Cost of Doing Business In Nigeria Rises By More Than 50% In 2022

Nigeria companies have been spending more on production since the beginning of the year. The soaring price of diesel, scarcity of foreign exchange and the rising spate of insecurity are major factors causing the soaring cost of production.

Amid unstable electricity supply, many businesses rely on diesel-powered generators. In some cases, the generators run for twenty-four hours to prevent any breakdown of operation. 

The price of Automotive Gas Oil, popularly known as diesel, has soared by almost 178 percent to N800 per litre from N288 in January, forcing some companies to restructure their production hours, while others completely shut down operations. 

Investors King confirmed that many businesses lamented that their cost of operation has increased by 50 percent while some said it has almost doubled. They complained that their businesses are crumbling because they can not increase the price of goods to reflect the jump in production costs due to the fear of losing patronage. 

In July, the Director of General of the Manufacturers Association of Nigeria (MAN) urged the government to intervene to prevent many businesses from collapsing amid multiple challenges. 

“Should manufacturing companies that are already battered with multiple taxes, poor access to foreign exchange and now over 200 per cent increase in the price of diesel be advised to shut down operations?” he asked.

Similarly, in July, the Premium Break Makers Association of Nigeria (PBAN) threatened to go on strike over the rising cost of diesel and other baking materials. 

The association spokesperson, Babalola Thomas said in a statement that bakeries are incurring a “huge loss” due to the continuous increase in baking materials and diesel.

The statement partly read, “Bread is a staple food and one of the cheapest ‘grab and go’ food that is available for both the poor and rich. It, therefore, behoves the federal government to be mindful of this and ensure the survival and sustainability of the industry,”. 

“In a move to ensure the survival of the Premium bread making industry in Nigeria, we have decided to embark on a withdrawal of services beginning from Thursday 21st July 2022 for four days in the first instance and where no intervention from the government, we shall escalate the duration of the withdrawal.

Since the Covid 19 Pandemic, many Nigerian businesses have been negatively impacted by the challenge of production and supply chain. These challenges are being compounded by the scarcity of foreign exchange, insecurity which has somewhat disrupted distribution and latest the rising price of diesel.