COVID-19

Supporting Nigerian businesses during COVID-19

As our global economy goes through the deepest recession in decades, businesses everywhere are struggling with the financial consequences of the coronavirus. This is no different for business owners in Nigeria. 

In this blog, Andrew Thorburn, our Team Leader on the Foreign, Commonwealth and Development Office's LINKS programme for economic growth in the country’s North, shares some key findings of several surveys the LINKS team has conducted over the last couple of months.  
When Nigeria went into lockdown due to the COVID-19 pandemic in March, we immediately tried to understand how we could support states governments and local companies to mitigate the impacts and the disruptions caused. What we found was worrying: more than 80 percent of business owners were seeing a drastic drop in revenues, while nearly a third were planning to make lay-offs – and 10 percent were concerned that they might not survive the crisis at all. 

These business surveys we were carrying out – conducted in cooperation with Local Business Chambers in Kano, Kaduna and Jigawa states – helped inform the LINKS team and our stakeholders about the state of the northern Nigeria business landscape and the findings show us that companies are enduring heavy challenges from the financial impact of the pandemic.

Almost 60 percent of affected micro and small-scale businesses reported that revenues had fallen by at least half, posing a major risk to their future viability. Looking across various sectors, we identified four major findings:

  • The agriculture sector has been hit hardest: Compared to the service and industry sector, agricultural firms suffered the highest level of losses due to severe transportation and distribution problems. Businesses operating in the service sector have been less affected in comparison as they may have been able to continue to work from home, thus preventing losses at the extreme end.
  • Women and women-owned businesses are at greater risk: Businesses that are fully or partially owned by women were 10 percent more likely to report negative impacts such as decrease in sale and loss in capital. Compared to their male counterparts, they had to lay off more workers and see a total shut-down as a likely outcome of COVID-19.
  • Transport volumes have nearly halved: On average, the number of trips transporters were making on key routes between north and south went down 47 percent. Due to COVID-19 restrictions, transport costs have increased by 27 percent.
  • There is a danger of food shortages: The restrictions on transport movement have caused disruptions in supply chains and farmers expect their productivity to fall by over 20 percent in the upcoming season. If left unaddressed, this could lead to a risk of price surges and food shortages within the next three to six months.

Our interviewees identified funding as the most critical support mechanism for their businesses to survive. They also highlighted problems – for example inconsistent communication regarding restriction rules – that required urgent responses from authorities.

For the people of Nigeria, there are challenging times ahead as reduced government revenues threaten education, healthcare and overall household welfare. People who are experiencing lay-offs and reductions in salary are now in urgent need of employment and steady incomes to provide for their families. Employers, on the other hand, are generally used to dealing with crises, and are resilient and creative enough to adapt to this new reality as well and find ways to keep commercial activities going. As a result, many are already looking for new business opportunities or are planning to build new lines of business for future resilience.

We understand that this is a pivotal moment as well as an opportunity for Nigeria’s economy and we, as the LINKS implementation team, are supporting companies of all sizes to innovate, survive and grow.

Facilitating access to finance is crucial to achieve this. We are seeing this everywhere in the world right now, whether in the U.S., the UK or Germany – when businesses run out of money, the national economy risks going into free fall. In Nigeria, we are therefore working with the Government to ease the flow of finance. For example, we are piloting a programme in Jigawa which supports smaller-sized businesses gaining access to government funds through provision of a Business Advisory Service.

We also adapted our own work on the programme to directly contribute to Nigeria’s fight against the virus: We instigated a new initiative to help train 1,000 Master Craft Persons in the tailoring sector to produce high-quality and safe face masks.

Sure, the future has become a lot more uncertain due to COVID-19. But whatever happens next, it is important to continue building value chains and increasing incomes at this time. Business owners are responding rapidly to the new circumstances and many believe they can recover from the crisis within a year. Likewise, we will keep on researching and collaborating with governments and businesses to identify opportunities that pave the way for investors to create jobs and income and support existing businesses to reset for post-pandemic growth.

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