The fragility of the reserves being used to support the naira and it's revalued rate shows that Nigeria needs to find new ways of earning foreign currency. In the first story of our series on the impact of COVID-19 on Nigeria, we look how its economy considers strategies to reduce the naira’s dependence on volatile oil prices.
This is part 5 of a series.
“They believe that it is the olowo [rich people] that the virus will catch, that it won’t catch poor people. So some people are not using face masks, they think nothing will happen,” says Kikelomo Giwa, the acting Iyaloja (leader of the market women) of Sangross Market, Lagos.
Given that many Nigerians working in the informal sector are illiterate, Giwa says many don’t even believe the coronavirus is real.
And with a country of nearly 200 million, over 80 percent work in the informal sector. That means trying to control the spread of the pandemic has been one problem. But ensuring that these workers have a livelihood afterwards is the other side to the coin.
Kikelomo Giwa – “worst thing has been the increase in price”
“The worst thing has been the increase in price,” says Giwa.
Increasing prices has led to a double-hit: it’s harder for market traders to buy produce, and it’s harder for clients to buy more. “When it [the lockdown] first started, it was very difficult. There was little production, and no goods were coming in,” she tells The Africa Report.
When the goods did start coming in, there was a major jump in price, with “goods of N500 being sold for N800 … people couldn’t afford to buy.”
With the lifting of the lockdown, things have improved, but the prices are still excessive, with increases of over 100%:
- Four plantains, previously sold for N500, now cost N1000;
- N200 worth of pepper is now sold for N500;
- N700 worth of yams are now N1,300.
Who supports the informal economy?
According to the IMF, the informal sector contributed about 65% of Nigeria’s GDP in 2017. In the country’s commercial capital, Lagos State – the informal economy employs about 5.5 million from the 7.5 million people labour force.
Informal workers range from street traders, subsistence farmers and small scale manufacturers, to service providers such as hairdressers, private taxi drivers, and carpenters.
They are supported by trade unions and civil society groups, such as the Nigeria Labour Congress (NLC – the umbrella organisation for trade unions in the country), the National Union of Petroleum and Natural Gas Workers (NUPENG – who help out junior workers in the oil well and gas well operations in the industry), and the Federation of Informal Workers of Nigeria, to name a few.
Savings will not be able to carry us much longer.
Leonard Nkah, NLC chairman in Ebonyi State appealed to the governments: “at all levels to kindly attend to the worker’s needs as a matter of urgency,” asking them to “pay salaries and remunerations with every other package as palliative to the workers and the people to help them observe guidelines such as the lockdown – sit-at-home directive.” Nkah urged the government to recognise that: “workers are hungry and in dire need of food.”
The national president of NUPENG, Williams Akporeha and the general secretary, Afolabi Olawale, says: “This is the time we should all come together to develop ways and means to save the human race from the pandemic rather than being preoccupied with issues of pecuniary gains.”
The general secretary of the Federation of Informal Workers of Nigeria asked that “the Federal Government, in conjunction with state governments, should immediately institute the immediate implementation of a basic emergency grant to all those without guaranteed income in the informal economy,” in order to “cushion the devastating impact of the lockdown on the working poor without guaranteed income or social protection of any kind.”
Omoehi Ighodalo – “it’s all just a nightmare”
Before the lockdown was imposed and the effects felt, it was a given that those from the informal sector were bound to be hit hardest.
As the pandemic rages on, with no end in sight, informal businesses, even those with savings, are starting to seriously suffer from the lack of incoming funds.
“Savings will not be able to carry us much longer,” says Omoehi Ighodalo, whose Lagos-based salon business hit the one-year mark during the lockdown.
“I’m trying to figure out ways my business can still thrive without clients having to come in, so I’m moving back to online sales [of ready-made wigs and hair bundles],” explains Ighodalo on how she is trying to be innovative with her salon.
She continues: “I want to make sure that when we open, the salon is extremely safe for both staff and clients, and I want to make sure the staff are trained properly so that they enforce the rules without me having to watch over them 24/7.”
For her, the hardest part is “the uncertainty and the delays. Not knowing when you can plan to open up because you don’t know when this will all be over is kind of disheartening.”
The closing of borders, and halt in trade, has also caused problems for stock. “It has been a nightmare because shipping by cargo takes over three weeks now, when it was three to five days before. DHL and and Fedex are the only solution for a quick turnaround time, but the prices are insane, and then you never know what is going to happen when it gets to customs. It’s all just a nightmare.”
Ify, a receptionist at her salon speaks wisely of the situation: “surviving during this period is trying to make do of one’s little savings or tokens received from people.”
When the lockdown was announced, the Central Bank of Nigeria (CBN) introduced a stimulus package to help households and small businesses hardest hit by the adverse impact of the coronavirus pandemic, in the form of a loan, not grants.
Lagos State announced an economic stimulus package for residents, targeting 200,000 households in the first phase, a small number in the 14 million strong population. This was in the form of food packages put together by the agriculture ministry.
The Federal Government asked the National Assembly to approve a N500bn intervention fund, and withdrew $150m from the Sovereign Wealth Fund, supposedly to help vulnerable citizens.
However, two months later, there is no evidence as to where these stimulus packages, and this money has gone. Vulnerable households largely did not receive aid from the government, as was initially promised.
This forced Nigerians to do their best to help the less fortunate in society.
Many took food around their neighbourhoods to give to people on the street, and organised efforts were made possible by societies such as WimBiz (Women in Management, Business and Public Service), who raised money and distributed nearly 12,000 relief packs across 28 communities all across the country.
Funmi Olaogun- “big blow on my business”
In Lagos, a city known for its large events, events planning is known to be extremely lucrative.
However, COVID-19 has brought about a new world order of social distancing, which means a restriction on social events. That has continued on even after the easing of the lockdown. Funmi Olaogun, a Lagos-based events planner describes the situation as “a big blow on my business, on my industry.” The forced down time has given her a chance to: “reflect, learn, take lessons, think about how to improve my business.”
Although she has tried to be innovative, and put together smaller events for clients such as small court registry weddings, where social distancing rules can be adhered to, it’s nothing compared to the lucrative business she had pre-COVID-19.
Her entire staff is currently on unpaid leave, as there is no income coming in. She tries to give them a stipend every month for transportation, food and general upkeep, and also tries to buy groceries (such as rice and beans) to be shared amongst her employees. Some have quit in order to look for other opportunities, as they are unable to sustain themselves this way.
Bottom line: The easing of the lockdown should in theory be helping the informal economy slowly get back on its feet, but it’s not spreading fast enough across this large and underrated sector. That means many are still struggling to keep their heads above water.
The government has not done enough to help these workers. If the government had taken a page from the actions of citizens who rallied together to help the vulnerable around them, perhaps these workers would have more than just a fighting chance at seeing their businesses bounce back.
For part 1, click here.
For part 2, click here.
For part 3, click here.
For part 4, click here.
For part 6, click here.
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