The Lagos Chamber of Commerce and Industry (LCCI) has admitted that the global economic landscape challenged by the coronavirus outbreak and associated containment measures has put a sizeable number of small and medium scale enterprises (SMEs) in dire financial straits.
It also flayed the difficult financial situation, saying that the financial straits came in form of revenue shocks, escalating costs,exchange rate depreciation, supply chain constraints and disruption to operating models, which are currently posing a significant threat on the bottom-line of the businesses. LCCI president, Mrs. Toki Mabogunje, disclosed this in her address during the NACCIMA Business-Group webinar themed: ‘COVID-19 Impact Assessment on SMEs: Perspectives and Strategic Options for Support.’
She explained that the impact of COVID-19 was now more pronounced among SMEs given their limited fiscal and monetary framework to adequately respond to the shocks. According to her, businesses are increasingly finding it difficult to meet contractual debt obligations given the pressure on earnings, adding that these realities underscore the need for small and medium-sized business owners to strategically position themselves for continuity at this challenging period and brace up for the challenges ahead. Mabogunje noted that following the pandemic’s impact on businesses, the short-term outlook of key economic indicators remained bleak.
The LCCI president pointed out that consensus projection showed that the predicted economic contraction by the end of the year would be severe on Nigeria as key sectors of the economy struggle to weather the storm. She said these were indications that the prevailing macroeconomic fundamentals at global and domestic levels are unfavourable to businesses and could potentially escalate business mortality rates in the near term, if unaddressed. Speaking further, Mabogunje stressed that the chamber recently conducted a survey to get an empirical insight into the impact of COVID-19 crisis on the business community.
She added that the Chamber’s findings revealed 81 per cent of business operators were ‘severely’ affected by the scourge, while 17 per cent noted that the crisis had a ‘moderate’ impact on their businesses. Similarly, 63 per cent of the respondents stated that they reduced the size of their workforce as part of their cost-cutting strategies. On the role of women in Nigerian businesses, the LCCI president said: “As we all know, women play a critical role in the economy and of course in the business community, particularly in Micro, Small and Medium Enterprises (MSMEs) sector. “According to official statistics from the National Bureau of Statistics, 59.6 million jobs were created by MSMEs as of December 2017.
“Women created 26 million jobs or 43 per cent of total jobs created within this period. “These numbers underscore the strategic importance of women in job creation which is an important national socio-economic objective of government. “Women’s economic empowerment stimulates productivity, fosters economic diversification as well as income equality in addition to other positive developmental outcomes.
“The participation of women in the Nigerian labour market saw a marginal improvement over the past decade. “According to official statistics, approximately 51 per cent of women were employed among the total female labour force in 2019, compared to 60 per cent for male. “Also, a recent finding by the Organization for Economic & Development Cooperation (OECD), affirmed that increasing female employment rates could potentially elevate economic output by $6 trillion in OECD nations.” Speaking on the International Monetary Fund (IMF)’s projection for global economy, Mabogunje said: “Projections by the International Monetary Fund shows that the world economy will contract by 4.9 per cent by year end-2020. “This is more severe than the 2008-09 global financial crisis period. The impact, however, is more pronounced in developing economies such as Nigeria given our limited fiscal and monetary framework to adequately respond to the shocks.”