DESPITE about N2.3 trillion interventions by the Central Bank of Nigeria (CBN) and the Federal Government, 73 per cent of businesses in Nigeria reported that they were faced with cash crunches in 2020 following COVID-19 lockdowns. However, 57 per cent of businesses were able to maintain their staff strength during the pandemic.
Many businesses, particularly informal ones, also reported poor access to credit and capital to sustain their enterprises, including difficulty paying fixed costs like rent. Many business owners have had to rely on personal savings or leverage support from families and social networks in order to sustain their businesses.
The necessity of ensuring access to cheap credit or loans and possibly targeted funds to support enterprises in struggling sectors is further highlighted through the results.
In addition, 43 per cent of the 3,000 businesses from formal and informal sectors surveyed shed 20 per cent of their full-time workforce.
A new report released on Tuesday by United Nations Development Programme (UNDP) and National Bureau of Statistics (NBS) says, “While there have been promising signs of recovery this year, COVID-19 has had an outsized socio-economic impact on Nigeria.
“From disruptions in supply chains, to ongoing supply and demand shocks and a drop in consumer confidence, these challenges are expected to leave a lasting impact on the businesses and enterprises that make up the backbone of the economy.”
According to the report titled, ‘The Impact of COVID-19 on Business Enterprises in Nigeria’, 81 per cent of the enterprises disclosed that they experienced a decline in revenue due to secondary impacts of COVID-19 in 2020.
Median loss in revenue reportedly remained at 44 per cent, in comparison to 2019 revenues.
Also, one third of the businesses indicated that they know of businesses that have permanently closed due to operational challenges resulting from the pandemic.
Against the backdrop of a decline in production of goods and services and an increase in operational costs, 55 per cent of business enterprises were utilising less than 60 per cent of their capacity.
To counter the impact of containment measures on operations, 77 per cent of business enterprises reported that they either reduced working hours or either temporarily or permanently had to lay off workers.
Nonetheless, “the utilities and agriculture sectors emerged as relatively less impacted and some enterprises even reported gains compared to those in the transport and mining and quarrying sectors, for instance.”
In a similar vein, the UNDP and NBS said 20 percent of Nigeria’s full time workforce lost employment during the pandemic in 2020.
According to the News Agency of Nigeria (NAN), the report highlights the significant decline in revenue faced by enterprises and establishments across the country as a result of the pandemic.
It based its findings on indepth interviews with almost 3,000 businesses from both the formal and informal sector across major industries of the economy.
The report said that 81 per cent of enterprises interviewed experienced a decline in revenue and 73 per cent stated that they faced liquidity challenges due to secondary impacts of COVID-19 in 2020.
“Other operational challenges included access to credit and capital, high expenditure on utilities and the lack of an adequate social safety net, especially for informal enterprises.”
However, data from the report suggests that businesses were likely to continue experiencing the impact of the pandemic even after the easing of public health measures.
