National Survey On The Impact Of Covid-19 On Nigeria Private Sector
In recent months, Nigeria and indeed the world have witnessed the ruinous comatose that has hit virtually every sector of the global economy. In Nigeria, the debilitating effects of coronavirus is currently reverberating across all the major sectors with the greatest impact on the private sector, which is the foremost driver of the economy. In view of the undeniable evidence of the economic slump sequel to the outbreak of the coronavirus (COVID-19) pandemic, The Africa International Trade and Commerce Research in partnership with the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), O-analytics Research and Development Initiative (ORADI) and International Trade & Research Centre (ITRC) have undertaken a national survey from March to April, 2020, to trail the effect of the COVID-19 on the Nigerian private sector. The survey findings provides objective evidence on the impact of the COVID-19 on the economy’s international trade with a specific focus on importers. The analysis covered businesses across the six (6) geopolitical zones of the Nigeria.
The result of the survey evidently revealed that 97 percent of businesses that participated in the study suffered revenue loss due to COVID-19 outbreak and the subsequent lockdowns. More than 66 percent of the businesses that participated in the study are micro businesses employing less than 10 staff. This is expected since the majority of the businesses are micro and small businesses, which are basically managed by Nigerians. 88 percent of the businesses are Nigerian owned, 8 percent have Nigerian and Foreign ownership structure, while 4 percent have foreign only ownership structure.
When respondents were asked about their pre-COVID-19 business travel plan to source for products and raw materials, 67 percent responded that their travel plans have been truncated due to lockdown due to COVID-19 outbreak, with 43 percent of private businesses sourcing their products and raw materials from China alone, with only 19 percent sourcing their product and raw materials from Africa. This explains the dominant position of China in the country’s supply chain and it partly reveals the low level of trade between Nigeria and other African countries. This strong external dependence on the economy on foreign nations especially outside Africa can be attributed to the severity COVID-19 will have on the economy.
It is also troubling to note that, 89 percent of Nigeria private sector businesses asserted that their business prospect for the year 2020 has been negatively impacted. One interesting outcome of the survey lies in the fact that 79 percent of the respondents opined that Africa can be their alternative market destination for sourcing products and raw material; if only the following issues can be addressed; improve the quality and standards of products and raw materials, access to information of where to source the products, because information asymmetry constitute a great challenge and dampens this possibility.
Our findings on the impact on job creation reveals that 72 percent of the private sector businesses surveyed experienced a contraction in job creation, due to COVID-19 outbreak as majority are rattling for new ways to be in business. The only strategy most of the businesses are adopting is to cut down their staff strength.
A number of the Nigeria Private sector businesses lack any form of corporate risk management system that should have mitigated drastic loss arising from unforeseen contingencies. Our findings further revealed that 60 percent of Nigeria’s private sector does not have insurance policy or risk management system in place, while 40 percent does. The absence of risk management system is perceived to be among the strongest reasons for the sudden flop of many of the private sector businesses. In response to the colossal loss already incurred by many of the businesses, the majority representing 89 percent expressed interest to have insurance policy in place in order to shield them from subsequent or future global crises.
Our findings recommendations and policy actions for the government of Nigeria and private sectors.
The Nigerian government should make the provision of sufficient and satisfactory healthcare reforms as a top priority. Provide incentives and safety net to those mostly affected: the country is currently experiencing a novel economic crisis of simultaneous shock from both supply and demand side arising from both primary and secondary waves of the corona virus. The possible way of containing this is through policy mix (expansionary fiscal and monetary policy).
The FGN should also ratify the African Continental Free Trade Area agreement. Findings from this survey reveals that 19 percent of Nigerian businesses are already sourcing their products and raw materials from African countries, while, 79 percent of respondents have expressed interest to consider an alternative market and are open to sourcing their products from other part of African countries.
The COVID-19 pandemic also presents an opportunity for the insurance industry in Nigeria to design policies for businesses. Nigeria private sector should consider taking up corporate insurance policy that will cover their business against internal and external uncertainty. Our findings revealed that most businesses that were severely affected by COVID-19 have no risk management system for their business, are now willing to have one.
Nigeria private sector business should also leverage on the current situation to diversify their business. In every adversity there is are opportunities. Micro, small and medium enterprises should be flexible to explore deliverables in sectors made active by the pandemic.
Finally, we recommend the increase use of verifiable technology and e-marketplace platforms for business operations in Nigeria. This should include business meetings, customer relationships, business promotion and marketing, procurement, and customer services, depending on the sector the business operates from and the type of business. This will help reduce cost and increase in efficiency, during this COVID-19 and post COVID-19 pandemic.
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