Businesses lost billions of naira during the five-week lockdown targeted at curbing the spread of coronavirus, according to separate reports by the Lagos Chamber of Commerce and Industry (LCCI) and the Enterprise Development Centre of the Pan-Atlantic University.
The lockdown has also forced small businesses to rethink their business models in order to stay afloat as the business environment gets tougher.
The Federal Government imposed a five-week lockdown in Lagos and Ogun states, as well as the Federal Capital Territory, Abuja, to curb the spread of coronavirus,also called Covid-19.
Though the lockdown was targeted at ensuring the safety of Nigerians, it has done a lot of harm on businesses.
According to a survey done by the LCCI, 64 percent of respondents (mainly business leaders and owners) said they lost below N500, 000 daily, while 16 percent lost between N500,000 and N1 million each day during the lockdown. Similarly, 12 percent lost above N5 million each day, while 7 percent incurred between N2 million and N4 million loss daily, during the period.
The LCCI found that 63 percent of respondents planned to downsize operations to minimize losses while 18 percent were willing to cut capital spending.
“This is unsurprising as businesses have not generated income over a five-week period and have lost trillions of naira in profit due to lockdown,” LCCI says in a report breakdown signed by Muda Yusuf, its director-general.
“This suggests that unemployment rate is expected to increase drastically post-lockdown except government takes urgent steps to support business owners towards surviving and ensuring business continuity.”
The chamber said such cost-cutting measures might see unemployment rate surge to 40-45 percent by end of 2020, from 23.1 percent currently.
“This has ripple effect on the Gross Domestic Product given that private consumption by households accounts for about 60 percent of national output,” LCCI further says.
Nigeria is world’s poverty capital with over 80 million people living in extreme poverty. Nigerians are the second most miserable people in Africa after South Africans, according to the 2019 Hanke’s Index. With coronavirus-induced lockdown, many will be out of job, thereby ballooning the already congested labour market and fuelling the possibility of higher crime rate.
Most of the respondents (41 percent) requested reduction in interest on loans, while 29 percent wanted tax waivers Seventeen percent were canvassing import/demurrage waivers as 13 percent called for extension on loan repayment.
The chamber calls for substitution of debts with equity, urging the government to redesign or develop national policy to protect jobs and income. Respondents were from various sectors, including energy and agriculture.
Similarly, the EDC survey on the impact of Covid-19 on MSMEs shows that 93 percent of small businesses reported decline in revenue while 89 percent admitted having issues in their supply chains.
“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 says.
Due to the influence of technology during the lockdown, 88 percent of MSME owner-respondents said they would tinker with their business models, with 47 percent likely to consider new businesses due to the harsh realities of Covid-19 pandemic.
Fifty-seven percent reported that their sales had been affected, just as 52 percent had issues with cash flow, according to the survey.
“The results suggest that many businesses are financial fragile,” EDC says.
“Some MSMEs report that they only have cash to cover for a short period of time,” EDC further says.
More than 55 percent are considering laying off employees, while 44 percent who are reluctant to lay off workers would consider salary cuts.
MSMEs now see more need to collaboarate and partner with each other as some of them now offer price cuts and promotion, the survey shows.
However, the majority of MSMEs (83 percent) believed that their business would survive the pandemic and they would bounce back, the EDC report says.
The EDC says MSMEs require deliberate support services to manage the post-Covid-19 period.
