KANO (Reuters) – Muhammad Khamis Umar stands in front of stacks of plastic items at a tiny business in Kano, Nigeria’s northernmost city. Since the removal of a gasoline subsidy by the country’s new president, Bola Tinubu, the price of petrol has increased significantly.
The majority of Umar’s clients travelled from all of Nigeria’s northern states to purchase plastic plates, bowls, and buckets in quantity, but demand has decreased as a result of rising transportation costs and the price of filling a vehicle’s tank after the roughly threefold increase in gasoline prices on May 31.
“More than 80% of my customers have stopped coming to take products from us because of the high cost of transportation,” said Umar. His customers are small merchants, some of whom are from Kano state, after which the city is named.
Prior to the elimination of gasoline subsidies, Umar struggled to keep up with demand, forcing consumers to wait hours for orders. In order to increase output, he brought in new equipment from China in February.
Since sales are now hardly moving, he has reduced manufacturing to 40% of its previous level. According to Umar, daily sales decreased from a high of 1 million naira ($2,146) to 50,000 naira.
On a visit to his plant, the 50-year-old stated, “As you can see, I am literally out of business,” referring to the new equipment that were sitting idle.
Although grid electricity is spotty, many people in Africa’s largest economy make a livelihood through tiny, unofficial companies. This implies that people and businesses depend on fuel generators to provide power.
Despite draining billions of dollars from the finances of Africa’s largest oil exporter, which still struggles with high rates of poverty, the popular gasoline subsidy kept prices low for decades.
The elimination of subsidies incensed labour groups, but after discussions with the administration, they have halted an indefinite strike. The unions have a long list of demands, including a more than six-fold increase in the monthly minimum salary from 30,000 naira.
Tina Doofan Orji, a hair stylist in Abuja, the capital of the federal republic of Nigeria, has seen a decline in clientele after she increased rates by more than half to offset rising gas prices.