POST-COVID business recovery interventions SMEs should explore in 2021
There is no gainsaying what the coronavirus pandemic did in global socio-economic realities. What is also irrefutable is that small business have been the worse hit amongst the victims’ rollcalls.
Beyond the economic uncertainty challenging a sustainable business environment, there was also the ravaging impact of the pandemic on healthcare that slowed productivity, hampered manpower and piled pressure on the unemployment scourge.
A steadily rising inflation now peaked at over 18% in April 2021, coupled with an economy that dipped into recession and back, acerbated by violent civil unrest and insecurities that slowed pan-Nigerian logistics, the Nigerian small business proponents have experienced a perfect storm.
According to the Nigeria Bureau of Statistics (NBS), Small and Medium Scale Enterprises (SMEs) remain critical to the country’s economy, contributing about 48% of the national GDP in the last five years and accounted for 84% of the national workforce.
Despite these contributions to the Nigerian economy, SMEs continue to face growth-hampering challenges such as lack of access to funding, skilled human resources, high cost of doing business, among others. These existing conditions already posit a challenging environment for SMEs to thrive; the pandemic’s entry into the equation will surely heighten their difficulties and slow their capacity to bounce back from this economic pandemic.
According to a survey by FATE Foundation and Budgit on the impact of COVID-19 on Nigerian on small businesses, 94.3% said the pandemic adversely disrupted their operations. 72.2% said the pandemic impacted their cash-flow; 67.8% said their sales went south, and 59.2% said their revenue took a hit.
In tackling what may be the most challenging global health and economic crises of our time, the instinctive response would expectedly tilt towards immediate needs such as health, food, security, and jobs. However, there is an urgent need to prioritise interventions for the SME sector – the backbone of major developing economies.
We have identified three existing business interventions that SMEs in Nigeria should leverage to recover from the pandemic’s overwhelming effect. These interventions and programmes include:
- The Federal Government MSME Survival Fund: A couple of months ago, the FG launched the Survival Fund Programme targeted at individual artisans and small businesses. The Survival Fund Programme (www.survivalfund.gov.ng) is part of the Economic Sustainability Plan, which aims to support and protect businesses from the potential vulnerabilities brought by the COVID 19 pandemic.The programme categorised into Payroll Support, Guaranteed Offtake, and MSME grant, is designed to provide a cushioning effect to business owners’ pain points. With the Payroll Support, business owners are assisted in paying employees; the Guaranteed Offtake helps businesses kickstart or rebuild, while the MSME Grant provided free funding for badly hit MSMEs. The programme is opened to any Nigerian with a running business (either registered or not registered).
- LSETF MSME Loan Programmes: The Lagos State Employment Trust Fund (LSETF) was established with a core mandate to tackle unemployment, promote job creation, entrepreneurship, and skills development in the state. The Loan Programme, one of its intervention vehicles, provides access to affordable funding for small business entrepreneurs.