spot_img
spot_img
26.2 C
Lagos
Tuesday, June 28, 2022

COVID-19 tightens noose around 40 million livelihoods

Must read

Small businesses are at the receiving end of the ravaging coronavirus scourge as over 40 million livelihoods are confronted with tough choices in their quest for survival.

In a worst-case scenario, Lagos has estimated 39,000 citizens catching the COVID-19 bug, and 90 percent of them recovering—if they have no pre-existing downers.

In that case, the odds are against about 20 million people living in the commercial hub of Africa and epicenter of the pandemic in Nigeria. The nation currently bristles with over 200 million people.

But in this plague, in Africa’s largest economy where more than 40 million people work mom-and-pop businesses, something else is at risk: livelihoods.

“That’s even my fear,” said Lagos resident Oyeyemi.

The 36-year-old who earns N1000 every day from hawking cooked food was responding to an initial 14-day lockdown the federal government slammed on Lagos, Ogun, and Abuja on March 31 to halt the spread of the virus.

“I don’t care about the virus.”

So in a worst-case scenario, 96 percent of Nigeria’s businesses, which comprise 37 million Small and Medium Enterprises (SMEs) alone, and millions of people like Oyeyemi that make the sector tick, will be at the mercy of COVID-19.

Ravages of a virus

They are reeling from its severe impact already. After losing 180 of the 250 birds in his poultry at Wasimi, Ogun State, Razak Ganiyu is now back to being an helpless breadwinner.

“This coronavirus have kill me,’ the father of five children lamented to the reporter.

Though shorn of a formal education, Razak does not have problems linking his misfortunes to the COVID-19 pandemic. He resides in Alagbado, Lagos, but locates his farm on his piece of land at Wasimi in Ifo, Ogun State and both states, alongside the Federal Capital Territory, were among the epicentres forced to a lockdown by efforts to contain the spread of the novel virus.

“I cannot go to see the chickens because of no transport from Alagbado to Wasimi because Sanwo-Olu and Buhari say we should not go out,’ he narrated.

“So when rain fall and water get into the poultry, my security guard there tell me the chickens are shaking and dying one by one.”

It was a multiple misfortune for Razak actually. Before the rainfall that eventually flooded his poultry, the birds, all of them layers, were already starving and vulnerable to ill-health.

He couldn’t get a place to buy feeds for the birds, he explained to the reporter, even when he flouted the sit-at-home order and trekked as far as Sango, Ogun State in search of a feed mill.

“I have to reduce the food they eat everyday so that the few bags in the poultry can last them, but they stop laying eggs because of that and my customers cannot get eggs to buy from me again,” Razak groaned.

If he had succeeded in his plans to sell off the old layers at N1500 each in the days leading to the Easter celebration, Razak would have made exactly N375,000 from his small business in a matter of days. But that never happened as a result of the collateral damage. What he has left now are 70 sick birds waiting to die soon.

That’s not just about the tragedy anyway. He also lost the opportunity to sell at least eight crates of eggs in a single day, which could have fetched him N8,000 at the end of the daily transaction.

That is N56,000 lost in one week, and everything put together for the initial two weeks the lockdown ravaged his egg business amounted to exactly N112,000.

Grim figures

No fewer than 20 states have eased into lockdown since then.

But the body count, for now, is that of the organised private sector. Figures here are quick to hit the giant screens at Standard and Poor’s, Goldman Sachs, and other financial figure crunchers.

For instance, the Purchasing Managers Index (PMI) which the Central Bank of Nigeria released for March indicated a 34-month decline in activity level. The data for the manufacturing and non-manufacturing PMIs dropped to 51.1 points and 49.2 points from their respective points of 58.3 and 58.6 in February. COVID-19 was just catching on then.

But the Nigerian situation presents its own peculiarity in that the informal sector is the heart of Nigeria’s economy. It contributes 65 percent of the nation’s economy output, according to an IMF 2017 estimate.

The Ministry of Industry, Trade and Investments says the sector generates 54 percent of the nation’s GDP, consistently for five years running now; it employs 86 percent of the work force; and, the CBN says, it controls 96 percent of all the businesses in Nigeria.

The size of the sector and the omnipresence of its players, have made the federal government focus on it, in the drive to alleviate poverty and scale down unemployment in Nigeria.

The Bank of Industry alone has no fewer than 20 interventionist funds serving the SMEs. There are the Development Bank Fund, the Agriculture Small Medium Enterprise Scheme (AGSMEIS), the Micro, Small and Medium Enterprises Development Fund (MSMEDF), and the Creative Industry Fund. The MSMEDF alone has N220 billion committed to funding its small players.

Each administration, since 2013, has been devoting more funds to it, or creating more micro-schemes. President Muhammadu Buhari added the National Social Investments Programme which comprises N-Power, Government Enterprise and Empowerment Programme (GEEP), with its TraderMoni, FarmerMoni, and other micro-funds. In the last three years, the N-SIP gulped N470 billion, said Mariam Uwais, Buhari’s adviser on social welfare.

How the cookie crumbles

The sad point, however, is: the COVID-19 disruption will be bringing all of these to their knees soon.

One way experts argue the pandemic can be contained, which has killed almost 200,000 and infected 2.73 million people across the globe is through restrictions and lockdowns.

That effectively limits commercial activities, with the effect on both income generating capacity and household spending of citizens like Oyeyemi and Razak.

The household expenditure, what consumers spend on goods and services in a year, stood at N10 trillion in the first quarter of 2019, the World Bank stated. The year 2020 will record a much lower figure. Ditto the income, which has been going south for two years—N200 trillion in the fourth quarter of 2018 to N17trn in the first quarter of 2019. Nigerians will earn much less in the wake of the COVID-19 pandemic.

The slowdown in income generation and spending can bottom out in death—business death—just like COVID-19 complications drain life out of the infected.

A business, however, doesn’t need to be as old as humans to succumb to the chilling hands of death.

In Nigeria, analysts have found out that 80 percent of new businesses go belly-up on their third birthday. Which means almost all the businesses that sprang up in 2017 will die standing up this year, ordinarily.

Of those businesses that have been around since 2015, including those GEEP and other interventions spawned, 85 percent will not survive 2020. The reasons are many: bad leadership, bad teams, poor financing, and wrong product choices, among others. The pandemic will definitely become an addition, an unknown that will make the death happen, surely and quickly.

The United Nation Conference on Trade and Development (UNCTAD) has already figured out how much the global economy will bleed while the viral ravage lasts—and even after it is over. It’s much.

“We envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September,” said Richard Kozul-Wright, director, Division on Globalisation and Development Strategies at UNCTAD.

That projection only captures the formal sector whose players, mainly the world blue-chip companies, unicorns in banking, technology, commerce, and others, get enough attention from analysts, regulators, and global economy’s minders. The little guys hustling and bustling on the fringes will also have their projections of losses.

Already, with the slump in oil prices, Nigeria, among crude-run economies, is heading back into recession, after four years of crawling out of it. Things surely will be hard. Even if the Nigerian informal economy is not going to get lots of eyeballs from world experts, the impending loss will be significant enough to get the nation’s economy team to sit up.

The federal government has come up with some measures to mitigate the impact of the pandemic on the economy. The Federal Inland Revenue Service put together some tax incentives; the Nigeria Stock Exchange has relaxed the regulatory hold on listed companies; and an Emergency Economic Stimulus Bill 2020 the National Assembly proposed is rough and ready—to give waivers on loan repayment, import duties, and loan restructure.

But many of these boons do little for the economic players at the bottom of the pile. Except the CBN, whose bouquet of palliatives includes a N50billion credit facility through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending Microfinance Bank for households and SMEs.

Eighty thousand individuals and businesses are jostling for the cash bailout already, the CBN announced April 14. But how far N50 billion can go in keeping the over 40-million-strong SME sector floating in the middle of a slowdown seems a moot question.

*This report was facilitated by the Wole Soyinka Centre for Investigative Journalism (WSCIJ) under its COVID-19 Reality Check project.

- Advertisement -spot_img

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -spot_img

Latest article