who is in her 50s has seven children including dependents and was able to train five of them in the university from the proceeds of her once booming provision store in Gwarinpa, Abuja.
“So far business has been frustrating. The prices of commodities are making us go crazy. The prices started rising during the festive period and then in January. If things continue from now to September, I may divest,” Patricia lamented.
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Diminished patronage from customers induced by reforms of President Bola Ahmed Tinubu has squashed sales figures. The official inflation figure for January according to the National Bureau of Statistics is 29.9 per cent.
In January 2024, Patricia sold a kilogram of chicken for N2,500 but the new price is N3500 and it is likely to rise, the entrepreneur said.
A carton of Indomie Noodles which was sold for N5,000 now costs N7,500 and customers are no longer patronising her business as usual.
“I had an experience last month where we went to the market to buy a product in the morning. I was supposed to make some profits but by the time I was done selling in the evening, I could not buy new stock because the price had doubled within hours. So, I added the profit I made and also ended up owing the supplier.
“I do order for Indomie worth N280,000 but when I went to the market to restock, they told me the same quantity costs N350,000 and no longer N280,000. I paid the supplier N280,000 and owed him N70,000. This is the same experience with other products that I sell. Customers think we are just inflating prices. They don’t know what we go through. They don’t know how much we spend on transportation.
“I am highly indebted and, in any business, when the debt is much, you cannot say you are progressing.”
When Patricia closed her financial records for 2023, she was shocked that she owed her suppliers nearly N1m.
“Before 2022, when we close our yearly financial account, aside from the daily thrift I do and the money I set aside for rent, food, fees, medication, and other things, I still record over N800,000 as annual profit.
“Last year, from January to December, I had in my company account only N130,000. It is unbelievable that the business has fallen to this point despite the effort I make.”
Ahmed founded Two Brothers Feed in Kaduna State, a business that produces animal feed for poultry farmers. However, Ahmed has downsized because he could no longer cope with the high cost of inputs.
Ahmed said the cost of materials became so expensive and the demand for the final output- chicken feed dropped after he increased his price.
“A good number of the poultry farmers that depend on my supply have closed down because they also can’t afford it. This will worsen food insecurity,” he said.
Mrs. Gift Effiong is facing a similar challenge with her restaurant business. She started her restaurant business with less than N350,000.
Unfortunately for her, inflation has eroded her profit and she is struggling to keep her less than three years old restaurant business afloat.
Mrs. Effiong had three workers but she laid off two of them in February because she could no longer pay their monthly salary.
She said, “The challenge is that prices rise daily and customers don’t want to understand because they are also not finding it so easy. Around December last year, when I went to market with N100,000, I could buy enough stock for my business. Garri was N27,000 but, unfortunately, things have become so bad.
“On Saturday, February 10, I went to buy garri and a bag was N40,000 the next time it rose to N45,000. Today, I paid N47,000 for one bag. No business can survive with this kind of trend. If I have another option, I will not continue with this because you have other bills to pay like AMAC bills for permits, environmental and food handling.”
The entrepreneur who is looking to switch to a new business has been unable to settle her annual rent and has been indebted to some of her suppliers for months.
What Tinubu’s Government Promised MSMEs
The woes began when Tinubu took over office on May 29, 2023, and on the same day, he announced removal of fuel subsidy which was no longer sustainable. The Central Bank of Nigeria announced a managed float on June 14 which dragged the naira to N1,537.9 as of February 16, 2024.
The administration promised an ambitious plan to diversify the country’s economy. SMEs are at the heart of his plans and in July last year, he earmarked N125bn for the sector but inflation and exchange rate crisis has frustrated the plans.
In December last year at the commissioning of the corporate headquarters of the Small and Medium Enterprise Development Agency of Nigeria in Abuja, Vice President Kashim Shettima reiterated to his audience that the administration will not relent in its promise to secure small businesses.
He said, “Allow me to emphasise the importance of this moment: there is no more fitting time than now to reinforce the protection of enterprises in Nigeria. Our resolve to protect SMEs remains unshaken.
These enterprises not only stand as the very bedrock of our society but also reflect the direction the government is headed and the velocity with which we do so. This moment solidifies His Excellency President Bola Tinubu’s assurance to protect our enterprises. It resonates deeply within our economic revitalisation plan.”
Government Has To Act Quickly— Development Economist React
A development economist and A Senior Lecturer in the Department of Economics, Ahmadu Bello University, Zaria, Professor Peter Njiforte said the plights of MSMEs did not come as a surprise following the removal of fuel subsidies and floating of the naira.
He said MSMEs are suffering because imported inputs have become so expensive causing MSMEs to find it difficult to continue production which has a ripple effect on traders and other businesses.
Njiforte said, “This situation was obvious because when they removed subsidy and floated the naira, they failed to subsidise basic inputs that will help small-scale businesses to be afloat.
“A lot of recommendations have been made and it is like the handlers of government are running out of ideas. What the government should immediately do is subsidise some of the inputs for domestic farm production.”
The economist said it may be difficult to maintain subsidy but he insisted that it is important to keep MSMEs afloat.
The professor said a lot of people are thinking of going back to the farm but they cannot afford a bag of fertilizer which has risen to N35,000.
“Urea is N35,000 which is even above minimum wage. So, how can somebody whose salary is not up to N35,000 buy fertilizer? SMEs are providing the bulk of employment that the country needs. By so doing, businesses will not close down and more people lose their jobs,” he said.
He said the government has to do all it can to protect the naira adding, “You can’t allow a free float when you don’t produce. You have to protect your currency.”