A Systematic Review of the Implications of Covid-19 pandemic for small and medium enterprises in Nigeria
Background to the research
Every business, no matter how mega or small, contributes to the economic growth and development of countries across the globe. In fact, when one carefully studies the world economy at present, he or she would observe that small scale business operations are propellers of financial increase especially as they contribute to the economic development of nations all over the world (Ojong-Ejoh et al., 2021, p. 272).
Statistically, SMEs rate about 99% of world business operations as well as 50% of global job creation (Ojong-Ejoh et al., 2021, p. 273). Furthermore, looking at the economies of developing countries, it would be observed that formal small and medium enterprises make up about 40% of their financial output (Ojong-Ejoh et al., 2021, p. 273). Ultimately, small scale business operations located in the African continent rate about 60% of every financial transaction that takes place in the continent. In other words, about 60% of the African populations (that is of employable age) partake in small scale businesses (International Trade Centre, 2018).
Coming down to Nigeria, it is reported that SME’s make up about 48% of the country’s GDP and in addition, about 84% of the country’s employment (National Bureau of Statistics, 2019). According to Saidu & Aifuwa (2020), there are 17.4 million small and medium enterprises in Nigeria (which makes up for about 50% of all jobs in industries and also 90% of all work that deal with manufacturing. Going by available statistics, it has been observed that small scale business operations, overtime, would command the capacity to provide about 80% employment opportunities for the Nigerian population. Interestingly, such a situation would improve the country’s per capita income and also boost its economy (Ojong-Ejoh et al., 2021, p. 272).
The outbreak of the Corona Virus in 2019, precisely the month of December in Wuhan (China) remains a contributory factor to the socio-economic crisis that ravaged the economies of many countries across the globe. (Caballero-Morales, 2021, p. 1). The outbreak of the pandemic caused a great concern in the medical sector especially as many countries began to record massive numbers of infected patients, many of which could not survive the traumatizing effects of the coronavirus (Suez et al., 2020). Thus, in order to stop the pandemic from proliferating to other parts of the world, various governments of the world took emergency actions such as the imposition of social distancing, closure of public places, cancellation of events with more than ten people, and the likes (Nicola et al., 2020). Consequently, these government survival policies and actions did not mean well for both stable and emerging economies, especially, SMEs as a lot of business investments collapsed. Therefore, it is against this backdrop that this article seeks to carry out a systematic review of the implications of the Covid-19 pandemic for small and medium enterprises in Nigeria
Covid 19 and the Nigerian society
According to Musa and Aifuwa (2020, p. 55), the outbreak of the Covid 19 pandemic meant a great disaster and disadvantage to the progress and development of the world. The pandemic negatively affected a lot of business operations in Nigeria. Having recorded its first case of the virus on 27th February, 2020, government agencies and civil society organizations staged enlightenment advocacy campaigns on the need for social distancing of people in public places as well as hygiene (Olapegba et al., 2020). Concurrently, the (NCDC – Nigeria Centre for Disease Control also worked in collaboration with the government at the state level to monitor the proliferation of the virus by tracking victims (Musa &Aifuwa, 2020, p. 56). As preventive measures to restrain the outburst of the pandemic, the Federal Government on 30th March, 2022, ordered the closure of national borders and airspace, schools, churches and mosques and businesses.
Howbeit, these measures had severe effect on the country’s economy as many business operations especially small and medium enterprises (SMEs were closed down except for those in the health and food sectors. Let it be known that SMEs in Nigeria – businesses with income of below one million annually or below three hundred workers (CBN, 2020), prior to the outbreak of the pandemic, were already faced with challenges like poor infrastructure, lack of funds, unskilled workforce, and poor investment opportunities.
So, such a condition, together with the compelling effects of the Covid 19 further exposed the vulnerability of these businesses (Musa and Aifuwa, 2020, p. 58).
Implications of the Covid 19 for small and medium enterprises (SMEs) in Nigeria
There is no gainsaying that the Covid 19 pandemic is completely over. This is owing to its reoccurrence in different variants. As such, even though it would be a little difficult to make conclusions regarding the impact of the pandemic on small scale businesses in the country, there is still need to do so (Juergensen, Guimon, & Narula, 2020, p. 501). Due to the pandemic, SMEs in Nigeria have been exposed to logistical challenges consequent upon labour shortages and the forced change in the transportation system. Also, as a result of the government lockdown policies, SMEs have witnessed a drastic decline in their demand and a fall in consumer confidence and loyalty (Juergensen, Guimon, & Narula, 2020, p. 501). Unfortunately, the situation became so severe such that while consumers continued to face financial constraints and unemployment, many SMEs on their own, experienced a sudden decline in the demand of goods and services.
In general, all SMEs in the country encountered financial challenges and liquidity issues. This is evident as many of them could not pay salaries and as such, relived many of their workers (Juergensen, Guimon, & Narula, 2020, p. 502). In adherence to government’s preventive measures like social distancing, many SMEs have executed some changes especially in the physical establishments, which demand more funds for investments. This too, on its own has become a challenge to the existence of some SMEs (Juergensen, Guimon, & Narula, 2020, p. 504). Interestingly, the pandemic challenged the existence and structure of SMEs in the country such that SME owners and managers have identified the need to get their businesses digitalized.
Covid 19 Recovery Measures for SMEs in Nigeria
In the research carried out by Deschryvere et al., (2020), it is observed that during the pandemic, various governments across the globe rolled out social and economic response measures. Howbeit, the authors noted that a good number of those response actions focused mainly on matters concerning cash-flow, hence, the need to deliberate on the function of aid programmes in reviving the economy. They also discussed the need to discard challenges that would prevent innovations such as technological development for SMEs. Elaborating the extent to which SMEs could advance the digital development of their structures, Priyono et al. (2020) emphasised the essence of carrying out research on digital aspects in the change process of small scale businesses in various sectors of the economy. In addition, Espitia et al. (2020) highlighted that it is possible to evaluate the extent to which support response during Covid 19 was able to curb the financial limitations of SMEs.
Conclusion
The article critically examined the Implications of Covid-19 pandemic for small and medium enterprises in Nigeria. In a bid to achieve this, the article was split into four parts. The first part introduced the concept of Small and Medium Enterprises (SMEs) especially as regards its operations in Nigeria. Also, it briefly discussed the emergence of the Covid 19 pandemic and how it drastically affected the social and economic progress and development of nations across the globe including Nigeria. The second part of the article x-rayed the state of Nigeria during the Covid 19 pandemic while the third part dealt with the Implications of the Covid 19 for small and medium enterprises (SMEs) in Nigeria. The final part of the article was focused on Covid 19 Recovery Measures for SMEs in Nigeria. Overall, the article recommended the need for SMEs to incorporate a digital approach into their business operations and this way, they cam be able to render their services to their clients uninterruptedly
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