Thursday, September 30, 2021 / 02:15 PM / by FBNQuest Research / Header Image Credit: McKinsley
We often hear how we must learn to live with COVID. Quite likely we will agree, not that we have much idea how our lives will pan out. The Impact of COVID 19 on Business is a collaboration between the UN Development Programme (UNDP) and the National Bureau of Statistics (NBS) that shows how a selection of firms has managed during the pandemic and how it views its prospects. The survey approached 3,000 companies (2,100 in the formal economy and 900 in the informal) and achieved a response rate of 98.8%. It was held in November and December 2020, and therefore long after Nigeria's lockdown was largely lifted yet well ahead of the rollout of vaccination programme abroad. It was shared by the NBS earlier this month. The time lag notwithstanding, the exercise gives us a huge amount of detail that we can usefully judge in the light of the messages from the top (both domestically and internationally).
To take one of the headline findings, two-thirds of firms surveyed had closed at some stage during the pandemic and 10% were still closed. The anecdotal evidence was no better: one third knew of a business in their field that had gone under.
The survey highlights the use of technology, without which Nigeria's successful development has poor prospects. We learn that 92% of respondents had a phone or smartphone, 62% used mobile banking and 50% worked with computers/laptops.
In terms of economic segments, the worst affected by the pandemic were transport and mining, while the least affected were agriculture, utilities and any operation able to make the transition to e-commerce.
As for financial winners and losers during the pandemic, 19% reported an increase in revenue and 81% a decline. We would have expected the above-average positive response from human health and social services (25%). Unsurprisingly, all firms in the transport segment reported a fall in their revenue. However, it was a shock to see that just 11% of businesses in information and communications had enjoyed higher revenue. This is the one segment said across jurisdictions to have benefited from the pandemic.
The three largest financial challenges from COVID 19 were the payment of wages and social security charges (38% of respondents), rent (16%) and loan repayments (14%).
Businesses had to be flexible in securing finance for their operations. We learn from the survey that 60% drew on personal finances and 44% on business finances. Family and friends supported 14% of respondents. Curiously the figure for banks was the same as that for money lenders (10%). Asked how long their operations would be able to continue at then current conditions, 39% of respondents said more than one year and a further 15% between seven and twelve months, with 15% in the 'don't know' category.
As to whether their workforce would increase at the start of the following year (2021), 67% of respondents agreed and just 4% foresaw a decrease. The labour market reports from the NBS currently run until Q4 '20, when the unemployment rate hit a record 33%, so we cannot align expectations with outturns.
We hark back again to the timing of the survey. In the context of similar business surveys and of our own manufacturing PMI, we have previously noted the sunny optimism of the Nigerian household and business.
The NBS has also carried out a series of reports on COVID impact monitoring in conjunction with the World Bank (Good Morning Nigeria, 26 August 2021). These are smaller surveys, carried out by telephone with the same sample of 1,960 households.