LAGOS, Mar 16 – Rising energy prices are placing growing pressure on small and medium sized enterprises in Nigeria, prompting the Centre for the Promotion of Private Enterprise (CPPE) to warn that many businesses could face serious sustainability challenges if the situation persists.
In a policy brief released on Sunday, the organisation said the latest increase in energy costs is raising operating expenses across the SME sector and adding to an already difficult business environment.
CPPE Chief Executive Officer Dr. Muda Yusuf noted that many companies are currently operating under severe macroeconomic pressures, including high inflation, elevated interest rates and weak consumer purchasing power. According to him, the recent escalation in energy costs is further tightening conditions for businesses that are already struggling to maintain stable operations.
The group explained that higher fuel and electricity costs are also increasing transport and distribution expenses, further raising the cost of doing business across several sectors of the economy.
Energy prices have been pushed higher in recent weeks by rising geopolitical tensions in the Middle East, where the conflict involving Iran, Israel and the United States has disrupted global energy supply and driven crude oil prices upward in international markets.
CPPE warned that SMEs are particularly vulnerable to such shocks because many lack the financial capacity to absorb sudden increases in operating costs. As a result, rising expenses could weaken profit margins and threaten the survival of smaller businesses if left unaddressed.
To manage the impact, the organisation advised businesses to improve energy efficiency, review operational spending and strengthen internal financial management. It also encouraged companies to explore alternative energy sources such as solar systems, hybrid power solutions and gas powered generators where infrastructure is available.
At the policy level, CPPE urged the federal government to improve the reliability of electricity supply while expanding fiscal incentives that encourage businesses to adopt renewable energy technologies. The group also called for affordable financing options that would allow SMEs to invest in energy efficient equipment and alternative power systems.
