The latest survey carried out by the Lagos Chamber of Commerce and Industry (LCCI) has shown that 83 per cent of business owners plan to cut down on salaries and reduce the number of people in their employment.
Although the lockdown may have been relaxed, the impact on businesses may lead to further high unemployment, reduction in consumers’ purchasing power.
According to the LCCI survey, the COVID-19 crisis impact on the Lagos business community revealed that 81 per cent of respondents were ‘severely’ affected by the pandemic with the median daily revenue loss of N500,000.
The Chamber noted that the lockdown has significantly destabilised business and economic activities especially in the informal and micro, small and medium enterprises (MSMEs) space given their lack of adequate cash buffers to withstand the shock.
To hedge the impact of the actions on the economy, the LCCI said more than half (54 per cent) of business owners want banks to reduce the interest rate and give moratorium on loans, 29 per cent want a reduction in tax liabilities, while 17 per cent want waivers on import duties and demurrages.
The operators said the palliatives given by the various governments though laudable, were not sufficient to address the social fallouts of the lockdown, noting that the high level of informal activities in Nigeria suggests that millions of Nigerian households, who survive on daily income for life essentials, were severely affected by the lockdown
Giving updates on the state of the economy yesterday, in Lagos, the President, LCCI, Mrs Toki Mabogunje, said following the fallout of the COVID-19 pandemic, the Chamber sees the short to medium-term outlook for the economy as bleak. This is because the pandemic has led to an unprecedented collapse in commodity prices, capital flight, turmoil in the capital market, supply chain disruption across sectors and destabilisation of commercial and economic activities.
Mabogunje, however, noted that the pandemic presents an ample opportunity for the government and policymakers to pursue structural reforms and put in place home-grown policies.
“Although the government has rolled out a raft of relief measures to support businesses, we observe that these packages are tilted more towards formal establishments while micro and small-scale enterprises, as well as informal businesses, have been largely left out.
“The outlook for the business environment is bleak. We believe that businesses will continue to grapple with the devastating shock of the pandemic amid weak macro fundamentals for some time to come.
“We might likely see businesses downsize operations, retrench workers, slash salaries to save cost or even collapse. There is a potential risk for high business mortality rate in the near term,” the LCCI added.
The Chamber then urged engagement of the private sector by regulatory institutions and agencies of government in addressing national economic issues so that intended benefits are achieved for the common good.
“In light of the foregoing, therefore, policymakers and the organised private sector need to come together to rescue the economy from collapse at this critical time.
“Recognising the role of business and investment in the economy, it is imperative to have an urgent rescue package that would enable businesses to navigate the storms as well as preserve employments.
“Commercial banks are implored to offer a reprieve to businesses and corporates indebted to them. The reprieve could be in the form of loan moratorium and restructuring.
“We urge the CBN to review the cash reserve ratio downwards to 20 percent from the current 27.5 per cent, to enable commercial banks to have more liquidity to support businesses,” the LCCI recommended.