These are challenging and troubling times for business owners across Nigeria.

As the economy experiences a slowing down and the fuel scarcity crisis continues across the country, costs are rising in all areas of life. This has left many businesses having to let go of staff at an alarming rate or shut down operations altogether.

Business owners are feeling the impact of an economic slowdown

While economists expect Nigeria to avoid a recession in 2023, the economy is at a standstill — which means the country is facing an extended period of little to no economic growth.

For businesses, this signals challenging times.

Local economists predict that more micro, small, and medium-sized firms (MSMEs) won’t be able to repay their loans due to higher interest rates. This would further hike the cost of doing business in Nigeria, making it harder to secure sales and generate profits.

Out of this comes the need to cut costs, which, unfortunately, leads to people losing their jobs.

Nigeria’s unemployment rate is expected to reach 37% in 2023 — a worrying statistic when everyone is facing difficulty.

The results of the upcoming elections could help to improve the situation, but business owners need solutions now.

A need to reduce costs has put the spotlight on company cars

Cars are parked 95% of the time. And during this time, even though they’re not being used, their value continues to depreciate.

The other 5% of the time, when you’re behind the wheel, costs continue to rise. You only need to look at the current fuel scarcity crisis to see how quickly and sharply prices can increase.

Fuel now sells for between N200 – N300 per litre. Though this may be temporary, the implication this has on car owners can’t be overemphasised.

Some people are resorting to purchasing adulterated fuel, which can damage vehicles — taking this risk leads to reduced mobility for corporate car owners.

For these reasons, businesses are now rethinking their relationship with company cars.

Working out the total cost of vehicle ownership

Knowing the ongoing costs of owning a fleet of company cars is a challenge. There are so many outgoings that can fluctuate month-to-month, making it tough to keep track, and the need to pay bills for unexpected repairs can arrive at any time.

If you plan to work out your total cost of vehicle ownership, then you should go back through your finances for at least the past six months, considering the following:

Licenses;
Taxes;
Permits;
Parking;
Insurance;
MOT;
Maintenance;
Repairs;
Tolls;
Fuel.

As business owners realise the true expense of owning and managing a fleet of company cars, many are reconsidering their relationship with them.

An erosion of the traditional fleet model

Due to all of the outgoings that come with owning a fleet of company cars, businesses in Nigeria are rethinking the traditional fleet ownership model.

A simple way to reduce these costs is by turning to ride-hailing or car-sharing services.

By turning to ride-hailing services, you get a clearer picture of how much you’re spending. This is unlike company cars, which, as we’ve seen, come with an almost endless list of outgoings that vary each month.

Get clearer visibility of your outgoings

During times of such uncertainty, you need clear visibility of your outgoings.

Seeing all the trips your team made in one place (with actual costs) gives you added security as a company. And this is where Bolt Business helps.

As a company, you can build travel policies that include spending limits and keep track of every journey made by your team. That way, you know you’ll always remain on budget.

This article was written by Kwaku Ampadu-Manu, Country Manager (Nigeria), and Folashade Oluwaseun Iyiola, Account Manager.

The rising costs of fleet ownership for businesses in Nigeria

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