High cost of diesel, inadequate electricity threaten Kano SMEs | Dailytrust

High cost of diesel, inadequate electricity threaten Kano SMEs

A footwear company in Kano
A footwear company in Kano

Kano State is one of the most populous and vibrant commercial hubs in Nigeria and indeed across the African continent.

From the routine selling and buying, processing, import and export to the manufacturing of goods and commodities, Kano is second to none in the business arena, having the capacity to not only accommodate residents, but expatriates who also find solace and grounds to establish, plant or create world-class opportunities in business.

Kano has thousands of major and small-scale industries located across different sites and clusters, among which are the popular Sharada, Bompai, Dakata, Challawa industrial areas.

In the past couple of years, these industrial areas have been retrogressing with the closure and transfer of businesses from the state due to inadequate power supply, which is a key factor determining the survival of any major or small-scale enterprise.

Speaking on the plight and challenges of industries, the Chairman Manufacturers Association of Nigeria, Sani Hussaini Saleh, said reliable, proper and efficient electricity is the bedrock of every industrial activity in the world. And as the cheapest source of power in Nigeria, its scarcity in Kano has killed 60 per cent of medium and small-scale businesses.

He further stated that the second cheapest source of power in Nigeria used to be gas, unfortunately, that has also become expensive that companies are returning to using 8-20 hours on generators.

“Diesel has skyrocketed to more than triple the cost of electricity; that is to say from the N200 we used to pay to over N800, and this has really brought down many businesses. 

“While some are operating at half capacity, others are operating at 25 per cent and some have even closed down entirely never to come back.”

He said, “Don’t forget that we are also grappling with foreign exchange where naira has skyrocketed to over N600 per dollar. So, we are only managing by scaling down production to the barest minimum, pending when electricity improves.”

He said another way out is their hope that in the nearest future, the proposed gas pipeline to Kano (i.e., Ajaokuta, Abuja, Kaduna and Kano (AKK) launched about four years ago, will help them save 40 per cent of what most of the industries are spending now.

He also lamented how the situation is so bad in northern Nigeria that they cannot compete with their southern counterparts, talk less of competing with other African Free Trade area agreement that was signed by the federal government a few years ago.

“Why I’m saying this is because Lagos and Enugu are generating electricity using gas for about N42, whereas electricity here is being charged at N70. So, look at the margin. For better understanding to a layman, those of us from the North, especially Kano, Jigawa and Katsina, have companies that are paying N30 million a month for electricity, while a company in the south is likely to spend N18-20 million in a month.

“Look at the gap of N10 million, now multiply that by 12(i.e., a year) and see the net worth differences. And remember that this compares with the cost of electricity only, which is the cheapest.”

Ibrahim Bashir Na Sambo, a business owner who produces oil and plastic materials, told Daily Trust on Sunday that the major problem they are face, especially the rubber companies, is that most of the machines they use need three hours of electricity to heat up before they begin production and if at any point it goes off during those hours, they have to start afresh.

Other factors he mentioned that are killing businesses in the state other than inadequate electricity are inflation, high cost of electricity and fuel.

“We have talked with the ministry of commerce and industries to no avail. We also discussed with KEDCO that we need 12 hours of electricity, not the average three hours they are giving us now, but nothing has been done about it till now.”

Meanwhile, Muhammad Kabir, also a producer of plastics (straws and spoons), said at the moment, they are not very concerned about profit anymore, as all they are doing is maintaining and paying their staff monthly salary, how they can generate power, as well as how production will continue.

He said the major problem they are facing around Dakata Small Scale Business area is using their own money to acquire land and buying electricity poles, only for KEDCO to allow other people to tap from it and then government would start collecting tax from them.

He pleaded with the government to provide an enabling environment for them, with good roads and a balanced price for uninterrupted electricity.

Small-scale (grassroots) entrepreneurs share in the plight

“Things are no longer as they used to be and our businesses are dwindly every day. A few months ago, when business was booming, I used to make more than N10,000 daily, but now, I hardly sell a packet of spaghetti a day. You have seen the half pack I cooked and the remaining uncooked half yourself,” said a female food vendor at Bompai industrial cluster.

“Ask my neighbour, she started this business before me, she has been here for 10 years and many companies closed their businesses before her eyes. It wasn’t like this seven years ago when I started this business. I’m telling you, even though companies were gradually shutting down then, but it wasn’t this bad.

“Like my friend told you, I’ve been selling bean cake (Akara) here for more than 10 years and many company staff and labourers eat in my place. I have done a lot of good things for myself, my family and friends with the money I’m making from the business, but for the past 2 years, I have not been able to do anything for myself, talk less of my family,” said the food vendor.

She further stressed that due to the hike in food prices, transport fare and lack of customers, she’s thinking of shutting down the business in order not to waste her money without making any profit.

Another small trader who sells provisions pleaded with the government to do something about the power shortage the state is facing, saying it’s the main thing killing businesses in all sectors of the state.

He also called on politicians to start investing in local businesses, so as to reduce the rate of drug abuse, hunger, poverty and unemployment amongst Nigerian youths.

“Just look at all the wealth our politicians are flaunting in our faces. How much are they buying party forms and delegates? How many of them were caught stealing billions of naira from our common wealth? Had they used that money to buy or invest in those run-down companies, the economic hardship and problems we are facing in this country would be at the barest. Look at me now, I have a family and parents to feed, but I struggle to get N500 a day,” he said.

Bashir Abdullahi is a Kano-based photographer and blogger, who recently took to social media platforms to share his experience with the lack of or absence of electricity having gross negative impact on his business by the day.

According to him, he runs two shops where he pays N3,000 for electricity for each of the shops, making N6,000 on a daily basis, N180,000 monthly and over N2m in a year.

He added that the nature of his business runs 24/7 with no weekends and the business area he operates in doesn’t allow for individual operation of generators and as such, the generator he recently bought for nearly N500,000 is of no use.

Reacting late last month to the series of complaints, Chief Corporate Communications Officer at the Kano Electricity Distribution Company (KEDCO), Ibrahim Sani Shawai, in a statement said the low power supply in its coverage area – Kano, Katsina and Jigawa states, was due to low generation as a result of gas shortage.

According to the management, the low generation last month had reduced power allocation to KEDCO as the company is now being allocated 120MW on the average out of statutory MYTTO allocation of 368MW.

“The shortfall of 248MW allocation to KEDCO is responsible for the current massive load shedding to industrial, commercial and residential customers in our coverage area.”

However, it added that those saddled with the responsibility of addressing the challenge from the generation sector are already working on the gas supply issue.

On his part, Kano State Commissioner of Commerce, Ibrahim Mukhtar, while sharing his concern on the unfortunate situation industries found themselves, assured that the state is doing the needful to salvage the problem.

He expressed optimism that the Kaduna, Kano to Maradi rail line and the AKK gas project when completed will surely boost industrial activities not only in Kano, but the entire northern part of the country and all hardships experienced would be a thing of the past.

From Salim Umar Ibrahim & Rahima Shehu Dokaji (Kano)

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