Businesses are suffocating under rising costs — Hayatu-Deen

Nigeria's private sector is entering a critical juncture. As businesses report operating margins under severe pressure from escalating input costs, the 2027 presidential race is beginning to reflect the urgency of economic reform. Presidential aspirant Hayatu-Deen, positioning himself as the Africa Democratic Congress (ADC) candidate, has elevated the business cost crisis to the center of electoral conversation—a signal that policymakers recognize the economic pain threshold is rising faster than government responses.

### What Exactly Is Driving Nigeria's Business Cost Squeeze?

The core issue is multifaceted. Energy costs remain the single largest burden: diesel prices have exceeded ₦1,000/liter in recent months, directly inflating manufacturing, transport, and logistics expenses. Coupled with naira depreciation (trading near ₦1,650–₦1,700 per USD in Q4 2024), import-dependent businesses face compounded currency headwinds. Labor costs, while rising slowly, are being outpaced by inflation, creating wage-expectation gaps. Import duties and port handling fees add another layer, particularly for SMEs lacking economies of scale.

For context, the National Bureau of Statistics reported headline inflation at 34.6% year-on-year in November 2024—the highest in 17 years. For businesses, this translates to eroded purchasing power for working capital and constrained pricing power in price-sensitive consumer markets.

### How Are Jobs and Investment Being Impacted?

The employment fallout is already visible. Small and medium-sized enterprises (SMEs), which account for over 40% of Nigeria's formal employment, are responding to margin compression by freezing hiring and, in some cases, reducing headcount. Investment decisions are being deferred: business surveys from the Lagos Chamber of Commerce indicate that capital expenditure plans for 2025 are down 15–20% year-on-year.

Foreign direct investment (FDI) inflows have also slowed. Investors are adopting a "wait-and-see" posture regarding fiscal and monetary policy direction, particularly given uncertainty around the 2027 elections. When political transitions are uncertain, risk premiums widen—capital flows to more stable jurisdictions.

### Why Has This Become a 2027 Campaign Issue?

The timing matters. With less than three years to the election, political camps are testing messaging that resonates with the business community and urban middle class. Hayatu-Deen's engagement with entrepreneurs signals that the ADC is positioning itself as the "business-friendly" alternative, likely promising supply-side reforms: energy transition investment, naira stabilization, and reduced regulatory friction.

This contrasts with the current administration's demand-management focus (tight monetary policy, fiscal consolidation). Whether these campaign promises translate into policy coherence post-election remains uncertain, but the debate itself is forcing a national conversation about competitiveness.

### What Do Investors Need to Watch?

Policy clarity on energy (renewable capacity timelines), foreign exchange management (CBN intervention design), and tariff rationalization will determine whether cost pressures ease or persist through 2026. Sectors most vulnerable—cement, food processing, logistics—warrant close monitoring. Companies with hedging capacity (dollar revenues, import offsets) are better insulated than domestic-focused, import-reliant players.

The business cost crisis is both a political opportunity and a genuine policy challenge. Whichever candidate can articulate a credible, execution-ready reform agenda will gain significant traction with Nigeria's investor class.

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