By Our Reporter
Rising commercial rents and escalating operating costs are forcing small business owners in the Federal Capital Territory (FCT) to abandon physical shops and embrace online trading, in a development that is reshaping the operations of small enterprises.
From fashion accessories and cosmetics to provisions and other consumer goods, several traders are increasingly turning to social media platforms and other digital channels to reach customers, as the cost of maintaining physical business premises eats deeper into their earnings.
A survey conducted in Abuja on Sunday showed that annual shop rents, which previously ranged between N500,000 and N700,000 in some locations, have climbed to between N900,000 and N1.2 million, putting additional pressure on small business operators.
The increases, coming alongside higher electricity bills, transportation costs, inventory expenses and weakening consumer purchasing power, have left many entrepreneurs struggling to sustain their businesses.
While some traders are considering shutting down their physical outlets, others have relocated their businesses to their homes or are increasingly relying on online sales to avoid the financial burden of commercial rents.
A fashion accessories dealer, Mr. Ikechukwu Chidi, said he was contemplating closing his shop following a proposed increase in his annual rent.
According to him, the growing cost of maintaining the premises is diverting money that should have been invested in purchasing merchandise and expanding the business.
“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, Mrs Abike Suleiman, disclosed that she had relocated her business from a rented commercial outlet to her residence to reduce operating expenses.
She said her annual rent had increased from N450,000 to N800,000, making it increasingly difficult to meet the cost of restocking and other business obligations.
“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.
Another entrepreneur, Mr. Samuel Olushola, who operates a provision store, said escalating shop rents were discouraging young Nigerians from establishing physical businesses.
He disclosed that his landlord had increased his annual rent from N600,000 to N950,000 despite the difficult operating environment 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, property consultants and landlords have attributed the rising rental charges partly to increasing construction, maintenance and property management expenses.
A property consultant, Mrs Anita Adenekan, said commercial rents were influenced by several factors, including location, property size, maintenance costs and the facilities available to tenants.
She explained that landlords were also contending with higher costs of maintaining commercial buildings and providing basic facilities.
Adenekan, however, advised property owners to consider the financial circumstances of small business operators when reviewing rental agreements, warning that excessive increases could make commercial spaces unaffordable to potential tenants.
A landlord, Mr. Chijioke Nnamdi, similarly attributed adjustments in commercial rents to higher expenditure on repairs, security, sanitation and general property management.
He acknowledged the difficulties facing small business owners but maintained that property owners also had to contend with rising financial obligations.
“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 the growth of small enterprises, with implications for employment generation, investment and economic activity.
He explained that when businesses committed a substantial proportion of their earnings to rental payments, they had fewer resources available for purchasing inventory, expanding operations 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 for policies that would improve access to affordable commercial spaces and strengthen the operating environment for small enterprises.
He also advocated improved access to affordable financing, noting that business owners needed sufficient capital to manage rising operational expenses without compromising their ability to expand.
While acknowledging that digital platforms offered opportunities for reducing overhead costs and reaching wider markets, he cautioned that online operations might not completely replace physical outlets.
He therefore advocated a combination of physical and digital sales channels to enable businesses to reduce costs, retain existing customers and improve their competitiveness.
The development highlights the growing pressure on small businesses in Abuja, where the rising cost of commercial accommodation is increasingly influencing business location decisions, operating models and the survival prospects of entrepreneurs.