Petrol Price Hike Could Force SMEs To Shut Down – MAN

The Manufacturers Association of Nigeria (MAN) has warned that the recent increase in petrol prices could lead to widespread shutdowns of Small and Medium Scale Enterprises (SMEs) across the country. According to MAN, the hike in prices would significantly raise operational costs for businesses, especially in terms of transport and logistics, which may force many SMEs to scale down operations or shut down entirely.
MAN’s director-general, Mr. Segun Ajayi-Kadir, expressed these concerns in an interview. He stated that the increase in Premium Motor Spirit (PMS) prices would result in higher costs for goods and services and reduced disposable income for citizens, ultimately affecting demand.
“The hike in petrol pump prices may lead to higher transport fares and increased costs for goods and services, which could potentially leave citizens with reduced disposable income,” Ajayi-Kadir explained.
Ajayi-Kadir emphasised that the impact of higher petrol prices on SMEs would be particularly severe, given their typically thin profit margins. “Small and medium-sized enterprises, which often operate on thin margins, could be particularly hard-hit. The increased costs could force some to scale down operations or even shut down if they are unable to pass on the additional costs to consumers,” he noted.
He further warned that the increase in fuel prices could trigger a rise in inflation, worsening the economic strain on households and affecting demand for non-essential goods and services across various sectors. “There is no doubt that it will add to production inputs and logistics costs, leading to higher prices and dwindling disposable income of the average Nigerian,” he added.
Ajayi-Kadir also voiced concerns over the potential negative impacts on the already struggling manufacturing sector, which might have to adjust pricing to accommodate rising operational costs, resulting in reduced profit margins.
His remarks come after the Nigerian National Petroleum Corporation (NNPC) increased the price of petrol from N617 to N897 per litre at its retail stations nationwide. This move has provoked public outcry, especially amid ongoing supply challenges attributed to NNPC’s financial obligations to suppliers and operational difficulties at its refineries, despite significant investments in maintenance and repairs.
NNPC has denied allegations of owing oil traders a $6.8 billion fuel subsidy debt, but acknowledged that its financial challenges are affecting the consistent supply of petrol across the country.