In a roadside welding shop in Nigeria’s commercial capital Lagos, Shola Ojo gives his power-generating set a second pull before the engine revved up, now he is ready to start his business for the day.
All around him are unfinished metal doors and gates that he now has to work on for almost double the cost since new President Bola Tinubu scrapped a fuel subsidy, sharply driving up the cost of petrol.
The 50-year-old welder and father of 3, gets little or no power supply from the national grid and is fully dependent on his petrol power generating set, which he now has to spend more on as gasoline prices nearly tripled on May 31.
He is now operating at a loss to finish the metal doors he already got payment for while making plans to pass his increased cost of production to his customers for subsequent job requests.
That increase may go as high as 100%.
“What we buy is what we would sell. A door we do for 80,000 naira ($173) or 75,000 naira ($162) before, now we can’t sell it for less than 130 000 ($280) to 150 000 naira ($324). The fuel issue is hard, and even transportation fare to work is hard. When we get to work no light. Fuel is the only thing we manage, now the same fuel has gone up,’’ said Ojo.
Many in Africa’s biggest economy earn a living from small and informal businesses but grid power is patchy.
That means that businesses and households rely on petrol generators for electricity.
For decades, the popular fuel subsidy kept prices low but drained billions of dollars from the coffers of Africa’s biggest oil producer, which nonetheless grapples with high rates of poverty.
In the federal capital Abuja, hair stylist Tina Doofan Orjir has seen fewer clients after she raised prices by more than 30% to make up for higher petrol costs.
“Last week some clients were here and what I was doing for 3 000 naira ($6.50), I told them it’s 4 000 naira ($8.60) and they were complaining that they will still pay the same amount they were paying. And to me, it is not possible to collect such an amount from them. I won’t meet up. I can’t just be doing business without making money that I would pay for the bills,’’ she said while making her first client’s hair.
She can use up to 25 litres daily for a generator to power her salon, which now costs nearly three times what she used to pay.
But passing on the costs to clients has been hard, she has just gotten her first customer 3 hours after opening, by this time she could have been working on the third person.
“Clients will not just want you to take up price from where you were to another level. They won’t pay, they won’t accept as much as they are aware of the fuel subsidy removal because making of hair is not a necessity to them and at this point, most of the people will go for necessity. They need to pay their children’s school fees, they need to buy some foodstuff, and making hair will be the last thing,” she said.
27-year-old Rejoice Chukwuneke was excited at the beginning of May when she got a job as a marketer in a financial institution.
That excitement was short-lived when her transportation cost moved up by 57%, taking up all her monthly income.
She was spending $3 daily on transportation but that has now moved up to over $6.
“I just got this job, but now I plan on resigning because of the increase in fuel price. If I should continue, it means that at the end of the month, I have to borrow money and feed since 80% of my salary goes into transportation. I’m just hoping to get a job around here, around my home, so that it will be easier for me and I can be able to, you know, manage myself,’’ she told Reuters as she heads to her office.
As Chukwuneke sits in the bus, she pondered on her chances of getting a new job that will be close to her home, unemployment is rife in Nigeria and one of the promises the new president has promised to work on through budgetary reform.
The subsidy removal angered labour unions but they have suspended an indefinite strike after talks with the government.
The unions want a more than six-fold rise in the monthly minimum wage from 30 000 naira ($65), among a raft of demands.
Economic analysts expect to see the impact of higher petrol costs in the June inflation rate, which is already near a two-decade high.
Farmers also face higher costs to take produce to markets, which will lead to higher food prices, analysts said.
