Overview of Covid-19 situation in Nigeria

The first case of Covid-19 in Nigeria was reported in February 2020. Since then, the country has experienced two waves of infection. To prevent the spread of the virus across the country, vaccinations are needed, and in March 2021 Nigeria received its first batch of the AstraZeneca vaccines and rolled out a national vaccination program. However, before this initiative, the primary national prevention strategies focused on promoting the use of face masks, frequent handwashing with soap, and physical (or social) distancing.

Like in other African countries, the Nigerian government imposed several lockdown measures including the closure of schools and markets and the prohibition of events with large attendance, such as weddings, burial ceremonies, and religious services, to control the spread of the virus. In addition, those working in the formal sector of the economy in public and private organizations were advised to work from home.

“Although they impact everyone, those working in the informal sector of the economy, who own small businesses and earn daily income, were more vulnerable to the negative effects of Covid-19 measures.”

These unprecedented lockdown measures are causing serious disruptions to the social and economic lives of Nigerians. Although they impact everyone, those working in the informal sector of the economy, who own small businesses and earn daily income, were more vulnerable to the negative effects of Covid-19 measures. Unlike those who work in the formal sector, traders in the informal sector cannot work from home1United Nations Economic Commission for Africa, COVID-19 in Africa: Protecting Lives and Economies (Addis Ababa, Ethiopia: United Nations, 2020). because they need to go to their shops daily and make face-to-face interactions with their customers to earn their income.2Thelma Obiako, “COVID 19 and the Informal Sector in Nigeria: The Socio-Economic Cost Implications,” Center for the Study of the Economies in Africa, April 24, 2020. Our study aimed to understand the impact of lockdown measures among traders working in the informal sector in Nigeria. This understanding is one of the first steps in the process of developing the appropriate interventions to cushion the impact of the lockdown among vulnerable populations in Nigeria.

The informal sector

Operators in the informal sector are self-employed persons who provide a range of services, including the sale of goods; services such as tailoring, shoemaking; and who do not pay taxes. In other words, the informal sector refers to the component of the economy that is not regulated by government. Markets have the highest number of people working in the informal sector in Nigeria. Diverse items are sold in these markets, ranging from clothing, jewelry, shoes, household utilities, foodstuffs, paint, building materials, and meat. The business activities of traders in Ibadan’s markets were seriously affected when the Oyo state government closed them as part of its Covid-19 measures. The traders in the market are self-employed professionals who manage their own businesses and whose income depends on daily interactions with clients.3Obiako, “COVID 19 and the Informal Sector in Nigeria.” They play an important role in the Nigerian economy, accounting for 65 percent of employment and the country’s GDP.4Bank of Industry, “Economic Development through the Nigerian Informal Sector: A BOI Perspective,” Working Paper Series No. 2 (working paper, Nigeria, May 17, 2018). However, lack of legal status for their businesses, lack of insurance, income insecurity, and limited access to credit are the major challenges affecting those working in this sector.5→Obiako, “COVID 19 and the Informal Sector in Nigeria.”
→Kate Meagher, “Crisis, Informalization and the Urban Informal Sector in Sub-Saharan Africa,” Development and Change 26, no. 2 (1995): 259–284.

Impact of lockdown measures

Face-to-face interviews were conducted with ten traders in Alesinloye, one of Ibadan’s largest markets. Our findings show that the Covid-19–induced lockdown had direct and indirect impacts on traders in four ways: less customer traffic, business travel restrictions, disruption of financial safety net, and interruption of children’s education.

The first direct impact was reduced patronage from customers. As one trader put it, “Market is not selling and moving as before. We put things down; we didn’t see people to come and buy. There is no money to spend; there are wares to sell, but people are not buying. Our customers that we are calling said they are under lockdown; they are not going out too and as such no money.” Another respondent similarly commented on the low patronage: “It affected me; I am a businessman [and] I don’t have anything to sell. People didn’t come out to buy [at the] market. After the lockdown, everything was too expensive; you have to put money on everything, and we are not seeing the money like that. It affected me a lot and even up till now.” Low patronage also impacted other commitments, such as paying school fees or rent.

“The Nigerian economy is highly import-dependent, and most imports come from China. As a result, traders make frequent local, national, and international trips to restock wares to stay in business.”

The second direct impact was the inability of traders to embark on business-related travel. The Nigerian economy is highly import-dependent, and most imports come from China. As a result, traders make frequent local, national, and international trips to restock wares to stay in business. Unfortunately, many could not travel because of restrictions on movement as explained by two traders. According to one of the traders, “It has really affected me a lot because, for a longtime, I can’t travel to buy goods because of coronavirus issues…. for now, business is not going on well. We are still crawling, praying that God should intervene in our business for now.”

The second trader explained the situation this way: “Generally, it has affected my business. I am supposed to be travelling abroad and locally but right now, there is no free movement to China where we get our goods. Then, in Nigeria, the cost of transport has increased a lot. For instance, when traveling to Aba [a city in Southeast Nigeria] to buy goods, we would spend N6,0006The value of the Nigerian Naira to the US Dollar was about N450 at time of the study. but now, it is N12,000. A bag of goods that would go for N7,000 is now N18,000. It has really affected the price of the goods. Foreign exchange is also high, this has affected the cost of importation, and the cost of the goods.”

The third direct impact is the disruption of social support from family members living abroad. It is common in Nigeria for those living abroad to send regular remittances to parents to help make ends meet. The positive impact of remittances on the Nigerian economy is well-documented.7Ebele Stella Nwokoye, Clement Izuchukwu Igbanugo, and Stephen Kelechi Dimnwobi, “International Migrant Remittances and Labour Force Participation in Nigeria,” African Development Review 32, no. 2 (2020): 125–137. Unfortunately, the lockdown affected this support system. As one trader put it, “The monthly help they [i.e., children] were giving for feeding every month to eat what I like and not to be wandering about became difficult. Before the pandemic, before I exhaust the one [money] they send, they would have sent another. They [children] too are doing work like before.”

Lastly, the indirect impact is on children’s education. Schools were closed during lockdown and some parents were concerned about the potential immediate and long-term consequences on their children’s learning. As one respondent explained, “They [children] could not go to school…When a student is idle, no revision of lessons, no lectures, the brain of the children may be affected. They may not be as smart as they used to be. I pray that before the end of this month the government should call back all schools to resume.” Some parents who could afford to hired private teachers to home school their children, “We had to employ the services of a private teacher and pay so that the children will not be at home doing nothing and forget what they have learnt,” they explained.

Many of the traders felt let down by the government for not providing any support to cushion them from the lockdown’s impact on their livelihoods. As one respondent lamented, the “challenges people faced in adopting the measures are many, such as hunger, lack of income. Out of which people were expecting support from government but there was none, and this is not good enough. People faced a lot of challenges; it affected business a lot, may God have mercy.”

Conclusion

“Interventions are particularly required for traders who cannot work remotely, because they need to make face-to-face interactions with clients daily to earn their income.”

The lockdown had a severe impact on business and on children’s education, particularly among informal traders. Government and other agencies urgently need to implement welfare and safety net programs, including food distribution and financial assistance, to support Nigerian households survive the impact of the Covid-19 crisis.8Gbemisola Oseni et al., “Tracking the Socio-economic Impacts of the Pandemic in Nigeria: Results from First Three Rounds of the Nigeria COVID-19 National Longitudinal Phone Survey,” Data Blog, World Bank, September 16, 2020. Interventions are particularly required for traders who cannot work remotely, because they need to make face-to-face interactions with clients daily to earn their income. However, implementing meaningful programs among this population is fraught with many potential challenges due to lack of appropriate statistics on the number of persons working in this sector. To overcome this challenge, the Nigerian government needs to work with nongovernmental organizations some of which are already in direct contact with traders and are better positioned to offer help that will meet their immediate needs.

The government will also need to use the existing social organizations among different categories of traders to develop appropriate intervention packages. For example, traders in the market organize themselves into local affiliates of national associations with well-defined leadership structure. These associations include those for tailors, shoemakers, patent medicine vendors, beauticians, and hairdressers, among others. Although membership in these associations is voluntary, the majority of traders join them because they provide economic support and play self-regulating and mentoring roles for their members.9Jenny Liu et al., “The Role of Drug Vendors in Improving Basic Health-care Services in Nigeria,” Bulletin of the World Health Organization 94, no. 4 (2016): 267–75. These associations can be organized into cooperative groups to raise money through members savings and investment to provide financial support to members in need.

Banner photo: International Institute of Tropical Agriculture/Flickr.

References:

1
United Nations Economic Commission for Africa, COVID-19 in Africa: Protecting Lives and Economies (Addis Ababa, Ethiopia: United Nations, 2020).
2
Thelma Obiako, “COVID 19 and the Informal Sector in Nigeria: The Socio-Economic Cost Implications,” Center for the Study of the Economies in Africa, April 24, 2020.
3
Obiako, “COVID 19 and the Informal Sector in Nigeria.”
4
Bank of Industry, “Economic Development through the Nigerian Informal Sector: A BOI Perspective,” Working Paper Series No. 2 (working paper, Nigeria, May 17, 2018).
5
→Obiako, “COVID 19 and the Informal Sector in Nigeria.”
→Kate Meagher, “Crisis, Informalization and the Urban Informal Sector in Sub-Saharan Africa,” Development and Change 26, no. 2 (1995): 259–284.
6
The value of the Nigerian Naira to the US Dollar was about N450 at time of the study.
7
Ebele Stella Nwokoye, Clement Izuchukwu Igbanugo, and Stephen Kelechi Dimnwobi, “International Migrant Remittances and Labour Force Participation in Nigeria,” African Development Review 32, no. 2 (2020): 125–137.
9
Jenny Liu et al., “The Role of Drug Vendors in Improving Basic Health-care Services in Nigeria,” Bulletin of the World Health Organization 94, no. 4 (2016): 267–75.