Startups are beginning to experience losses caused by COVID-19 outbreak and may shut down in months if the losses are not stemmed.
The shutting down of businesses might lead to a higher level of unemployment in Nigeria as the economic effect of COVID-19 continues to take its toll on operations and activities of SMEs all over the country.
The emergence of the global pandemic in Nigeria has led to a partial shutdown of the government, businesses, airports and markets with a ban placed on gathering of more than 25 people in some parts of the country. Economic activities are beginning to slow down all over the country, as economic units are advised to practise social distancing and proper health precautions to stem the spread of the virus.
The Central Bank of Nigeria (CBN) in response to the looming economic crises arising from the effect of COVID-19, in collaboration with the bankers’ committee, has rolled out an economic stimulus package of N3.5 trillion to boost economic activities in manufacturing, health and other key sectors in order to prevent a complete meltdown of the country’s economy. The apex bank will also provide a N100 billion in loans to health authorities to contain the spread of the new virus.
Meanwhile, amidst the increasing number of confirmed COVID-19 cases in Nigeria. Startup founders and managers have raised concerns about the devastating negative effects of the virus on their businesses with the loss of customers, dwindling revenue and increasing financial obligations.
Speaking to Nairamentrics, co-founder at Drivers.ng, Daniel Esthekpaobo called on government to assist them and prevent a fade out of their business. He said, “Well, the effect of this virus has been a colossal fall from progress for our business. We have now resulted to working remotely; financially we are on a decline, as drivers have been told by their employers to stay at home.”
Victor Ejechi, partner at Statisense said, “COVID-19 is not just coming to disrupt our health or daily activities, it has also come to disrupt businesses and many start-up companies after the pandemic will face difficulties in operating due to huge losses and may eventually shut down jacking up the number of unemployed people in the country.”
Tech start-up founder, 115 Garage David Aboluwarin though said the effect on the coronavirus is not pronounced on his company, he added that, “It is just a pity the government can’t afford to do a total lockdown; it is best if Nigeria can be rid of the virus fast.”
Titobi Oreolorun, founder JustUsed said, “For us at JustUsed, we have had a slow product purchase since last week and we can’t import most of our gadgets since all borders are on lockdown, as sourcing in the country also has come with a very high cost and COVID-19 is playing a major part in this.”.
Meanwhile, as at 11:25 pm yesterday, the total number of confirmed cases had hit 51 in the country, with 48 active cases as the economic implications of the virus continue to linger with Nigeria reportedly preparing for a Nationwide lockdown to curb the spread of the virus.
However, even when Nigeria is rid of the coronavirus outbreak, the economic effect on small and medium businesses might still linger, as the country’s borders might still be temporally shut preventing free movement of people, goods and services.