COVID-19, E-Commerce & MSEs

The Executive Governor of Lagos State announced the closure of markets selling non-essential (non-food) products. For those who are unfamiliar with Lagos, being that the lion share of our retail trade occurs in open markets, this is big. This includes the famous computer village or GSM Village trading in computing peripherals; Balogun Mandilaz Market in Lagos Island specialising in clothes, shoes and other wares like hair extensions, cameras (Aroloya); Ladipo Market that is famous for the sale of motor spare parts. Prior to the Presidential address shutting down the country for 2-weeks, one bothersome concern was regarding household maintenance - plumbing or electrical problems. The thought of not accessing the spare parts if and when we need maintenance repairs was an attendant problem. In the spirit of seeking solutions, my mind raced to e-commerce adoption by micro and small enterprises (MSEs). Imagine a plumber purchasing replacement parts without going to the market or the mechanic ordering the car parts that ship directly to his workshop. E-commerce in Nigeria and other emerging markets is not new, but ubiquitous adoption is still nascent among MSEs. Despite electronic marketplace platforms like Jumia and Konga, the ecosystems are yet to disrupt traditional markets. COVID-19 has dealt an enormous blow to business and commercial transactions in Lagos, Nigeria’s commercial capital and Abuja, the capital city. Effective 11:00 PM on Monday, March 30, both cities will resemble the sleepy cities in the North like New York, London and Milan. However, while Governments’ responses in the global North include stimulus packages for the emerging unemployed and zero-rated workers. I cannot help but think about the traders in Balogun and other markets in Lagos and Abuja. Yes, the President mentioned moratorium extensions on loans like TraderMoni and conditional cash transfer (CCT) payment to the poorest of the poor and respite for internally displaced persons (IDPs). But these palliatives only cover a fraction of the population. How do the MSEs survive in the next 2 weeks? Who’s got their backs? What’s the impact on them? Let me try to describe the lives of most of these traders. They are informal entities, operating as individuals and lack assets for collateral and hence little or no access to formal credit, and so they rely on either family and friends or informal lenders. They have limited savings and protections and are susceptible to shocks. Sometimes they are daily earners. So what does the shutdown mean for such MSEs and their households? Words like destabilisation and hardship come to mind. If care is not taken, hunger and devastation may claim more lives than COVID-19. Notwithstanding, MSEs play a significant role in economic development - contributing to gross domestic product (GDP), creating jobs, contributing to household incomes and promoting supply chains. The 2017 study on micro, small and medium enterprises (MSMEs) in Nigeria published by the statistics bureau and small and medium agency sized this problem. According to that report, MSEs alone represents 99.996 percent of businesses and contribute about 54 percent to GDP. As of 2017, Nigeria’s reported 41,543,028 micro, medium and small enterprises (MSMEs). The need for immediate post-COVID strategies to jumpstart MSEs is imperative. E-commerce may have supported business activity during the initial Lagos slowdown, but not during a shutdown or cessation of movement. We cannot afford a lag in our already hurting economy. Without access to their livelihoods, the survival of households in the informal economy is further threatened. The COVID-19 pandemic exacerbates the existing poverty scourge.

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