COVID-19: Small Businesses Count Losses, On Brink Of Collapse
Many Small and Medium Enterprises (SMEs) across Nigeria are beginning to run into losses and may likely collapse as a result of the negative effects of measures introduced by the federal and sub-national governments to contain the spread of coronavirus.
The lockdowns and ban on intercity travels have taken a toll on small businesses, inching them closer to the brink of extinction.
A phone accessories retailer in Abuja, Gabriel Shima, feared that most phone batteries in his shop may never be sold as the lockdown in the city has allowed them run to their expiry dates on the shelf.
Shima told Daily Trust on Sunday that some of the batteries might have exploded due to excessive heat as the shop has been under lock for a long time due to the lockdown.
The retailer said he ordered the goods on credit from a wholesaler in Lagos and feared that he might default in payment.
A Super market Shima’s ordeal is not different from the accounts of several other small entrepreneurs across the country who have been impacted negatively in one way or the other.
Shuaib Abdullahi, a fish farmer, said his business is at a standstill presently. “We have been forced to sell our stock and go into self-isolation, what do you expect? Shops and open fish markets in the FCT have been closed,” he said.
Abdullahi said the cost of animal feeds has also gone up, adding that though they had set a target for the year, the COVID-19 pandemic would slow down production.
Another entrepreneur and CEO of ShoeSpeed based in Lagos, Abiodun Folawiyo, said the effort to combat the ravaging coronavirus has affected sale of products.
“Customers’ attention has now been diverted to the purchase of items like soap, hand sanitiser, food and personal savings of cash for other eventualities as a result of the pandemic.
This is so because no one really knows the exact time the pandemic will be contained,” Folawiyo said. However, Grace Uzorka, whose company makes various spices for food, said sales had been good.
“It’s a very difficult time for businesses but for mine, being a food business, sales are coming in at the normal rate, especially because we do nationwide delivery.
“The challenge we now encounter is difficulty in getting raw materials for production due to the closure of some shops and markets in most states of the nation. But in all, we give glory to God,” Uzorka said.
Many SMEs have shutdown – Experts The National Vice Chairman (North Central) National Association of Small and Medium Enterprises (NASME), Engineer Auwal Ibrahim Bununu, said the COVID-19 pandemic has forced the shutdown of many MSMEs which is very dangerous for the economy.
He said, “The N50 billion intervention fund which the government said it would release to cushion the impact of the pandemic on MSMEs is good but should be increased to N1trillion.”
Meanwhile, the National Coordinator of Association of Women in Micro, Small and Medium Enterprises (AWIMSME), Mrs Nancy Nathaniel, said the impact of the 5 percent downward review of interest rate on intervention schemes by the Central Bank would encourage MSME operators to thrive with the economic challenges which have come with the COVID-19.
Similarly, the president of National Association of Small and Medium Enterprises (NASME), Prince Degun Agboade, urged the CBN to make all the intervention funds available to MSMEs. “We at NASME hope the CBN will see to it that the funds are released to MSMEs and it will not only be pronouncements but getting the funds to the end-users,” he said.
A restaurant Border closure rattles businesses in Bayelsa SME operators in Bayelsa State are complaining about the effects of COVID-19 on their businesses, especially as the state government imposed a one-week lockdown and closure of boundaries in the state.
Public places like motor parks, drinking joints, relaxation centres and the rest where businesses thrived before now are already closed for business.
A food vendor in Yenagoa, Mrs Ikwo Dominic, told Daily Trust on Sunday that before the outbreak of coronavirus, her business was running well, but now, people are even afraid coming to her restaurant. She said the closure of boundaries had made prices of food items surge, and this had affected the food business because people do not even have enough money to eat at the restaurant.
A phone repairer at the phone village in Yenagoa, Mr Ifeanyi Godstime, said with the stay at home order, and closure of the mechanic village, his business had crumbled and left him with no means to provide for his family.
He said: “We are just here suffering at home, our legitimate hustling has been jeopardised by COVID-19, nothing to fall back to again.” However, operators of Point of Sale (POS) outlets in the state said COVID-19 has boosted their businesses because customers who could not stand the stress in banks are now exploring their options.
SMEs innovate to survive in Borno Na’ish Kitchen in Maiduguri, Borno State, is one of the SMEs gasping for breath under the crushing weight of COVID-19.
It is into production of confectionary, snacks and sundry ladies’ items like hand bags. “Since the beginning of COVID-19 we have generated virtually no income,” Aisha Musa Kida, the proprietress, told Daily Trust on Sunday. Speaking with sadness, Kida said, “Everything has been at a standstill.
For the first time since the establishment of Na’ish Kitchen, the Ramadan package comprising new dishes which we teach ladies to prepare at home for Iftar (breaking of fast) is not being taught, it has been suspended because of COVID-19.”
She said the enterprise had diversified into the production of personal protective equipment. “We now produce 100-percent-curtain face masks which have already been approved by the Borno State Committee on COVID-19, we are targeting the production of 10,000, not for sale, but as our contribution to the state government to control the spread of Corona virus,” Aisha Kida said.
“You can therefore see that business is down, no thanks to COVID-19, this is the situation majority of SMEs are across the country in this period of COVID-19,” she observed.
SMEs seek bailout in Oyo For the federal government to support SMEs in the country, stability of the currency and financial support for business owners are key areas to focus on, the chairman, Diamond Group, Dr. Olumide Ajayi, has said.
He said fluctuation of the currency is discouraging business owners in the country, adding that many businesses may fold up after the pandemic if the value of the currency continues fluctuating.
A businessman, Chief Wale Oladoja who deals in precious stones, urged government to stop borrowing and never yield to the calls to devalue the naira. Oladoja said the effects of the pandemic may affect many businesses, therefore there is need for the government to support business owners with soft loans to augment their businesses.
“Many people are financially down as we speak. They cannot go back to their businesses after the pandemic, except the government supports them. Such people need soft loans to go back to business. For those who are financially sound, they need currency stability,” he said.
A bakery SMEs demand tax holiday in Abia Most operators of SMEs operating in Aba, Abia State who spoke to our correspondent said the lockdown had crippled their businesses. Some of them said they had perishable products in their respective stores, and were unable to gain access to them because of the lockdown and the curfew put in place by the state government.
A cross section of traders said the Abia State government should give them a one month tax holiday to enable them build up their businesses. Some of them demanded for soft loans to enable them return to business, considering the fact that they spent a lot of money during the lockdown without making any money.
SMEs go virtual in Kaduna Nabila Usman who runs a cosmetic shop in Kaduna said she had to deliver goods to her customers at home due to the lockdown. She said, “Since the state government asked residents to lock up their businesses, I had to open a WhatsApp group for my customers so that I can supply products to them during the two-day window we are allowed to go out.
“I was forced to device a way to get funds for myself and I must say it has been very challenging coupled with the fact that during those two days, traffic in Kaduna is at another level, so it takes longer to get from point A to point B.”
SMEs hike prices over high demand in Lagos The production manager of a bread company based in Mushin, Lagos, Mr. Ajao Ismail, said the lockdown had led to an increase in demand for their product as a few companies now produce bread.
He said the price of bread had increased during the lockdown due to increase in the price of ingredients used in making it. A N250 bread is now sold in most parts of Lagos for N300 while that of N400 now sells for N450. He said, “Powdered milk is the costliest because within two weeks, there was N10,000 addition.
Based on the quality of milk we use, we buy a 50kg bag at N37,000. As at November 2019, it was N29,000. Importation of milk was stopped so that local ones can thrive. That made the price of milk to increase drastically in January/February from N29,000 to 36, 37 and sometimes N38,000.
When the index case of coronavirus was confirmed in Nigeria, it skyrocketed to N48,000 in the first and second week in March. Ever since, it is being sold for N48,000.” Aside milk, he further said, butter too was N5,900 or N6,000, now it is sold for N7,500.
The price of preservatives has increased with N2,500. It was N10,000 but it now sells for N12,500 and N12,600. The price of yeast has increased too. All those items are no longer being imported from China, so, people sell what they have in stock at the moment.”
A baker in Lagos, Mrs. Rukayat Rasheed of Rhoras Cakes and Pastries, lamented that the lockdown had affected her business as activities were on a standstill. As a baker, her products are mostly needed for ceremonies such as birthdays, weddings, seminars, conferences and burials among others.
With the ban on social gathering and restriction of movement, her business has been practically brought to a halt. “Clients who had ordered for cakes and pastries before the lockdown all called and asked me to stop production because their events were cancelled and postponed in some cases.
Delivery of the ones already baked became a problem. I remember delivering a cake during the lockdown using motorcycle and before getting to the client, the cake had smeared and the client was not happy but understood the situation,” she said.
She also raised alarm over the hike in prices of baking ingredients, which she said was a big challenge to the business if at all they must work skeletally. Mrs. Oluigbo Juliet Chinemerem, the CEO of Jules Pro-Selectibles and Logistics, deals in groceries, gift items, souvenirs, kitchen wares, household items, fashion accessories and logistics.
The lockdown, she said, had affected her as she said it led to what she described as withdrawal of cash in circulation since everyone at the period was scampering to save and maximize the little money they had to make only food purchases and other basic needs.
“The fact remains that nothing works anymore, a lot of spending is done with no income, which in the long run leads to poor standard of living.
Also, because the government palliative did not reach many residents, we have had to tamper with the business capital because all we needed during the lockdown is survival,” she said.
