• Tuesday, July 23, 2024
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Businesses under water as flood rages

Businesses under water as flood rages

Many Micro, Small and Medium Enterprises (MSMEs) in Nigeria that were already facing existential threats from a struggling economy have seen their pains aggravated as floods are crippling their businesses.

According to a BusinessDay survey, most of the businesses that have been worst hit are those involved in small-scale farming, logistics, processing and trading.

The impact of the flood on MSMEs is worst in Anambra, Delta, Cross River, Rivers and Bayelsa, said Friday Opara, director of partnerships and coordination at Small and Medium Enterprises Development Agency of Nigeria.

“This is happening at a time when we have high-interest rates, foreign exchange volatility and surging diesel costs. Prices will continue to surge as production costs are also surging,” Opara said.

Abdulrashid Yerima, president/chairman of the governing council at Nigeria Association of Small and Medium Enterprises, said about one million farmers have been mostly affected.

“Most of our members greatly affected by the flood are farmers who account for 20 percent of the 5.1 million registered MSMEs,” said Yerima.

Africa’s biggest economy is said to be witnessing its worst floods in a decade. The floods, which have been worsened by inadequate infrastructure, underfunded flood defences and climate change, have displaced over a million people and caused over 600 deaths.

This situation has prompted Sadiya Umar Farouq, minister of humanitarian affairs, to ask state governments badly affected by the flood to prepare to evacuate residents living along flood plains.

“Despite all our efforts of averting the consequence of the 2022 flooding season, unfortunately, we have recorded the loss of over 500 lives, partial or total damage of more than 90,000 houses, damage of more than 140,000 hectares of farmland, so many roads and other critical infrastructures were also affected,” she said.

The Nigerian Meteorological Agency had earlier warned that at least 32 of the 36 states in Nigeria, including Kaduna, Borno, Delta and Bayelsa, were expected to experience a high risk of flooding this year.

Already, Benue, Jigawa, Nasarawa, Taraba, Kano, Bauchi, Niger, Anambra, Kogi and Ebonyi have recorded flooding incidents within the last month.

Just recently, Ade Adefeko, vice president of external relations and stakeholder management at Olam Agri, revealed that the company’s 10,000-hectare land in Nasarawa, with investment worth about $140 million investment, has been submerged by floods.

GIG Logistics, a courier and logistics services company, also notified its customers recently via its social media handle that the flooding was affecting their business.

“The last few weeks have been challenging due to the unprecedented and enormous flooding, which has limited road access to the South-South, South-East and the Northern regions of the country, causing delays in the delivery of shipments,” it said.

Amanda Etuk, co-founder at Messenger Ng, a full-service supply and logistics company, said logistics businesses will not be able to deliver to their customers, thus affecting their sales and growth.

Read also: Video: Flood takes over Patani, Delta State

Etuk described the development as sad “because there had been warnings about the floods but it was not taken seriously by the government”.

The MSME sector is important to market economies as it acts as the wheel of the economic growth of any country. By creating new products and services, they stimulate new employment, which ultimately results in the acceleration of economic development.

In Nigeria, they account for 96 percent of all business activities, according to the United Nations Industrial Development Organization. The sector currently contributes 50 percent of the Gross Domestic Product and has provided over 48 percent of all employment opportunities in the country.

Muda Yusuf, founder of the Centre for Promotion of Private Enterprise, warned that the floods are going to drag down whatever growth the country is expecting in the coming months because the economy is about investment and the performance of economic operators.

“Businesses in the agric, transport and trade sector are the ones whose aggregate output contributes to the GDP. So, if they have this type of setback in terms of economic activities, it will affect the GDP and its growth performance, and also have an inflationary and employment effect,” Yusuf added.

Apart from the impact of the flooding on businesses, it could push food prices higher in a nation where millions have fallen into food poverty in the past two years.

“Over the next two to three months, Nigerians living in those states will likely witness an increase in the cost of living particularly in the prices of food,” Ibrahim, Tajudeen, director of research and strategy at Chapel Hill Denham, said.