Small Businesses Sinking Under Fuel, Logistic Costs, LCCI, ASBON Cry Out

The Lagos Chamber of Commerce and Industry (LCCI) and the Association of Small Business Owners of Nigeria (ASBON) have raised fresh concerns over the mounting strain on businesses following recent economic reforms.

They urged government to channel fiscal gains into critical infrastructure to ease operating conditions on soaring fuel and logistic costs crippling small businesses, blaming post-2023 economic reforms for factory closures, job losses, and firms fleeing to Ghana.

The business groups raised fresh concerns over the mounting strain on businesses following recent economic reforms, urging government to channel fiscal gains into critical infrastructure to ease operating conditions.

They also urged the federal government to redirect fiscal gains from these reforms into critical infrastructure like roads and power so as to slash operating expenses and deliver real relief to households and enterprises struggling amid rising prices and weak demand.

LCCI director general Chinyere Almona said the reform measures introduced since 2023 had significantly increased the cost of doing business, triggering widespread adjustments across the private sector, including factory closures, downsizing, and relocation of firms to neighbouring countries.

“Since 2023, with major policy changes and FX liberalisation, alongside developments in the power sector, the cumulative effect has been a sharp rise in operating costs,” she said.

According to her, manufacturers have been among the hardest hit, with several forced to scale down operations or shut entirely, while others have moved production bases to countries like Ghana in search of a more stable and cost-effective environment.

Despite the difficult landscape, Almona noted that some businesses are beginning to adapt by restructuring their supply chains and reducing reliance on foreign inputs.

“A number of firms are now looking inward, sourcing locally and trying to improve efficiency. Over time, we expect these adjustments to yield some stability,” she added.

However, she stressed that the broader economic benefits have yet to reflect in household welfare.

“Many Nigerians have seen little or no improvement in income, while expenses continue to rise. The gains at the macro level have not translated into real relief for citizens,” she said.

Almona emphasised that infrastructure development remains the most critical lever for reducing business costs and improving competitiveness.

“If government invests meaningfully in infrastructure, roads, power, logistics, it will lower production costs and ultimately reduce prices of goods and services,” she stated, warning that policy inconsistency could erode any progress made so far.

Echoing similar concerns, ASBON national president, Dr Femi Egbesola said small businesses across the country are grappling with severe operational challenges, driven largely by rising energy and logistics costs.

“Small businesses have faced multiple shocks and significant setbacks. Profit margins have been squeezed, and many are struggling to stay afloat,” he said.

Egbesola noted that increased fuel and transportation costs have driven up overheads, forcing many enterprises to either raise prices or cut back on production, moves that have weakened consumer demand and slowed sales.

“Turnover has dropped sharply. Many businesses are operating below capacity, and in some cases, shutting down completely,” he said.

He added that the manufacturing sector had also seen a decline in output as rising input and distribution costs make locally produced goods less competitive.

For many small business owners, the situation has translated into declining liquidity, stalled expansion plans, and job losses.

“Cash flow has reduced significantly. Some businesses have become moribund, while others are barely surviving,” Egbesola stated.

He further observed that the impact is evident in rising prices of goods and services nationwide, compounding pressure on consumers and businesses alike.

“The reality is clear: prices have gone up, demand is weak, and Micro, Small and Medium (MSMEs) are under intense pressure,” he said.

Both LCCI and ASBON leaders called on government to take deliberate steps to cushion the impact on businesses by prioritising investments that directly lower production and distribution costs.

They stressed that without visible improvements in infrastructure and targeted support for enterprises, especially small and medium-scale businesses, the current pressures could undermine productivity, investment, and job creation in the economy.

While the reforms have strengthened public finances and improved revenue flows to governments, operators insist that the real test lies in translating those gains into tangible economic relief for businesses and households.