{"id":46850,"date":"2021-11-08T13:23:26","date_gmt":"2021-11-08T13:23:26","guid":{"rendered":"https:\/\/qatar-news.org\/qatarnewsEn\/?p=46850"},"modified":"2021-11-08T13:23:26","modified_gmt":"2021-11-08T13:23:26","slug":"as-inflation-bites-nigeria-small-businesses-struggle-to-survive","status":"publish","type":"post","link":"https:\/\/qatar-news.org\/qatarnewsEn\/?p=46850","title":{"rendered":"As inflation bites, Nigeria small businesses struggle to survive"},"content":{"rendered":"
\n

Lagos, Nigeria \u2013<\/strong> Every morning, Esther George rises before dawn to prepare a cooler of rice and a large pot of beans, as well as yams and an assortment of other staple foods to reheat and sell to customers from a roadside table in Lagos.<\/p>\n

Before the coronavirus pandemic, the mother of three would clear a monthly profit ranging from roughly 10,000 ($24.40) to 15,000 naira ($36.60), she said.\u00a0 But this year, she\u2019s fallen deeper and deeper into the red, racking up monthly deficits between 30,000 ($73) and 40,000 naira ($97.40).<\/p>\n

The reason \u2013 soaring food prices.<\/p>\n

\u201cBefore [the pandemic], we used to buy one derica [a local measurement named after a brand of tomatoes ] of beans for 300 naira ($0.73).\u00a0 Now we are buying it for 600 ($1.50). The price of two is now the price of one,\u201d said George.<\/p>\n

And she\u2019s bracing for more price hikes.<\/p>\n

\u201cWhat you are buying for 500 naira ($1.20) before, tomorrow it will be 550 ($1.34), the day after that it will be 600 naira and so on,\u201d she told Al Jazeera.<\/p>\n

Nigeria\u2019s annual inflation rate hit 16.3 percent in September [Courtesy of Ope Adetayo]<\/figure>\n

Nigeria\u2019s annual inflation rate hit 16.3 percent in September. Though that is lower than this year\u2019s 18 percent peak in March, higher prices for food, fuel and other raw materials are squeezing small business owners, forcing them to either cut back on production, fall into debt, or pass on cost increases to customers who are also feeling squeezed.<\/p>\n

George has tried to slash expenses by producing less and dropping some items from her menu \u2013 like eggs. She used to sell ten dericas of beans on average a day, but has cut back to five. And even if she could afford ten, she can\u2019t absorb the cost of the three butane-propane gas cylinders needed to reheat that volume of food \u2013 because prices for the fuel cylinders have increased threefold.<\/p>\n

Global price pressures, local pain<\/h2>\n

George, like millions of small and medium-sized business owners in Nigeria \u2013 not to mention, the world over \u2013 has had to persevere and adapt to the slings and arrows of COVID-19 pandemic disruptions and distortions.<\/p>\n

Nigeria\u2019s economy shrank 1.8 percent in 2020 \u2013 the sharpest decline since 1983 \u2013 and is expected to grow only 2.5 percent this year, according to the International Monetary Fund.<\/p>\n

One drag on growth is rising prices. As nations have cast off virus restrictions, supplies of raw materials have not kept pace with demand, causing prices for food, fuel and other raw materials to soar.<\/p>\n

Global food prices hit a decade high<\/a> last month, according to the United Nations.<\/p>\n

Nigeria also has local factors that are worsening the pain of global price pressures.<\/p>\n

\u201cNoneconomic factors like insecurity have affected the economy and contributed to the inflation, because for example, farmers cannot go to farms because they are scared,\u2019\u2019 said Sheriffdeen Tella, a professor of economics at Olabisi Onabanjo University.<\/p>\n

A general view of a food market in Lagos, Nigeria on March 30, 2020 [File: Temilade Adelaja\/Reuters]<\/figure>\n

Tella told Al Jazeera that monetary policy and exchange rate management have further contributed to Nigeria\u2019s economic problems.<\/p>\n

\u201cThe economic factors include the exchange rate. First, the Central Bank devalued the currency, which caused a high inflation rate. And most products are exchange rate-dependent because they are import-dependent,\u2019\u2019 he said.<\/p>\n

All of this makes it an especially tough time for the small and medium-sized firms that account for 96 percent of businesses in Nigeria and 84 percent of jobs.<\/p>\n

Moreover, passing on higher raw material costs to consumers carries risks because it could compel customers to either take their business elsewhere or simply go without.<\/p>\n

\u201cThe fear is if it is products people can do without, it will be difficult to transfer the costs to the consumers,\u201d said Tella.<\/p>\n

That fear is felt by Oluwaseun Kareem, who runs a printing shop in Lagos.<\/p>\n

Back in June, when a ream of paper cost 5,100 naira ($12.4), he landed a contract to supply monthly notebooks for a school at a fixed price. By October, the price of a ream of paper had climbed to 7,000 naira ($17) \u2013 obliterating his profit.<\/p>\n

\u2018\u2019I went to the school and told them I can no longer continue with the job because of the price margin. For me to continue on that job, it means that all the profit that I will gain will be spent on [buying] paper,\u201d the 41-year-old told Al Jazeera.<\/p>\n

Kareem said the school understood his situation and agreed to suspend the contract until further notice. But that is not the only business he\u2019s lost.<\/p>\n

\u201cI have lost a lot of opportunities,\u201d he said. \u201cWhen you came in, did you see me doing anything? I was sleeping. The people I work for are not ready [to pay the new prices].\u2019\u2019<\/p>\n

Official inflation, market realities<\/h2>\n

Though September\u2019s inflation rate was not as blistering as it was in March, Tolulope Afolayan, a business analyst, questions the official figures.<\/p>\n

\u201cThe market realities are showing evidences against the numbers that are being portrayed,\u201d she told Al Jazeera. \u201cI don\u2019t think the numbers we use in our economic measurements have integrity.\u201d<\/p>\n

Rising prices have also sown uncertainty into the outlook for small businesses, she said, making it harder for them to effectively navigate inflation and stay afloat.<\/p>\n

\u201cIt is not sustainable that a business owner cannot reasonably predict how their business would be in the next six months, which is very important for a business,\u201d she said. \u201cA bag of beans, for example, sold for 100,000 naira at one point. I don\u2019t think that six months ago, any beans seller saw that or even fathomed if that could be possible.\u201d<\/p>\n

While George hopes conditions will improve for her and other small business owners, she has little choice but to resign herself to the current crunch, and hang on as long as she can.<\/p>\n

\u201cI did not stop the business because where is the alternative?\u201d she said. \u201cThere is nothing I can do.\u201d<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Lagos, Nigeria \u2013 Every morning, Esther George rises before dawn to prepare a cooler of rice and a large pot of beans, as well as yams and an assortment of other staple foods to reheat and sell to customers from a roadside table in Lagos. Before the coronavirus pandemic, the mother of three would clear…<\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-46850","post","type-post","status-publish","format-standard","hentry","category-spotlight_news"],"_links":{"self":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts\/46850","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=46850"}],"version-history":[{"count":0,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts\/46850\/revisions"}],"wp:attachment":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=46850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=46850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=46850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}