By EMMANUEL IJIKANMI

Rising cost of renting shops are forcing many small business owners in the Federal Capital Territory (NAN) to take to online trading to reduce operating costs.

A survey by the News Agency of Nigeria (NAN) in Abuja on Sunday indicates that increasing rental charges are putting pressure on small businesses, particularly those operating in rented commercial spaces.

Some affected entrepreneurs said frequent rent increases, coupled with electricity bills, transportation expenses and declining customer patronage, were impacting on their businesses negatively.

A comparison of rental charges provided by some traders showed that shops previously rented for between N500, 000 and N700, 000 annually we’re presently going for between N900, 000 and N1.2 million in some locations.

The traders said the increases had forced some business owners to relocate, downsize their operations or consider selling their products through social media platforms.

A fashion accessories dealer, Mr 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, Mrs Abike Suleiman, said she had relocated her business from a rented shop to her residence to reduce expenses.

She said her annual rent had increased from N450, 000 to N800, 000, making it difficult to sustain the business alongside other operating expenses.

“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 high shop rents were discouraging young Nigerians from establishing physical businesses.

According to him, his landlord increased his annual rent from N600, 000 to N950, 000 in spite of the challenges facing small business operators.

“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.

A property consultant, Mrs Anita Adenekan, attributed increasing shops rents partly to higher property maintenance costs, construction expenses and the cost of providing facilities.

She said landlords also faced financial obligations, adding that rental charges were often influenced by location, size and facilities available in commercial properties.

Adenekan, however, advised property owners to consider the financial capacity of small business operators when reviewing rental agreements.

A landlord, Mr Chijioke Nnamdi, said increases in property maintenance costs and other financial obligations had influenced recent adjustments to commercial rents.

He said landlords also had to contend with 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 Micheal Onukwube, said rising commercial rents could affect business expansion, employment generation and the ability of small enterprises to contribute to economic growth.

He explained that when business owners committed a significant portion of their earnings to rent, they had less money available for expansion, purchasing inventory 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 urged relevant authorities to encourage policies that would improve access to affordable commercial spaces and support small business development.

He also called for improved access to affordable financing, noting that business owners needed sufficient capital to manage operational expenses and expand their activities.

The economist added that adopting digital platforms could help some businesses reduce costs, although online operations might not completely replace physical outlets.

He said a combination of physical and digital sales channels could provide opportunities for businesses to reach more customers and improve their competitiveness.

The development has renewed calls for a business environment that allows small enterprises to survive, expand operations and contribute meaningfully to Nigeria’s economic growth. (NAN)