Effects of fuel scarcity on small businesses in Nigeria
NaijaRock
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Posted by Felix Okoli on Sunday May 15, 2016 at 23:27:27:
One of the most recurring problems small businesses face in Nigeria is the problem of fuel scarcity. It's a national problem that affects just about everyone and it occurs almost every year making one to constantly wonder why it had not been completely solved by successive civilian administrations.The Effects of fuel scarcity includes the following:1. It increases cost of operation: For a company that relies on fuel powered generators to carry on their business, fuel scarcity will make them buy the available fuel at a higher price and this may have to be offset by the final price of their products/service. It makes them spend more than they originally intended to for running the business. Petrol generators are commonly used in Nigeria because of the low level of electricity supplied by the power companies.2. It can reduce profitability: For a business in Nigeria that is affected by short term fuel scarcity but doesn't want to immediately increase price of products/services in order to retain their customers, it reduces their profits as it makes it more expensive for them to run their business while selling at the same price.3. It creates uncertainty and delays business activities: Many businesses in Nigeria tend to close shop or go on a break during a fuel scarcity period because of the uncertainty surrounding it. There are no guarantees from fuel distributors on when it will end and for how long it will continue.4. It reduces job opportunities: Small businesses are less likely to hire more employees during a fuel scarcity because they would be trying to minimize costs rather than increase it by employing new staff.5. It can reduce their sales revenue: When small business try to increase the prices of their goods or services as a result of fuel scarcity and black market purchases at higher prices, it may eventually reduce sales because they would have less customers buying from them as a result of the increase in price.Fuel scarcity doesn't happen for the long term in Nigeria but only lasts for a short term which is about 2 weeks to 1 month and it's normally as a result of the fact that supply of fuel has not been sufficient to meet with the demands of people.
One of the most recurring problems small businesses face in Nigeria is the problem of fuel scarcity. It's a national problem that affects just about everyone and it occurs almost every year making one to constantly wonder why it had not been completely solved by successive civilian administrations.The Effects of fuel scarcity includes the following:1. It increases cost of operation: For a company that relies on fuel powered generators to carry on their business, fuel scarcity will make them buy the available fuel at a higher price and this may have to be offset by the final price of their products/service. It makes them spend more than they originally intended to for running the business. Petrol generators are commonly used in Nigeria because of the low level of electricity supplied by the power companies.2. It can reduce profitability: For a business in Nigeria that is affected by short term fuel scarcity but doesn't want to immediately increase price of products/services in order to retain their customers, it reduces their profits as it makes it more expensive for them to run their business while selling at the same price.3. It creates uncertainty and delays business activities: Many businesses in Nigeria tend to close shop or go on a break during a fuel scarcity period because of the uncertainty surrounding it. There are no guarantees from fuel distributors on when it will end and for how long it will continue.4. It reduces job opportunities: Small businesses are less likely to hire more employees during a fuel scarcity because they would be trying to minimize costs rather than increase it by employing new staff.5. It can reduce their sales revenue: When small business try to increase the prices of their goods or services as a result of fuel scarcity and black market purchases at higher prices, it may eventually reduce sales because they would have less customers buying from them as a result of the increase in price.Fuel scarcity doesn't happen for the long term in Nigeria but only lasts for a short term which is about 2 weeks to 1 month and it's normally as a result of the fact that supply of fuel has not been sufficient to meet with the demands of people.