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When President Buhari, on March 29, announced a temporary restriction of movement in Lagos, Ogun state and Abuja, many people believed it was needed to prevent a COVID-19 outbreak.
But as many expressed satisfaction with the lockdown news, there was another group of people who were worried that even though a lockdown might prevent them from the coronavirus, it will stall their livelihood and worsen their lives.
One of such persons is Adewale Abiodun, a 25-year-old primary school teacher in Lagos state. When the lockdown announcement was made, he and the school authorities thought it would only be for two weeks and they would resume the school graduation plans. What they did not know was that the two weeks were merely the start.
“We had made graduation party plans, but when COVID-19 happened, we couldn’t go ahead with the plans. And we had bought some things for the graduation party so when the COVID-19 started, we thought it would be 2 weeks but it went more than that, 5 weeks to 6 weeks plus, so all the materials we bought for the children became a waste, we could do nothing about that,” Adewale told NewsWireNGR.
As two weeks rolled into months of school closure, the immediate future became weary for Adewale and other teachers. School was locked, money spent on graduation was wasted, the school was not making any revenue; and having seen layoffs and salary-cut in other schools and affected sectors, Adewale understood that his livelihood was about to be hit.
Prior to the pandemic, Adewale had always struggled to live within his NGN 15,000 (about $39) monthly salary without accruing debts. And now, with no income or palliatives in sight, a disruption to his livelihood caused by the pandemic would increase his debt profile and the pressure from his creditors.
Like Adewale, many Nigerians as well as organisations’ survival have been put on the line by the pandemic. Either by inability to do business, layoff, voluntary resignation or reduced salaries, almost everyone has felt the financial pangs of COVID-19.
- A survey by the National Bureau of Statistics (NBC) reports that the pandemic reduced the income of 79% of Nigerian households.
- 42% of Nigerians lost their job to the pandemic within the survey period
- Nigeria’s unemployment rate as at the second quarter of 2020 is 27.1% meaning about 55,863,829 million Nigerians are unemployed.
For 29-year-old start-up founder, Babajide Oluwase, The pandemic brought a colossal challenge to his business. His startup, RenewDrive, is an agricultural firm that provides cooling services for farmers in Lagos and Ogun state. The nature of this business meant he had to regularly shuffle between these cities in order to oversee operations. But as the pandemic hit and lockdown was implemented, the business had to halt its operations, and that hit the business finances.
“Before COVID-19 we want to improve our process and scale up our plants. So we were building an improved version of our products, which we called 2.0 with some improved functionalities to serve our markets and our customers better. We had some components to be shipped in from outside the country, but we were unable to get our components on time and we were unable to move forward in product development.
“The second one is in terms of our regular operations. Because our service is providing cooling services to farmers that deal with fruits and vegetables. And you will agree with me that the whole COVID-19 thing brought about lockdown. Like now we have more of our operations in Abeokuta, I am in Lagos so I usually shuttle Lagos and Abeokuta, even though we have an onsite hub manager. Me and the other team members being unable to move as much as we can sort of hamper how well we can move and which also by extension affected the business well-being.”
About three months before the pandemic, 26-year-old Ibrahim Erinle just secured what he calls a good job as the Head of Operation in a Printing and Branding firm. But as soon as the pandemic thickened and the government ordered closure of non-essential businesses, his workplace stopped paying salaries. After waiting for a non-existent salary for 2-3 months, he resigned from the job in June and collected 30% of the accrued salary.
For Bisola Ologunde, a 25-year-old customer care service person, the pandemic paved the way to forced resignation of many staff in her organisation. When the lockdown was announced, the agency she worked for tried the work-from-home model to keep operation flowing, but the approach did not work so well and staff productivity declined. Soon the agency was under pressure from losing their accounts and the staff were under pressure for being laid off or asked to forcefully resign. Bisola became a victim of this forceful resignation, but it didn’t catch her unawares. She had seen the signs coming, so it came as no surprise to her when the HR asked her to resign. A month after the resignation, the agency lost their biggest client.
The financial turmoil of the pandemic was hard on Seyi Oriola and family. As a family of teachers, Seyi and his wife felt the financial pangs of the pandemic more than most families. While Seyi received 25% of his salary, his wife was without income for months. And that made him fall back on his consultancy business to make ends meet. He recalls the high point of the pandemic.
“There was the day I had N7,200 remaining in my account and it was trapped in the bank. I went to the bank to shout, I told them that if they don’t refund my money, I won’t leave the bank after waiting for 4 days. I was credited before leaving the bank that day.”
If the pandemic was bad for the formal sector, it was worse for the informal sector where the majority earn a daily wage.
A middle-aged woman who sells soap and other household care products narrates that the situation put her in a big financial mess.
“When the lockdown was announced, I was worried that markets would be closed and I wouldn’t be able to sell my products. But I wriggled through the problem because I thought it would only last for two weeks.”
When the lockdown was restructured and markets were scheduled to on some days, she felt happy that she could eventually sell. But that happiness was cut short because prices of products had gone high. She had spent part of her running capital during the lockdown, and customers had low purchasing power.
“I had to take an unfavourable N100,000 loan to balance things up with my business, but I hope I am able to repay the loan because prices of goods keep springing up.”
A nightclub disc jockey and father of one also complains that the pandemic put him in a survival pandemonium and he at some point resorted to begging for money.
Why the pandemic created financial hardship for Nigerians
As a highly infectious disease, the fear of COVID-19 is more than death and the damage it does to the body system. Experts fear the adverse economic effects of the virus once it hits a region.
As COVID-19 spread was about to hit Africa, the whole world feared that the virus would cause a deeper damage to Africa than the rest of the world.
And the reason is simple.
While the pandemic had caused many casualties in other continents, they had the resources to control fatalities that are not health related. Majority of these developed countries had a stable economy, they had the reserve to steady the economy and citizens enjoy some form of social securities.
This is in contrast to Africa, where the majority run a failing economy. The economic effect of COVID-19 was the last thing these countries wished for.
Ikemesit Effiong, the Head of Research at SBM Intelligence, explains how the COVID-19 pandemic caused a huge problem for Nigeria and many African nations.
“Covid exasperated already existing trends in economies. We barely crawled out of the 2015/16 recession, the purchasing power of Nigerians has been dwindling, food prices have been elevated, poverty has increased, insecurity as we all know has elevated levels.
Covid just deepened all these indices and now we have gone from very low growth to a shrinking economy. Food prices shut up because the border closure and it has negatively impacted all of those staples which Nigerians consume a significant amount. Chief among which is rice. The initial lockdown in Lagos, Ogun as well as the Federal Capital, which is a significant chunk of the national economy affected the significant majority of Nigerians who are daily wage owners because supply chains were squeezed, people could not move round to sell their wares, goods and services. That again put that added pressure on already squeezed family incomes. That largely accounts for the tip in consumer spending and that squeezed the revenue on many businesses.“
Palliatives from the government
If you conduct a random survey and ask people if the Nigerian government rolled out palliatives during the lockdown, you will get divided replies. While some people believe that they were not aware of any sensible palliatives given by the government, others who were beneficiaries of the palliatives will argue that the government played some part in cushioning the effect of the pandemic.
However, NewsWireNGR findings show that the palliative measures were poorly communicated and executed.
The importance of a palliatives during a pandemic cannot be overestimated. When a pandemic strikes, citizens’ livelihood are at risk. This is when the government is expected to stand up and give everyone a soft landing.
The Nigerian government claims to do this by providing free COVID-19 test centres, a three months interest holiday for those holding Tradermoni, Marketmoni, and Farmermoni loans issued by the Bank of Industry, Bank of Agriculture, and the Nigeria Export and Import Bank.
Also, the government kept paying the full salary of employers under them.
In addition, President Muhammadu Buhari launched a campaign for the direct distribution of food and cash to 3.6 million households that are considered to be vulnerable.
However, this vulnerability definition became the grey area of the palliatives. If these palliatives are for the vulnerable people in the society, who are the vulnerable people and how did the government decide the most vulnerable group? Looking at the government’s execution, that does not include Lagos and the cities that were majorly affected.
So this has made people fault the government’s response. Yes, the government might truy claim to have shared some palliatives, but it’s presence was not strong in the cities.
“For us, we thought it could have been better managed,” Ikemesit explains. First and foremost, the government decided to use it’s existing social intervention mechanisms in order to coordinate distribution of palliatives. The problem with that approach is that that social intervention mechanism was significantly lopsided towards a few states. So you have a situation where Jigawa and Katsina combined accounted for half of all the beneficiaries who were registered under the government social intervention programmes. It has been running for about two and half years now. And those two states boasted more recipients than the entire South. The argument you could make is that poverty is deeper and is grinding in the next North, but are disparities between poverty in the North and South that sparked? That is debatable, we can argue that depending upon the divide you belong too. It’s national reach was wobbled.
The private sector decided to come in and supplement the government effort under the Coalition against COVID-19 (ca-covid) umbrella. Again, the problem with Cacovid is that it was essentially the vehicle to funnel private sector resources and funding to support existing government’s priorities. We have established that those priorities in respect to economic palliatives were fundamentally flawed and the primary chunk of private sector funding was still channeled towards meeting government priorities, especially at the centre. So in that sense, critics of the government’s approach towards offering economic palliatives would have a very good point.”
Reviving the economy through policy changes
It is over 6 months since Nigeria recorded its first case of covid-19, and it is getting more important to revive the economy and restore people’s livelihood. But how do we get there?
Ikemesit responds, “Unemployment would get worse before it gets better, but I think we will get to mid 2021 before we start seeing unemployment go down. However, that would need many painful but needed structural changes to the way the economy is run. It will require it to get out of a lot of sectors that it currently distorts by its participation; there are largely Energy, oil and gas and power.
Also, policy making would have to shift from this current rent seeking, tax collection by all means approach to a smarter form of regulation. Government can’t create all the jobs, the private sector needs to step in and pick up the unemployment slack. But that is not going to happen under this regulatory regime. The government would need to prove that it can be much more friendly to all sizes.
Another key one for us is for the government to end all forms of direct and indirect subsidies. And to be fair to the government, its hands have been forced to take these drastic measures. We have data that shows that we are the cheapest place in West Africa to get fuel. That arbitrage in fuel prices has fuelled smuggling of the kinds that made some people stupendously wealthy. The government has gotten rid of that which is good, but the messaging should be more empathetic. The government cannot just toss it in our faces that it is ending the fuel subsidy regime. The government has to transit from removing subsidy for subsidy sake to removing subsidy in a way where the effect of that inefficient way of spending is channelled to a smarter way of spending.”
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