Covid-19: FG must urgently rejuvenate MSMEs to save jobs, economy

Serious governments across the world are unveiling pragmatic programmes to rejuvenate small businesses that have been hard hit by the coronavirus-induced lockdown. The United States’ president Donald Trump introduced a $350 billion stimulus package and is requesting more approvals from the Congress to revive and retool small businesses.

Similarly, German Chancellor Angela Merkel announced a limitless loan programme for the country’s small businesses and will lend as much as $862,000 to one business. This is targeted at enabling them to pay rents and cover other costs resulting from demand-supply disruptions.  Also, France’s Emmanuel Macron is spending $50 billion to help businesses and their employees struggling with coronavirus-related stress.

On the continent, South Africa has set up a Debt Relief Fund to support MSMEs and save the already stressed economy from a deeper mess.

These governments are providing the loans to save millions of investments, jobs and prevent their economies from caving into recession or depression.

In Nigeria, MSMEs are the bedrock of the economy, accounting for over 95 percent of all the businesses. The 41.5 million MSMEs contribute 50 percent to Nigeria’s GDP and account for 86.3 percent of employment (59.6 million jobs), according to a 2017 report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). However, the survival of millions of these businesses are threatened while Nigeria fight COVID-19 with lockdown measures.

Some operators of micro businesses are among 87 million extremely poor population earning less than $1.90 per day. Available statistics shows that micro businesses from “akara” balls seller to kiosk operators account for 99.8 percent of the 41.5 million MSMEs in Africa’s biggest economy.

Many of these businesses are not sure of returning after the lockdown, concluding that 2020 is already a lost year even in the absence of a well-coordinated relief programme from the Nigerian government.

Millions of workers in these businesses may not return to their jobs after the pandemic, pressuring up unemployment rate with currently reads 23.1 percent.

President Muhammadu Buhari is planning to borrow $6.9 billion and has asked the National Assembly to approve N500 billion intervention fund. The government also has wads of cash from donations and the Sovereign National Fund.

Rather than waste money on white elephant ventures when available, we urged the government to initiate a well-coordinated, corruption-free post-coronavirus programme for MSMEs to save the Nigerian economy from plunging into a steep slump.

Like it is done in other countries, small businesses can be provided with single-digit loans and given moratorium of two to five years. Those in job-creating sectors such as manufacturing, IT, telecoms, entertainment and agriculture may be given priority.

This measure will yield results as long as the right businesses are targeted and identified. Such a programme must be politically-neutral and managed by development banks such as Bank of Industry, Bank of Agriculture and Development Bank of Nigeria. The loans must also be long-term to enable these MSMEs stand strong enough.

Failure to do this may not be palatable for the economy because unemployment gets worse whenever small businesses begin to shut down.

For instance, between 2016 and 2017, about 272 MSMEs were forced to shut down. About 180,000 jobs were lost within the period, according to a survey jointly done by NOI Polls, the Manufacturers Association of Nigeria (MAN) and Centre for the Studies of Economies of Africa in 2017.

Unemployment, as is evident today in Nigeria, comes with all forms of social vices such as armed robbery, kidnapping, banditry, rustling, terrorism, theft and a lot of others. Nigeria can stop these crimes from getting worse by supporting people’s livelihoods.