COVID19: The impact on Small Medium Enterprises & Way Forward.
The opportunities that lurk in the Post-COVID19 in the African Economy.
“The crisis caused by the coronavirus pandemic is plunging the world economy to depths unknown since the Second World War, adding to the woes of an economy that was already struggling to recover from the pre2008 crisis. Beyond its impact on human health (materialized by morbidity and mortality), COVID-19 is disrupting an interconnected world economy through global value chains, which account for nearly half of global trade, abrupt falls in commodity prices, fiscal revenues, foreign exchange receipts, foreign financial flows, travel restrictions, declining of tourism and hotels, frozen labor market, etc.”
The world’s statistics on the novel coronavirus stood at 5,321,814 (Coronavirus cases), 340,286 (Deaths) and 2,170,664 (Recovered) as at the time of compiling this article. Since the outbreak of coronavirus in Wuhan, a commercial city in China last year which earned its the popular nomenclature - COVID19. The virus has spread across several other countries which have left the world with a double blow - the threat to health (lives) and economy (businesses).
Nigeria is not exempted from this as the pandemic is ravaging what is left of our health sector. Part of the guidelines given by the World Health Organisation (WHO) to curb the spread of coronavirus was to ensure there are social distancing and restrictions of movement. As a response to WHO’s call, several countries had to go on total lock-downs which directly pose a global threat to international trade, local business transactions and so on.
This global threat has made third-world countries especially Nigeria’s economy sinks into the abyss. Thus, affecting most business owners especially SMEs as the figures are not in their favour and the odds are gradually increasing by the day due to the falling economies. Although, Nigeria’s economy pre-COVID19 has been dwindling as the price of oil at the world market is digging for well. We’re in such a critical period thus the government, private sectors and other stakeholders need to be proactive in their war against this pandemic to salvage the dwindling economy.
To enumerate the proactive measures and strategies, we are going to look at it under these headlines; The effects of the virus on the business sector and way forward (post-covid19 opportunities).
Effects of the virus on the Business Sector:
From indications, the African economy is not immune to the global outbreak of this disease as its battles with a recession at this perilous time. According to an article from the African Union (AU) titled - Impact of Coronavirus on the African"‘s Economy”, which predicted at least 20 million jobs loses across Africa during and after coronavirus and a rise in global unemployment to be 24.7 million (high scenario). Although, the statistics did not show where the figures are concentrated. But there is a pointer to the informal sector (such as Macro and Small Medium Enterprises) since they contribute the largest quota to the employment rates compared to the formal sector.
African commerce is dependent on the European Union, the United States and China ( the manufacturing hub of the world). And since global lockdown took place in China, which has brought most manufacturing factories across the globe to their feet. The side effect is on the supply chain as it affected the productivity rate of most SMEs in Africa.
Nigeria pride in the wealth of its oil wells and it is the largest revenue source for financing her economy but paradoxically the economy is unstable. The oil market has been fluctuating since 2014 when it hit below $60/barrel. But the global market sinks when the oil market records an ATL during this pandemic as the price of oil plummeted below $30/barrel. Most oil-producing countries especially Nigeria and Angola should brace up for the big hit as the demand for oil in the global market is rapidly low due to the international restrictions and the price war between Saudi Arabia and Russia.
The crash in oil price is directly proportionate to the devaluation of the naira against the dollar in the world market. And this will adversely affect the GDP, production and importation of raw materials for businesses Post-COVID19.
Way Forward (Post-COVID19)
Amidst this angst, opportunities abound for Small Medium Enterprises (SMEs). The post-COVID19 opportunities can be categorized into two broad parts; short and long term plans.
Short Term Plan (STP)
As Africa looks inwardly to boost and strengthen its economy, recognition would be given to the private sector which holds down the production chain. And the collaboration of the African governments with the private sectors will improve the domestic resources mobilization and strengthen the GDP of Africa as we’ll no longer depend on Asia for products.
HINT: Start branding/producing locally made goods as most consumers do not have a choice than to patronize the local products as borders remain close due to Coronavirus pandemic. Government’s policy will aid most locally-made goods.
The Agricultural sector has been renowned when it comes to the food value chain in Africa especially Nigeria. Africa is blessed with an abundance of food and entrepreneurs need to tap into these resources. The food chain is clogged with several difficulties from harvest to processing stage, packaging and marketing stages. A local factory with automated machines to process foods and which make delivery to homes are most likely to take over from supermarkets as people will grow weary of visiting crowded places due to fear of coronavirus.
HINT: Build an E-commerce website where people can shop for groceries within their house and get the goods deliver to their doorsteps within few hours of making orders. Automated technology for services and payment will be generally adopted Post-COVID19 in most businesses.
For those entrepreneurs who have built their businesses on the internet, I say kudos to you.
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