In the dynamic landscape of Nigeria’s business sphere, women entrepreneurs have emerged as powerful agents of change, driving innovation and economic growth. However, their journey is not without its challenges, especially in the face of rampant inflation and volatile exchange rates. As the Nigerian economy grapples with these macroeconomic forces, entrepreneurs like Posi, Zulu, Biba, and Deborah find themselves at the forefront, navigating turbulent waters to sustain and grow their businesses.
As we delve deeper, their challenges will unfold, but first, let’s start with some eye-opening statistics.
at are the numbers saying about the economy?
Nigeria has faced significant economic headwinds in recent years, with inflation rates soaring and exchange rates fluctuating unpredictably.
According to the National Bureau of Statistics, the headline inflation rate increased to 31.70% in February 2024. This is relative to the January 2024 headline inflation rate, which was 29.90%. Looking at the movement, the February 2024 headline inflation rate showed an increase of 1.80% points compared to the January 2024 headline inflation rate. On a year-on-year basis, the headline inflation rate was 9.79% points higher compared to the rate recorded in February 2023, which was 21.91%.
This reveals a rise in the headline inflation rate for February 2024 when we compare it to the rates from February 2023, highlighting a year-on-year increase.
The current state of the economy is challenging for women entrepreneurs, especially those in retail, manufacturing, and services. An International Finance Corporation (IFC) study highlighted how women-owned businesses in Nigeria face a tough battle against currency fluctuations, given their reliance on imported raw materials or products.
With the Nigerian Naira experiencing periods of depreciation against major currencies like the US dollar, these entrepreneurs face increased costs for imports, further squeezing their bottom line.
Zulu, Haircare entrepreneur
For some, the only option remaining is to simply quit. Zulu started her haircare product journey in 2022, and after two years of business, she has decided that the best course of action is to shut down.
“I started making natural hair care products in January, but I’m stopping this month because it’s too expensive to keep up. I was still struggling to build my client base when the cost of production went up. For example, a cream I sell for ₦4k used to cost ₦3,200 to produce. Now, it costs ₦4,100 to produce. How do I tell the customers I’m still trying to keep that I’m increasing prices just seven months after I started selling?” she laments.
The rise in uncertainty in Nigeria’s macroeconomic environment is on course to further dampen business activities, with some more firms expected to close this year.
The shaky ground of our economy, marked by unstable macroeconomic indicators, has thrown a wrench into the plans of numerous businesses. This turbulence could hit their profits hard, force layoffs, shrink tax revenue, jeopardize the future of many firms, or even push multinationals to pack up and leave.
Deborah, bag and shoe retailer
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After 7 months of business, Deborah decided to pause her bag and shoe retail business. This is after not selling anything since May 2023.
“I market bags on WhatsApp and Instagram for a commission fee from a wholesaler, but sales have been really bad for about seven months. The prices have doubled, and people are looking for what to eat, not fashion. In a good month, I used to make around ₦40k in commissions, but I’ve not sold anything since May last year. I had to take a break and re-strategise, but now I have decided to try again.”
It is important to note that businesses all over Nigeria, including manufacturing companies, have decided to pause operations following the economic crisis. In 2023 alone, the Manufacturing Association of Nigeria (MAN) revealed that about 767 manufacturing companies shut down operations while 335 experienced distress in 2023.
Posi, jewellery retailer
For Posi, a jewellery retailer based in Mowe, Lagos, running the “Posy Fashion House” business has become a hassle compared to when she first started in 2023. These days, the price of jewellery from her wholesalers shoots up astronomically every week. She recounted an experience where the price even rose in just days.
In her words,
“My supplier sold 3 pieces of jewellery to me for N2500. I bought 3 of them and decided to post my jewellery. 3 days later, some of my customers asked for it. I gave them my selling price, but since it wasn’t available again, I decided to ask my supplier for that same jewellery. Imagine my wildest surprise when she said it was now N3,000. Her reason for increasing the price was that “the dollar has gone up.”
The volatile state of Nigeria’s exchange rate has affected not only small business owners but also foreign investors, as a report from BusinessDay shares their desires of wanting to “hold off” on new investments into Nigeria until the naira finds some stability. For entrepreneurs like Posi, the tough economy forces a tough choice: hike up her prices or keep selling at a loss. Thankfully, she has “loyal customers” who stick with her despite the economic challenges, and she’s thankful for their support.
Biba, electronics dealer
Like many other retailers in the country, Biba has decided to increase the prices of many of her electronics. This is due to increased operational costs, such as the PHCN bill and fuel costs.
“I deal with electronics, which means I need constant electricity so prospective buyers can test the products. Before now, I spent around ₦7–₦10k weekly on fuel. Now, I ration my fuel usage but still spend close to ₦21k weekly. I’ve had to increase my prices by 30% to meet operational costs. I may even have to increase it again because supply has also become more expensive. I have to transport my products from Lagos to Ekiti, and the shop rent is still there.”
Improving the economy, according to experts
The World Bank lead economist, Alex Sienart, explained in great detail the way forward for Nigeria in terms of curbing high inflation rates and the economic crisis:
1. Restoring macroeconomic stability through measures to reduce domestic and external imbalances. This will require a coordinated mix of exchange rate, trade, monetary, and fiscal policies, notably including adopting a single, market-responsive exchange rate, eliminating the petrol subsidy, and increasing oil and non-oil revenue
2. Boosting private sector development and competitiveness by eliminating structural constraints that hinder productivity
3. Expanding social protection to protect people with low income and the vulnerable.
The challenges these women entrepreneurs face go beyond personal stories; they spotlight the broader systemic hurdles rooted in our economy that urgently need our collective action and attention. By joining forces, offering support, and taking decisive steps, we’re paving the way for a future where women entrepreneurs aren’t merely getting by but are thriving, vital forces in shaping Nigeria’s economic horizon.
