Increased fuel prices may cause SMEs to cease operations – MAN

The Manufacturers Association of Nigeria (MAN) has expressed concern that the recent increase in petrol prices could have devastating effects on Small and Medium Scale Enterprises (SMEs), potentially leading to operational scale-downs or complete shutdowns.

The petrol price increase, which saw prices rise from N617 to N897 per litre, has sparked widespread criticism, particularly amidst ongoing fuel supply challenges.

In an interview with the News Agency of Nigeria (NAN), MAN’s Director General, Segun Ajayi Kadir, said the price hike will result in increased operational costs, particularly in transport and logistics, which may be difficult for businesses to pass on to customers.

He said that the increase in petrol prices might lead to more expensive goods and services and higher transportation fees, potentially leaving citizens with reduced disposable income.

This may result in a decrease in the demand for non-essential goods and services, which might have an impact on businesses across various sectors.

Ajayi-Kadir warned that this scenario may trigger a rise in inflation, further straining household budgets. He emphasized that SMEs operating on thin margins would be disproportionately affected, facing potential closure if unable to absorb the additional costs.

The manufacturing sector is also expected to feel the impact, with businesses likely to adjust their pricing strategies, potentially leading to reduced profit margins if consumer demand weakens.

Ajayi-Kadir expressed concern about the effects on the already struggling manufacturing sector, citing increased production inputs and logistics costs, leading to higher prices and dwindling disposable income for the average Nigerian.

The situation has compounded the cost-of-living crisis, with many Nigerians struggling to cope with the economic reforms and inflationary pressures.

NNPC has denied owing $6.8 billion to oil traders, which some speculate is contributing to the current supply challenges.

However, the company acknowledged recently that financial obligations to suppliers are affecting its ability to consistently supply petrol across the country.