Businesses in Nigeria are having a hard time operating optimally two weeks after the government began a gradual easing of the lockdown imposed on Lagos, Abuja and Ogun State to help curb the spread of coronavirus.
In Lagos, Nigeria’s economic nerve-centre, businesses are struggling to sell their products despite the easing of lockdown that started on May 4 – exactly two weeks ago.
Even when they sell, moving their goods across Nigerian states poses a very big challenge due to inter-state restrictions and imposition of lockdowns by other states.
Debo Thomas, founder of Lagos-based Hastom Nigeria Limited, deals in cattle and cashew in Lagos. Demand for his cattle has fallen by over 50 percent since he re-opened on May 4. To survive, he now slaughters the cows himself and sells as meat to markets across the South-West region.
But his cost of logistics has soared as security agents on checkpoints allegedly demand N5,000 to N30,000 to move the meat to neighbouring states.
“We now dry our cashew nuts and store them appropriately to ensure they are well aerated to increase their shelf life so that we can sell after COVID-19,” he said.
Thomas is not the only one facing the struggle. Ifeanyi Okeleke, CEO of Kenfrancis Farm, said he was closing down his poultry business as he could not cope with rising input costs. He is now moving to cassava production to process it into ‘garri’, starch and flour.
Coronavirus has forced states to impose restrictions to curb spread of the deadly virus. But the struggling economy and rising cases of infections have boxed the federal and state governments into a hard choice between saving lives and avoiding an uprising from impoverished citizens.
Official data show that Lagos has 8,395 million MSMEs, the highest in Africa’s largest economy with 41.5 million small businesses. Most of them are now battling with high cost of logistics.
Olamide Ayeni-Babajide, chief executive of Pearl Recycling, a Lagos-based company that transforms solid wastes into chairs, has got orders for the supply 300 chairs across the Nigerian states since the Lagos lockdown. But she can’t supply due to restrictions on inter-state movements.
“In Lagos, I now dispatch the products myself. But logistics companies no longer accept products that are non-essential for onward movement to other states. This is affecting us badly,” she said.
A five-week lockdown to curb the spread of COVID-19 has impoverished many Lagosians who rely on daily incomes for upkeep. Lagos accounted for 12 percent of total national household expenditure (N5 trillion) in 2019, according to the National Bureau of Statistics (NBS). Lagos residents spent N534 million on transport and N827 million on eating outside their home in 2019, said NBS. But the situation seems to be changing.
Samuel Ogundipe, a hawker in Oshodi, who used to sell ice cream and sausages before the lockdown, said he was not returning to the business because he did not have any capital to go back to it. His plan is to move down to Osun State and work in a construction company.
Other small businesses are also facing challenges.
Seyi Osinaike, CEO of Divine Hair Dressing Salon based in Owode-Weigh Bridge along Ikorodu Expressway, Lagos, said before the COVID-19 outbreak hairdressers in Lagos had been struggling as most ladies preferred to wear wigs than braid their hair.
“Few that were patronising us before stopped because of the lockdown. Now that the lockdown has been lifted, things are yet to pick up,” she said.
Most businesses in Lagos rely on other states to operate optimally, and restrictions on inter-state movements mean they can’t meet the needs of their customers or get supplies from outside the state.
Ibrahim Maigari Ahmadu, co-founder of livestock247.com, sells cows online. But he depends largely on cattle farmers who are offline. He facilitates movement of cows from the northern part of Nigeria to the south, which is the hub of cattle business.
But he can’t move cows from Charanchi in Katsina State or Nguruji in Mambilla Plateau in Taraba State to Lagos now because most states are on lockdown. He said despite getting government exemption to move, truck movement was being hindered by security checks.
Ahmadu said billions of naira was being lost every day as one market alone (Charanchi) often moved 100 trucks worth N600 million to Lagos.
“We are operating at a very difficult time,” he said. “What happens to those in the value chain such as those fattening the cows and the merchants? Lagos can say, since Oke-Oba market is shut down, anyone interested can buy through a trusted channel.”
The Lagos Chamber of Commerce and Industry (LCCI) ran a survey and 81 percent of businesses indicated that they were severely impacted by the COVID-19 situation. Forty-six percent are cutting jobs.
Chukwuma Soludo, a former central bank (CBN) governor, advised that while efforts should be made to fight the pandemic, locking down a largely impoverished people would have an adverse impact on the people.
However, some businesses say they are coping well with the situation.
Attah Anzaku, co-founder of Agroeknor, an exporter of hibiscus flower, said his business has not been interrupted as he still exports to the global market.
Anzaku said raw materials prices have crashed as farmers are now desperate to sell at giveaway rates.
