Rising shop rents are forcing small business owners in the Federal Capital Territory to abandon physical outlets and embrace online trading to cut operating costs and keep their businesses afloat.
A survey by the News Agency of Nigeria in Abuja on Sunday showed that increasing commercial rents, alongside rising electricity bills, transportation costs and declining customer patronage, were putting small businesses under severe financial pressure.
The development has forced some entrepreneurs to relocate their businesses to their homes, downsize operations or consider selling their products through social media platforms.
Findings from the survey showed that shops previously rented for between N500,000 and N700,000 annually now cost between N900,000 and N1.2m in some locations.
A fashion accessories dealer, Ikechukwu Chidi, said he was considering closing his shop following a proposed increase in his annual rent.
“Running this business is becoming increasingly difficult because a large part of my capital now goes into paying rent instead of purchasing goods.
“If I eventually close the shop, I will continue selling through social media platforms because I cannot afford to spend most of my earnings on rent,” he said.
Similarly, a cosmetics dealer, Abike Suleiman, said she had moved her business from a rented shop to her residence to reduce expenses.
She disclosed that her annual rent had increased from N450,000 to N800,000, making it difficult to sustain the business alongside other operational costs.
“I had to move my business home because I needed money to restock and meet other expenses.
“Paying such a huge amount for rent leaves little money to invest in the business,” she said.
A provision store operator, Samuel Olushola, said rising commercial rents were discouraging young Nigerians from establishing physical businesses.
He said his landlord had increased his annual rent from N600,000 to N950,000 despite the economic difficulties confronting small business owners.
“Not everybody can afford the huge amount landlords demand for shops, especially when there are other expenses to settle.
“Many people have good business ideas but cannot implement them because securing a suitable shop has become expensive,” he said.
However, a property consultant, Anita Adenekan, attributed the rising rental charges partly to increasing property maintenance and construction costs, as well as the expenses of providing facilities.
She explained that rental prices were also influenced by the location, size and facilities available in commercial properties.
Adenekan, however, urged landlords to consider the financial capacity of small business operators when reviewing rental agreements.
A landlord, Chijioke Nnamdi, said rising maintenance costs and other financial obligations had contributed to increases in commercial rents.
According to him, landlords also contend with the rising costs of repairs, security, sanitation and general property management.
“We understand the challenges business owners are facing, but maintaining commercial properties has also become expensive.
“However, landlords should be willing to negotiate with responsible tenants to avoid unnecessary vacancies,” he said.
An economist, Dr Michael Onukwube, warned that rising commercial rents could undermine business expansion, employment generation and the contribution of small enterprises to economic growth.
He explained that committing a significant portion of business earnings to rent left entrepreneurs with limited funds for expansion, restocking and employing additional workers.
“Small businesses are important to economic activities because they provide employment and create opportunities for entrepreneurship.
“When operating expenses become excessive, businesses may reduce their workforce, increase prices or shut down completely,” he said.
Onukwube called on relevant authorities to introduce policies that would improve access to affordable commercial spaces and support small business development.
He also advocated improved access to affordable financing, saying entrepreneurs needed sufficient capital to manage operating expenses and expand their businesses.
The economist noted that although digital platforms could help businesses reduce costs and reach more customers, online trading might not completely replace physical outlets.
He therefore recommended a combination of physical and digital sales channels to strengthen business competitiveness.
The development has renewed concerns over the rising cost of doing business in Nigeria, particularly for small enterprises struggling to survive amid increasing operational expenses.
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