The Challenging Lives of Nigerian Artisans and SMEs amid COVID-19

As you may well know, the Coronavirus pandemic has disrupted millions of lives in mostly negative ways. It is not just about the infections and the deaths, of which Nigeria has recorded 55,005 and 1,057, respectively. Instead, it is also about the economic impacts.

The Economic Impacts of COVID-19

Unfortunately, just like every other thing that is negative in Nigeria, those in the middle and lowest layers of the economic strata have been affected the most.  Business Elites Africa spoke with some petty traders, artisans, and small business owners, virtually all of whom have the same sad story to tell —COVID-19 has been the worst thing to happen to their means of livelihood in a really long time.

One could clearly see the sadness across Emeka’s face (real name withheld) as he narrated his story over the weekend. Emeka, who sells basic building construct materials somewhere in Ikeja Lagos, told our reporter that he had just used almost all his money to stock up his shop shortly before the lockdwon.

“I had a good feeling about 2020. And I had some pretty good plans, one of which was to scale up my business. So, in February I rented a new shop here because it is more commercial. I even borrowed some money from my friends and combined it with my savings just to stock up my shop. Sadly, it was barely a month afterwards that the lockdown began.

“I could not go to the shop. Nobody would even come to the shop anyway because there were no construction activities going on. I was broke and just praying that the lockdown would end soon. Unfortunately, even though the lockdown has ended, market has not really picked up pace,” Emeka said.

He went on to narrate how he has continued to struggle ever since, even as some of the friends he borrowed money from are not asking him to refund them because they too are broke and in need of money.

In a related development, Mr Yakubu who owns a mechanic workshop somewhere in Yaba, lamented to Business Elites Africa how he struggled to feed his family during the lockdown. He told us that “because of the lockdown, many people were not moving about. And because of that nobody was bringing vehicles for me to repair. It affected me o. I can’t remember the last time I was so broke. But I’m happy that things are getting back to normal.” 

More Insight into the Challenges Facing SMEs during COVID-19 Pandemic

In June this year, Nigeria’s foremost MSMEs support provider, Fate Foundation, published a research report in partnership with BudgIt which detailed the challenges facing Nigerian small business owners amid the pandemic. Part of the report noted that “94.3% reported being negatively impacted by the pandemic particularly in the areas of Cashflow (72.1%), Sales (67.7%) and Revenue (59.2%). Despite the negative impacts of the pandemic, 47.1% of respondents were positive that their businesses will survive the pandemic with 22.8% being unsure while 30% indicated that their businesses will not survive the pandemic.”

Mixed Feelings Trail Reopening of the Economy, as Economic Challenges Persist

It has been more than three months since the lockdown in major cities like Lagos was lifted. And while everyone is back to work, the economic situation is not yet as pleasant as it is supposed to be. Latest Nigerian economic indicators such as the GDP, inflation rate, and unemployment rate are all in negative territories. Gross Domestic Product (GDP) in real terms declined by 6.10% (year-on-year) in Q2 2020. The country’s inflation rate is at 12.56% as of June 2020, even as unemployment rate jumped to 27.1% as of Q2 2020. In addition to all these, Nigeria is battling with what is arguably its worst forex crisis in years.

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In view of the foregoing, the situation is grim for Nigerian SMEs. Some of the small business owners who spoke to Business Elites Africa are unsure how long it will take before their businesses to get back to pre-pandemic stage, in terms of growth rate. In the meantime, some of the SMEs with employees have had to lay off their workers because of their financial challenges which have made it difficult to pay. Apparently, this is one of the things that contributed to the unemployment crisis.

“I had to lay off about five of my staff as soon as the lockdown was announced. I knew knew that with the lockdown, business would be paralysed and that was no way I could pay them. Even now that the lockdown has been called off, business has not really picked up. So, I have not hired back some of them,” said Kingsley who operates a small restaurant in Lagos.

The SME owners also complained about the lack of proper financial/economic stimulus in order to really help cushion the effect of the pandemic. Agreed, the Central Bank of Nigeria recently began disbursing a N50 billion COVID-19 loan targeted at SMEs. Yet, many of the SMEs have complained about their inability to access this loan.