Three out of every 10 Micro, Small and Medium Enterprises (MSMEs) operating in Nigeria will not survive through the coronavirus pandemic, according to a new survey, showing how bad businesses in the segments have been negatively affected since the outbreak started.
Dubbed “the impact of Covid-19 on Nigeria MSMEs”, the new survey done by FATE Foundation in partnership with BudgIt Nigeria, was designed to give insight into the prolonged impact the COVID-19 pandemic is having on MSMEs in the country.
Responses were gathered from 1,943 businesses, 80 percent of which were micro businesses polled across various sectors in the country.
The survey showed that the impact of COVID-19 on businesses in the segments has been brutal with 94.3 percent of them reporting they are worse-off on all financial fundamentals from sales, to revenue down to their cash flows.
That would deal a big blow to the employment, income expenditure, poverty rate and real gross domestic product growth of Africa’s largest economy, which looks onto businesses in the segment to employ about 84 percent of its working population, and rake in as much as 48 percent of national GDP, according to PWC data.
On employment, Nigeria could see a host of its population becoming jobless, a move that would further exacerbate the country’s unemployment rate which is already at a record high of 23 percent as of third quarter, 2018, which happened to be the last time state-funded data agency, NBS, updated the figures publicly.
From the survey, about 80 percent of businesses reported that they were likely to lay off employees.
Their decision to retrench staff is due to a number of factors including prolonged periods of the pandemic, inability to pay staff, poor sales and restriction of movement.
Those who might manage to survive the tsunami of being laid-off from work, would see a deep cut in income which could go a long way in threatening the livelihood of many Nigerians and push more people into poverty.
The new survey is somewhat in tandem with that conducted by the NBS when it surveyed 1950 households, showing that about 4 out of every ten of them said they lost their jobs due to the pandemic, while 79 percent saw their total income decreased since mid March, almost about one month after the index case was first reported in the country
Meanwhile, 47.1 percent of MSMEs surveyed said they were positive that their businesses will survive the pandemic while 22.8 percent were indifferent
As blood is important to man, the same way it is that MSMEs are important to the growth and survival of any economy hence, effectively supporting them especially at a time like this when the global economy is on the verge of a recession, should be a priority path for stakeholders as they work towards economic recovery and slowing down job loss, analysts have said
As a way of supporting households and (MSMEs) that are affected by the coronavirus pandemic, the Federal Government through the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance, Budget, and National Planning, rolled out some monetary and fiscal measures to help mitigate the impact of the pandemic on the economy, Nigerian businesses, and households
One of such was the introduction in April of a N50 billion Targeted Credit Facility (TCF) as a stimulus package for SMEs.
While critics have raised concerns that the intervention fund is too little to move the needle for the country’s over 41 million MSMEs, many businesses have complained of not being able to access any of such stimulus from the government yet. From the survey, 94.2 percent of MSMEs said they haven’t received any support whatsoever.
This might be more crisis looming for Africa’s largest economy whose economy is already showing signs of weakness from the devastating effect of the COVID-19 pandemic.
The Nigerian economy slowed 1.87 percent in the first quarter of 2020 from 2.55 in Q4’19, owing to a slower growth in both the country’s oil and non-oil sector. The country has also been tipped by the World Bank to contract as much as 3.2 percent by year end.
But despite the hurdle, Nigerian businesses have continued to show resilience as they rethink various strategies that would help them in cushioning the impact of the pandemic.
From the survey, about 49.7 percent of entrepreneurs said they see opportunities to create new products/services while about 42.3 percent of them see opportunities to expand/diversify their businesses.
The survey reports made several recommendations to the governments that would support MSMEs in surviving this period, and these are highlighted below