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COVID-19 Puts Businesses on Death Row

The victims of the rampaging coronavirus pandemic are not just those in the cemetery or the hopefuls at the intensive care units, hospital wards or isolation centres. They include the rest of humanity, legion of those who do not yet know their status. They include those whose future have become uncertain, particularly because they have lost jobs, or their businesses have been negatively impacted. Among them are those whose health has been hampered because of the concern over how to handle debt repayment or the businesses that have gone awry even after financial commitments that cannot be reversed. Thus, by the time the lockdown following efforts to curtail the spread of coronavirus may have been lifted in countries across the world millions of businessmen and women would be in one crisis or the other.

However, some of these may be mitigated because of the stimuli put in place by the government. The difference will only be in the type of the stimulus per country and the method put in place, as well as the system within which they are to be applied. What is certain is that no business, including those that were exempted from the lockdown, like food and medication, has not been impacted. For instance, livestock farmers have been groaning in pains, complaining that the lockdown has made it difficult for them to cater for their animals.

At the piggery farm in the Oke Aro area of Ogun State, aside from the lockdown preventing several farmers and their attendants to access the farm, they could also not get feeds to the animals. Unfortunately, by the time the lockdown was eased, except for inter-state, the farm, said to be the largest in West Africa was ravaged with swine fever. Over 145,000 pigs were lost. And in the desperate attempt to cut their losses farmers had to sell pigs at giveaway prices. It is said that about 3,000 farmers and over 10,000 attendants have lost their livelihood to that crisis. Bello Dogodaji, national secretary of Agricultural Commodities Association told the media that the sector has been hard hit by the lockdown. Perhaps the telecommunications industry may stand out. That is like a drop in the ocean. In Nigeria, as it is in many other countries, the aviation industry is counting losses by the day. In the absence of business, airlines will have to pay for parking their planes. While they could ask some staff to proceed on leave without pay, there are certain kinds of staff, particularly in the technical section that must be guarded jealously. That is not all. By the time the lockdown is over, many of the aircrafts would have to be taken for checks, having been idle for some time. The loss of business in the aviation has a viral effect on the catering companies that serve the inflight foods. And in a country where many players in aviation industry were at the precipice before the lockdown, only government intervention would be the way out. That is also a problem, as the government has had to cut down the national budget twice because of the slide in the price of crude oil, which is the main stay of the nation’s economy.

Captains of industry are counting their losses as Covid-19 continued to take a toll on economic and social life in the world. But even worse than that is the fear that the immediate future looks bleak, with uncertain recovery plans in place.

The President of the Rivers/Bayelsa State Branch of the Manufacturers Association of Nigeria, Adawari Pepple told the magazine that many of the manufacturers may never recover from the aftermath of the pandemic. Pepple painted a grim picture of what manufacturers are going through because of Covid-19. “It has been a loss-loss situation to us,” he says.

Adawari Pepple Photo
Adawari Pepple

“At the moment, virtually all the businesses are shut down. Even the manufacturers of essential goods have been forced to drastically reduce their operations, and in some cases have been forced to shut down totally. My members have managed to pay last month’s [April] salary. We just pray and hope that members will be able to pay the salaries for this month [May], which of course is going to be a very, very difficult thing to do. I will tell you; manufacturing is not like the business of governance where every month, you go somewhere, and you draw some allocations and you use it to pay. In our own case we have to generate the income by producing and by selling and people buying from us. All these factors are nil at the moment, and so there is nothing we can do.”

“Many businesses are retrenching. They have activated business continuity plan including cutting down staff salaries, cutting down the number of staff and having staff do multiple tasks,” Emi Membere-Otaji, a national officer of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, told the magazine.

Even businesses that have been allowed to operate because they were providing essential services are not doing any better because the shutdowns have not allowed them to access their markets and clients. “It is not all about being authorized to operate, but it is about being able to access your markets. And in this instance, it has been a very herculean task for manufacturers to transport their goods within and across state borders. And this has impacted very negatively on the activities of manufacturers,” Pepple says.

Membere-Otaji, who is the immediate-past President of Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture, told the magazine that even with the shutdowns a lot of businesses are still running costs. “Your fixed costs are still there. Your generators are working; your power bills are running. The planes are parked at the airports and they are paying costs for parking. I know that because I am a mariner. I own vessels and my vessels are parked. They are parked in Onne. You are not working but you are paying per day for parking them,” he laments.

Membere-Otaji Photo
Membere Otaji

The job and business losses have already been phenomenal. Membere- Otaji puts the losses into three categories. One is catastrophic, the second is very bad a while and the third is just bad.

The pandemic has been very disruptive of all businesses, according to him. But the worst hit is the hospitality industry, which have all been totally closed down, as a result of government policy to tackle the pandemic. “Hospitality business – hospitality, entertainment, hotels, travels, logistics, fitness clubs like gyms; these ones are closed because of government instructions that they be closed and border closures. The effects are catastrophic for now and even in the future.”

The other sectors like oil and gas and manufacturing, which though are not totally locked down, he says, are equally distressed because customers are limited. He says even when you produce, the customers are either not there, having been also locked down, or might not even have the resources to patronize the products.

“Even farming is impacted. If you farm, markets are closed, and you cannot even truck it across. You cannot even take it out even locally, that is within the country or outside the country. And most of those farm products are perishable. It is bad, very bad,” he laments.

Hospitals and pharmacies may have been categorized under essential services. But Membere-Otaji says, “I will tell you why they are bad. They are bad because their clients don’t have money to pay for the service. So even if you are opening your hospital or your pharmacy or your eye clinic, people are not coming. You used to see 100 patients a day, now you are seeing five patients a day.”

So, what can be done to mitigate this damaging effect? Both Pepple and Membere-Otaji think that government has a major role to play in getting industries and businesses out of the Covid-19 hole. “The only thing that could be done is on the table of government. We have been paying tax. And you know that within the last three years, the drive for tax has been at its peak and manufacturers were not spared. Some of our accounts were blocked so that sufficient tax could be generated. We paid. We believe that our records are there with government to know the companies that have been paying tax and this is the time that the government should reciprocate so as to enable companies maintain their payrolls as it is. Otherwise, jobs must be lost if nothing is done,” says Pepple.

“In other developed countries, they give stimulus to companies. They know companies that are paying tax. They can use other things. They have BVN. FIRS and the state tax firms have your records,” Membere-Otaji says, pointing out that it is now time for government to keep faith with businesses that have been supporting it.

Pepple says the only institution that can help to reduce the impact of Covid-19 on businesses is the government. Hear him: “The Federal Government should be able to come out and fully support the businesses. You don’t go to the press, ‘Oh! We have approved N100 billion for the health sector,’ then you say for you to access these funds you must bring collateral, landed property. What if they had been operating on borrowed funds and their title deeds are lodged in the commercial banks, where would they get it from? Businesses don’t run on allocation. There is no money kept for you to say you will continue using it. You borrow, you try to increase your capital by savings, and in this instance everything has collapsed. So, there is no way we can meaningfully sustain what is on ground in terms of the economy where there is no support from the government.”

However, the chief executives are doubtful of government’s sincerity in bailing out businesses. “I’ll tell you, even the N50 billion stimulus or palliative that the Central Bank of Nigeria said they have offered to manufacturers, the conditions are near impossible to meet up,” Pepple says. He reveals that the CBN is asking for collateral for sums as paltry as N10 million, which is the maximum for Small and Medium Enterprises. Dogodaji echoed the same sentiment when he said, “There are a lot of issues in accessing government [government stimulus package].” He concluded by saying, “I have not seen any member who has benefitted.” So, where is the packages announced by the government, through which it plans to save the businesses? The consequence is that businesses have little trust in government, and so believe that the package may not come their way. Then, what is the future of businesses after coronavirus? The consensus is that the future looks bleak and uncertain. People in business say this is because the stimulus is packaged in such a way that it would be difficult for them to access. One of the problems, they say, is the demand for collateral. Is that not normal in financial support? Pepple says it is not in a situation like this. What then should government do?

“Collateral is the tax that we have been paying to government and you shouldn’t expect us to go and look for houses, to look for debentures, so as to secure what is a palliative. It is the responsibility of those who collect taxes to be able to support businesses to thrive,” he says.

Membere-Otaji even suspects that government may not give the stimulus to the right businesses and manufacturers. His doubt is hinged on the imperfections involved with the N5,000 palliative government claimed to be paying to the vulnerable during the pandemic. “Obviously, more than 60 percent of the vulnerable people are not getting it. So, it means that most of the payments are going to people on paper, not on actual,” he said.

One way out of the situation, according to Pepple is to learn how to live with Covid-19. “My opinion has always been let’s look for a way of still keeping our economy running while we are still fighting the Covid-19. You don’t just shut people and tell them to go home as if shutting down and sending them home indoors is going to solve the problem. Are you reaching out? What contact tracing are you doing? How many tests are you conducting? Even when you shut down, people are meant to be tested, even at home. You don’t just shut them down.”

Concerns like these compound the doubts and disbelief that people have about the reality of Covid-19. There is a general despondency that government merely shut down the country without taking the necessary steps to contain the spread of the virus. The lockdown, some suspect, is an imported solution without consideration for local realities.

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