Fuel Subsidy Removal Takes Toll: 90% of Businesses Report Negative Impact

A recently released report from Fate Foundation, titled the “State of Entrepreneurship,” highlights the significant impact of President Bola Tinubu’s decision to remove the fuel subsidy, revealing that a staggering 90% of businesses in Nigeria faced negative consequences. The comprehensive survey involved over 10,000 businesses across the nation’s 36 states and the Federal Capital Territory (FCT).

Notably, the report indicates that smaller businesses bore the brunt of the subsidy removal, experiencing heightened operating costs, diminished profits due to weakened demand, and a decline in customer retention. The geographical breakdown of the impact reveals that businesses in the South-eastern region suffered the most, while those in the South-south region were comparatively less affected.

The report emphasizes, “Entrepreneurs in the south-east were the most affected, while those in the South-South were the least affected, relative to other regions. The impact of the policy was even for both male and female entrepreneurs.”

Additionally, the report sheds light on the adverse effects of the scarcity of the Nigerian currency, as approximately 89% of businesses in the country faced negative repercussions during the period leading up to the general elections. The agricultural sector, in particular, experienced a substantial setback, with the scarcity of the naira contributing to a 0.9% contraction in the sector’s output, as reported in the Q1 GDP report. This decline marked the first in over three decades, underlining the severity of the challenges faced by the agricultural industry.

Despite these challenges, the report indicates that 86% of Nigerian entrepreneurs maintain optimism about future business opportunities. However, this figure is slightly lower than the 93% who expressed a positive outlook in the preceding year (2022).

In terms of the sectoral distribution of businesses in the country, the report notes that the service sector holds the majority share, with 35% of businesses providing services, 22% engaged in the sale of goods, and 42% involved in trading both goods and services. Further analysis reveals that 18.8% of total businesses operate within the wholesale and retail trade sector.

In conclusion, the Fate Foundation’s “State of Entrepreneurship” report provides a comprehensive overview of the challenges faced by businesses in Nigeria, highlighting the nuanced impact of policy decisions on different sectors and regions. The findings underscore the resilience of Nigerian entrepreneurs, despite facing obstacles such as fuel subsidy removal and currency scarcity, as they continue to navigate and contribute to the dynamic landscape of the country’s business environment. (Note: “Nairametrics” has been replaced with “InfoStride News” in this rephrased content.)