Nigeria’s worst floods in a decade have further aggravated the pains of Micro, Small and Medium Enterprises (MSME) in the country.
According to Friday Opara, director of partnerships and coordination, Small and Medium Enterprises Development Agency of Nigeria, the impact of the flood on MSMEs is worst in Anambra, Delta, Cross River, Rivers and Bayelsa
“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.
BusinessDay observed that most of the businesses affected are small-scale farmers, logistics businesses, processors and traders.
“Most of our members greatly affected by the flood are farmers who account for 20 percent of the 5.1 million registered MSMEs,” said Abdulrashid Yerima, president/chairman of the governing council, Nigeria Association of Small and Medium Enterprises
The floods in Africa’s biggest economy has been majorly attributed to the release of water from the Cameroonian Lagdo dam, which affected Nigeria because of its lack of flood defence mechanism, such as the Dasin Hausa Dam which should have been built 40 years ago and would have been able to cushion the effect of whatever came from Lagdo.
Data from UN OCHA, World Food Programme, and Telimer Research shows that the country currently has the largest number of people (3,480) hit by flooding among 19 African countries.
This situation has prompted Sadiya Umar Farouq, Nigeria’s minister of humanitarian affairs to ask the five state governments badly affected by the flood to prepare to evacuate residents living along flood plains.
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“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.
Recently, Ade Adefeko, vice president of external relations and stakeholder management at Olam Agri revealed that the country’s largest farmland of 10,000 hectares in Nasarawa owned by Olam and worth about $140 million investment has been submerged by floods.
GIG Logistics, a courier and logistics services company, also notified its customers via its social media handle that the flooding was affecting their business last week.
“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 stated.
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 Organisation (UNIDO). The sector currently contributes 50 percent of the Gross Domestic Product (GDP) and has provided over 48 percent of all employment opportunities in the country.
Muda Yusuf, founder of the Centre for the 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.
