The coronavirus pandemic and the lockdown aimed at containing the virus have impacted the cash flow, sales, revenues, and ability of micro small and medium enterprises to pay salaries and wages of workers.
According to a new study conducted by Fate Foundation, about 80 per cent of the businesses said they were likely to lay off employees due to prolonged periods of the pandemic, inability to pay workers, poor sales and restriction of movement.
In the report, titled ‘Impact of COVID-19 on Nigerian MSMEs’, 82.8 per cent of the businesses said that they would likely lay off between one to five employees.
Despite the negative impact, about 47 per cent of businesses were optimistic that they would survive the pandemic.
While 30 per cent were certain their businesses would not survive the pandemic, 22.8 per cent were unsure.
Majority of the entrepreneurs listed cash flow, sales, revenues, salaries and wages as areas where they urgently needed support, saying they were not receiving any form of support as at the time of developing the report.
Others stated that they would like support in the area of funding, access to markets and business support.
“Given that 94.2 per cent of our survey respondents stated not receiving any support at the time of completing the survey, the COVID-19 pandemic presents a major crisis for most Nigerian businesses who were already challenged by a recent recession and slowing economic growth,” the report said.
The foundation suggested that adequate support to MSMEs be made a priority as stakeholders work towards economic recovery and slowing down job loss.
Despite the challenges facing these entrepreneurs, findings of the study showed that 49.7 per cent of MSMEs were ready to create new products and services while about 42.3 per cent of them saw opportunities to expand or diversify their businesses.
“For the ecosystem, stakeholders who are able to provide financing opportunities, support packages through grants, interest-free loans and bridge financing to meet critical needs such as salaries and working capital are particularly important at this time. The funds must be easy to access, clear in their terms and prompt to disburse.”
While acknowledging that the Federal Government through the Central Bank of Nigeria has set up the N50bn Targeted Credit Facility as a stimulus package to support households and MSMEs, analysts at the foundation said the fund might not be sufficient to support the over 41 million Nigerian MSMEs.
They called on the governments at federal and state levels to establish more COVID-19 MSME funds.