• Friday, March 29, 2024
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SMEs struggle as ease of lockdown fails to improve margins

SMEs struggle as ease of lockdown fails to improve margins

Micro, small and medium enterprises (MSMEs) are having a hard time selling their products despite the gradual ease of lockdown that started many weeks ago.

They say most of their customers are cash-strapped and cannot spend as much as they did pre-COVID-19 era.

Temiloluwa Smyth, CEO of Lagos-based fashion outfit, Smyth Couture, says despite business resumption, people were yet to start making outfits as they used to pre-COVID-19, and attributes the situation to some of his clients being laid off from work, which made it difficult for them to afford new outfits.

Oyedeji Dolapo, CEO of Ibadan, Oyo State-based D’Oye Edibles, maker of popcorns and drinks, notes that since resumption of business, she had cut her production by 50 percent as her business was yet to pick up.

Read also: How SMEs can mitigate COVID-19 impact

“I am hopeful that, overtime, business will pick up,” she says.

COVID-19 has hit over 10 million people worldwide, killing half a million. In Nigeria, more than 25,000 have been infected, with over 550 dying. The virus has changed all activities globally and locally, affecting lives and sources of livelihood. Countries, including Nigeria, have stepped up measures to curb the spread of the virus, but such steps have hit businesses hard.

MSMEs are among the worst hit as some of them contemplate shutdowns or new businesses. They account for 90 percent of all businesses in the country and contribute 50 percent to the GDP.

BusinessDay gathers from interactions with MSMEs across the country that resumption of business activities has not been rosy, as some MSMEs say they have had a 20-60 percent drop in their margins.

“My revenue has dropped by 60 percent since the lockdowns started,” Onyeka Iwoma, CEO of Igraduel Limited, a trader in Kaduna, states.

“I hope that the ease of inter-state lockdowns will make a difference because my business depends so much on inter-state movements,” he says.

Johnson Obasi, CEO, Johnsfrank Global Resources Nigeria Limited, an Aba-based footwear manufacturer, who now produces personal protective equipment (PPE), says since the beginning of the pandemic, business activities in the commercial hub of Aba had taken a different turn.

He notes that his booming shoe business is struggling as people are more concerned about protecting themselves from the virus.

“Even as a PPE production business is not moving as fast as it should due to various reasons, which include the scarcity of raw materials, a cut in supply chain and restricted market access,” he explains.

Aba flourishes on the importation of fabrics. However, since the pandemic there has been a supply glut and this has caused artificial scarcity of raw materials, leading to a hike in the price of the inputs.

“This is further aggravated by the import restriction and high cost of dollars,” Obasi further says.