Micro, Small and Medium Enterprises (MSMEs) in Nigeria are facing their worst nightmares as a result of inter-state restrictions imposed to curb the spread of the deadly coronavirus.
Movement of certain types of goods, such as food and medicines, is permitted by the Federal Government, but SMEs claim security agencies insist on collecting large amounts of bribe before allowing passage to their vehicles carrying essential products.
“Bringing in a bunch of plantains into Lagos used to cost N800 to N1,000, but you have to spend at least N2,000 now because security agencies insist on being ‘settled’,” said Jon Kachikwu, CEO of Jon Tudy Enterprises, a Lagos-based food processor, in a telephone interview.
“Security agencies are simply frustrating us. The Federal Government said we can bring in food, but this is not the case. The government should visit security checkpoints and see how frustrating things are,” he said.
Trade comprises over 15 percent of Nigeria’s GDP while transport (and storage) contributes 1.77 percent to the economy, according to the National Bureau of Statistics (NBS). The Nigerian economy relies on inter-state movement, particularly Lagos whose 20 million people rely on other states for 80 percent of their food, vegetables and fruits.
Most of Lagos’ 8.4 million MSMEs depend on inter-state movement to reach their customers or get their raw materials.
Adepeju Jaiyeoba, CEO of Mother’s Delivery Kits, said her supplies outside Lagos have been stalled owing to inter-state restrictions.
The 41.5 million MSMEs in the country contribute 50 percent to Nigeria’s GDP and account for 86.3 percent of jobs (59.6 million jobs in 2017), according to a report by the NBS and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
In a survey done by the Enterprise Development
Forty-nine percent of the respondents said they were facing crippling logistics issues as 88 percent said they would change their business models.
“Most of them reported that they were unable to move their raw materials needed for production or transport their goods due to the restrictions of movement for both human and goods,” EDC said in the report.
Olamide Ayeni-Babajide, chief executive of Pearl Recycling, a Lagos-based company that transforms solid wastes into chairs, has got orders for the supply of 300 chairs across Nigerian states since the Lagos lockdown. But she can’t supply due to restrictions on inter-state movements.
Weeks of lockdown to curb the spread of COVID-19 has impoverished many MSMEs who rely on daily incomes for upkeep. Lagos accounted for 12 percent of total national household expenditure (N5 trillion) in 2019, according to the 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.
Friday Opara, director, strategic partnership, SMEDAN, said small businesses are on life support now.
“The government should do something to help the small businesses in this pandemic, considering their contribution to GDP and to employment,” he said.
In a recent interview, Degun Agboade, president, Nigerian Association of Small and Medium Enterprises (NASME), said the Covid-19 pandemic and lockdown have been devastating for MSMEs operators in the country, especially for micro businesses who survive on daily incomes. He called for a bailout to save millions of small businesses from going under.
Chijioke Ekechukwu, an economist and former director general of the Abuja Chamber of Commerce and Industry, told BusinessDay that government’s intervention would most likely be limited now amid dwindling revenues. But he said the government must find a better strategy to address specific concerns of respective MSME sectors.
“When the COVID pandemic started, the government rolled out stimulus package. Most MSMEs applied online for those packages and between that time and now I don’t think anything has happened and I can tell you that categorically,” he said.
“I can also tell you that MSMEs that applied for amount up to N25 million, which is the maximum, got approval for N2.5 million. The implication is that if someone has a need for N25 million and you approved N2.5 million, it means you have prepared from day one to accept default,” he said.
Odinaka Anudu (Lagos) & Harrison Edeh (Abuja)
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