Small businesses in Sokoto groan, claim ‘politicians hijacked CBN’s COVID-19 loans’

“The government won’t do anything because the government doesn’t like poor people, especially small business owners,” Bashir Muhammad, a trader at the Hajia Halimah market, Sokoto State, fumes over the alleged silence of the government on the impact of COVID-19 on small businesses. 

Hajia Halimah market is one of the largest markets in Sokoto, the capital of Sokoto state.

In his mid-30s, Muhammad owns a cooking utensils shop at the popular market in Sokoto. He is one of many small business owners affected by the COVID-19 pandemic globally.

It was double jeopardy for Mohammad and other shop owners at the market as they also suffered losses due to a fire incident in January. Market fires have become a recurring challenge in Nigerian markets. 

Nine months on, Muhammad and his colleagues are still trying to recover from the fire incident that destroyed shops and properties in the market as well as the impact of COVID-19 on their businesses.

He said if the pandemic continues till next year, small business owners in Sokoto state may not survive the devastating effects.

A 2017 MSME survey carried out by the Nigerian Bureau of Statistics (NBS) and the Small and Medium Enterprise Agency of Nigeria (SMEDAN), found that micro, small and medium enterprises (MSMEs) account for 76.5 percent of Nigeria’s total workforce and 49.78 percent of the country’s gross domestic production (GDP). Evidence that MSMEs are the socio-economic engine of the country.

MSMEs STRUGGLING TO RECOVER FROM COVID-19 IN SOKOTO

In a survey on the impact of the COVID-19 pandemic on Nigerian MSMEs conducted in 2020 by FATE Foundation and BudgIT Nigeria, 95 percent of respondents said the pandemic negatively impacted their cash flow, sales, and revenue. 

However, they expressed optimism that their businesses would survive the pandemic. 

The survey studied the impact of COVID-19 on 1,943 MSMEs across the 36 states in Nigeria, including the FCT. Almost two years into the pandemic, many MSMEs are still struggling to stay afloat and recover from losses. 

Munirat Aliyu, a 30-year-old business centre operator at the Usmanu Danfodiyo University, said she was depressed during the pandemic lockdown. 

Aliyu, the breadwinner of a family of six, said the closure of school during the period affected her business and family. 

“We couldn’t do business because schools were closed and we had to close down our shops. Throughout the 6 months that schools were closed, we couldn’t do any work, there was no money, and we couldn’t engage ourselves in any business,” Aliyu said.

“I felt so depressed that time, I couldn’t work elsewhere,  we just sat down at home because our business is inside school and students were not in school, and I didn’t have money to run a new business.”

She said businesses like hers are still struggling to recover from the lockdown and COVID-19 induced economic hardship.

“Gaskia! Since then, the business has not been like it was before, but we thank God now it was not like when we had to sit at home,” she said, following school resumption. 

“I could remember that those times when things were hard, I had to spend all the savings in my bank account before school resumed, and that’s the part that pains me most.”

CHINA VS LAGOS: NO TRAVEL, LITTLE PROFIT

Like Aliyu, Muhammad also said businesses are recovering, but things have changed for him and other colleagues in the market. 

“A once bubbly market is usually dull these days. I don’t know what brings a lack of money to the people, but some people are saying the economic crisis is a result of COVID-19,” he said. 

“Everything has changed because people are hungry. Am I going to buy something that I’m going to use while I’m looking for food? I have to buy food first.

“It has really affected me. I used to travel abroad to get goods, but because of Coronavirus we couldn’t travel and most of those things that we buy in China, we are making more money than things that we are buying in Lagos, and you can see from there how it affected my business.

“Most of those people who usually patronise us couldn’t come to the market, they locked them down in their houses, and business is not moving as it used to.”

Corroborating Muhammad’s claim, Aisha Ahmed, another trader who deals in baby’s care products at the market, said items are now expensive because of the security situation of the country.

“For example, if someone had six pieces of this [baby] walker now and he knows that people were unable to travel, maybe he was selling it at N2,000 before, he would increase it to N3,000, it is either you buy it or you leave it, but you don’t have a choice but to buy it, and at the same time, cash flow was very low,” Ahmed added.

“It is still affecting us till now. Prices of things have gone up and you know in Nigeria when things go up like this it won’t come down again. It remains like that or it keeps going.

“For instance, this baby bath, we were selling it at the rate of N2,600 before, but now we are selling it at N4500, people who resell will still add their own [margin]. You see how the goods keep increasing.”

LOSING N1.5M IN PERISHABLES FOOD ITEMS

It was a sad tale for Maina Sara, a foodstuff retailer inside Usmanu Danfodiyo University, Sokoto Campus, as goods worth millions of naira stored in his shop got spoilt due to the COVID-19 lockdown. 

“You know the pandemic hit us unexpectedly, and it was the time students just resumed back to campus. I filled my shops with goods and raw foods with the hope that I would them,” Sara narrated.

“Then, the pandemic came, and it changed to another way. No students to sell to and no market to take them to for prospective buyers. Everyone was made to stay indoors. If I could remember vividly, the foods that got expired in my store would cost nothing less than N1.5m. 

“What of petty things like noodles, sachet milk? I threw most away.”

He said the current hike in the price of goods and scarcity of food items in Nigeria also presented an unpalatable situation for businesses. 

“One of the effects of COVID is a scarcity of food items in Nigeria which has led to the hike in food prices nationwide. This is also affecting me as a foodstuff seller. The hike in these foods has reduced the purchasing power of my customers, who are majorly students,” he added.

“Before the pandemic, the bowl of rice was around N850. Now it is double — N1600. A crate of egg which was N900 is now N1500. This crazy increase has affected how people patronise me, and this surely has affected my income. I know how much I earn as profit before Corona, and I know what my take-home is now. Things are no longer the same.”

FEED NOW, DRESS LATER

For Okafor Angela, the effect of the pandemic and increase in prices of goods and services still affecting her business. Angela sells female wears around Tasha Alu, Sokoto State.

“It affected my business a lot. That time there was no movement, and we couldn’t get the goods from where we normally got it, and people that were buying it did not have money to eat not to talk of buying clothes,” Angela said.

“I used to bring goods from the down east, but because of the inter-state travel ban, we couldn’t travel to buy goods from where we normally got it.

“The government promised that time that they were going to support people with ‘small small’ businesses with loans, but some people got some people do not get, there are people that got it twice while some did not get. Like me, I applied, but I did not get it.

“If they want to help, they should help everyone not that they will help some and leave some.”

As of September 21, 2021, Nigeria had recorded 202,704 cases of COVID-19 — 191,370 people have recovered and have been discharged, while a total of 2,664 lives have been lost to the virus across the 36 states and federal capital territory (FCT).

In Nigeria, the majority of enterprises are micro-enterprises, and any business and economic shocks will unavoidably affect various sectors and livelihoods of many citizens. With the country currently experiencing the third wave of the COVID-19 pandemic, businesses are likely to continue to crawl and fight for survival.

COVID-19 SME LOANS HIJACKED BY POLITICIANS

Small business owners in Sokoto decried their inability to access government facilities. They claimed that most of the opportunities have been hijacked by politicians and shared among their families and children in the state. 

“If the government wants to support people, they know how to do it, they have to come down and interact with people and see how it has affected them,” Muhammad said.

“The government will even say they want to help people, they will only say it on air, the people that are supposed to get it will not get anything. 

“We are aware of the COVID-19 loan, but what is there? This Nigeria is who knows who you know, they will ask you to come and fill forms, but they won’t give it to you, they are giving it to their people (politicians) and their people also give it to their children, and they will say they have given money to people when the money doesn’t even come to you. 

“If they want to support people they should come down and interact with people shop by shop.”

Ahmed said the government should not only give out loans but ensure appropriate price mechanisms are in place. 

“I don’t think the government can help. If they want to help, they should come down to our level,” she suggested.

“Also, let there be price regulations. Someone may go to Lagos and buy something N6,300 another person will buy N6,500 that N200 is a loss.

“I heard that they were giving out loans. I heard that they gave it to some people but ‘me’ I was not interested and thank God that I didn’t even waste my time because there are some people I know that they applied for it, but they didn’t get it, then what is the essence?”

Aliyu said she applied for the loan but did not hear anything from the agency handling the disbursement. She sought help from within her network.

“So, when school resumed, I later borrow money to start again, and gradually things are coming back to normal.

“We need to sustain ourselves, patronage is unlike what it used to be. The government should find a way to assist us to ensure the loan circulates widely and to those who need it to fund businesses. I think it will go a long way.”

Sara advised the government to curb inflationary pressure in the market, adding that “it is killing businesses”.

Last year, the federal government, through the Central Bank of Nigeria (CBN), introduced the targeted credit facility (TCF) as a stimulus package to support households and small and medium-sized enterprises (SMEs) in the country that were hard hit by the COVID-19 pandemic.

The scheme (TCF) is disbursed through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending Microfinance Bank (NMFB), and the exit day for this intervention is on December 31, 2024.

Despite the laudable initiative, inefficiency and lack of transparency flawed the distribution to small businesses.  

So far, the facility has been increased from the initial N50 billion to N300 billion with more than eight million applications and only 600,000 granted, according to CBN.

Osita Nwanisiobi, CBN’s corporate communications department director, had admitted that more businesses need to get onboard into the COVID-19 facility.

He said the TCF helped Nigeria exit recession and achieved the latest gross domestic product (GDP) growth rate of 5.01 percent in the second quarter of 2021.

“If you tell me that there are people who still need COVID-19 facility and who have not received it, honestly, I will agree with you,” Nwanisiobi had said.

“The governor (Godwin Emefiele) is actually very passionate because he has also seen that what we have done in this regard also helped Nigerians exit recession and to post the kind of GDP that we have, and so he is poised to do more.”

A recent report, titled: “The Impact of COVID-19 on Business Enterprises In Nigeria,” conducted by the National Bureau of Statistics (NBS) and the United Nations Development Programme (UNDP), called on the government to implement more targeted interventions for MSMEs to alleviate the worst of the suffering caused by the pandemic.

The report said that the interventions would be necessary to shield small businesses from the worst of the effects of this once-in-a-lifetime event.

“Addressing these challenges through targeted interventions will help accelerate the economic recovery and create a business environment that is more equitable and sustainable in line with the sustainable development goals (SDGs). This holistic approach can better contribute to improving the lot of both business owners and the communities surrounding them,” the report stated.

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This story is supported by the I4C hub through BudgIT Foundation.