A RECENT surge in electricity rates in Nigeria, the most populous country in Africa, has triggered widespread discontent among businesses and consumers, highlighting the challenges posed by economic reforms initiated by President Bola Tinubu’s administration.
Jude Okafor, a small business owner running a frozen fish and meat enterprise since 2021, expressed dismay over the sharp increase in electricity costs. Okafor, who typically spends around $25 on electricity for his business, now faces significant financial strain following the government’s announcement of a nearly 300 percent rate hike last week.
‘There is no escape. Light has gone high, fuel has gone high. And for a businessman, there’s no way we can cope with that,’ lamented Okafor, emphasizing the detrimental impact on his business operations. ‘If there’s no light or fuel to ice our fish, what are we going to do? Our business is running down. This is [a] first-class act of wickedness,’ he told VOA.
The Nigerian Electricity Regulatory Commission (NERC) defended the price adjustment, stating that only larger consumers, constituting about 15 percent of the total, would bear the brunt of the subsidy cut. Authorities justified the move as equitable, arguing that consumers receiving fewer hours of electricity should pay higher rates.
The decision to remove electricity subsidies aligns with President Tinubu’s broader reform agenda aimed at revitalising the economy. Economic analyst Ogho Okiti supported the government’s stance, citing the need to attract investment and address the sector’s financial instability.
However, criticism has been swift, with business associations, manufacturers, and workers’ unions denouncing the timing and potential repercussions of the rate hike. The Abuja chapter of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) warned that the decision could jeopardise the survival of thousands of businesses already grappling with soaring inflation.
Dele Oye, national president of NACCIMA, criticised the timing of the subsidy removal, stressing the necessity of a balanced approach considering the challenges faced by businesses. ‘There’s nowhere in the world where there’s no subsidy. We cannot compete if we have to pay everything at market value when we don’t see market value service from the government,’ Oye remarked.
While authorities anticipate substantial savings from the subsidy removal, reminiscent of a similar reform in the petrol sector last year, critics remain vigilant amid concerns about exacerbating the cost-of-living crisis for ordinary Nigerians. The outcome of this latest policy shift will undoubtedly shape the country’s economic trajectory in the coming months.