The operational backbone of Nigeria’s small and medium-sized enterprises (SMEs) is under severe strain as energy expenses consume an increasingly disproportionate share of corporate earnings. According to Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), the cost of powering a business has surged from a previous average of 40% to a staggering 60% of total profits.
A Crisis of Sustainability
For businesses operating on razor-thin margins, this shift is more than an inconvenience; it is an existential threat. The heavy reliance on self-generated power has become a primary driver of industrial decline.
-
Operating Below Capacity: Many firms have scaled back production, choosing to remain idle while waiting for public grid supply rather than incurring the unsustainable costs of running diesel generators.
-
The “Pass-Through” Struggle: While businesses traditionally pass increased costs to the consumer, the current climate of weakened purchasing power has led to a sharp decline in sales, leaving owners to absorb the losses.
The Human and Economic Cost
The fallout of this energy crisis extends beyond balance sheets. Egbesola warns of a growing trend of “industrial flight,” where entrepreneurs are forced to shut down their ventures and pivot to menial labor just to survive.
“Businesses are very sick. We are seeing small business owners closing shop to become commercial motorcycle riders because they simply cannot keep up with a 100% increase in diesel prices,” Egbesola noted.
Furthermore, these high production costs are eroding Nigeria’s global competitiveness. As locally manufactured goods become more expensive, the nation’s ability to generate foreign exchange diminishes, creating a “ripple effect” that further devalues the Naira.
A Call for Strategic Intervention
To prevent further industrial collapse and widespread job losses, ASBON is calling for immediate government intervention through a multi-pronged approach:
-
Energy Subsidies: Temporary relief on diesel and other fuel sources to stabilize industries in the short term.
-
CNG Alternatives: The swift rollout of Compressed Natural Gas (CNG) infrastructure for vehicles and industrial generators as previously promised.
-
Renewable Incentives: Tax waivers and financial support for businesses transitioning to solar or other sustainable power alternatives.
-
Grid Prioritization: Fundamental improvements to the national electricity supply to reduce the “generator dependency” that currently cripples the private sector.
As an oil-producing nation, the irony of the current energy scarcity is not lost on industry leaders. The consensus remains clear: without a buffered energy strategy, the engine of the Nigerian economy—its SMEs—risks grinding to a permanent halt.
