-Umuchinemere Bank calls for government subvention
By Chikezie Ogbonna
When Ogbete main market, Enugu was closed in march, John, a pseudo name for a dealer on different kind of drinks knew that there was danger ahead. According to John, he has just few weeks before the expiration of his products. With the indefinite lockdown of the market, John knew that it will be difficult for him to sell off his products of which time essentially is not on his side.
Fast forward to June, almost three months after, John’s fear has become a reality, some of his goods of over a million naira have spoilt, he was not able to meet up with his monthly loan obligation and he is almost coming back to nothing as business restarts.
The story of John though not a widespread one, however, represents an appreciable number of many traders in Ogbete main market and many other markets in the state who have been adversely affected by the raging COVID-19 pandemic.
Three months ago, the state governor, Rt. Hon Ifeanyi Ugwuanyi closed down the market and many other major markets in the state as part of the measures to curb the spread of the virus.
As predicted, the world economy will be badly hit by the COVID-19 pandemic. In America, millions have filed for unemployment while many businesses are facing bankruptcy. Nigeria has not be left out of it as well.
In May 22, Nigeria’s Finance minister, Zainab Ahmed, said the Coronavirus pandemic and falling oil prices are set to force the economy into negative growth.
She added that the economic contraction will multiply the misery of the poor.
Just recently, the National Bureau of Statistics (NBS), said that no fewer than 42 per cent of hitherto employed Nigerians lost their means of livelihood to the adverse impact of the COVID-19 pandemic, according to the National Bureau of Statistics (NBS).
It stated that the impact on employment and income had been widespread as “respondents who were working before the outbreak reported that they were not currently working due to COVID-19.”
According to the maiden COVID-19 National Longitudinal Phone Survey (COVID-19 NLPS) report, which was published on 5th June 2020 by the statistical agency, 79 per cent of Nigerians also reported that their households total income had decreased since mid-March while some households struggled to purchase staple foods namely yam, rice and beans during the seven days prior to the interview with 35-59 per cent of households who needed to purchase these staple, reporting that they were not able to buy them.
The report which monitors the impact of the pandemic, using May 2020 as baseline, essentially highlighted the cost of the pandemic on employment, education, economy and households within the review period and is expected to be published on monthly basis going forward.
It stated that the impact of the pandemic was most severe in the commerce, services and agricultural sectors of the economy.
The NBS added that the economic shocks experienced by Nigerians in the few months after the outbreak of Coronavirus far exceeded shocks experienced between 2017 and 2019.
The NBS findings further showed that more Nigerians were concerned about the health and financial impacts of the virus.
Like John in Ogbete main market, Enugu, many other business are already facing harsh economic realities in as the nation is crawling back from a protracted lockdown occasioned by the pandemic.
Speaking on the difficult economic environment Coronavirus has created in Enugu state, Mr. Abuchi Anueyiagu, the head of Public Relations/ Media Unit of Umuchinemere Pro-Credit Micro Finance bank owned by the Catholic Diocese of Enugu, acknowledged the level of trepidation the effect of the virus has had on businesses.
He said; “there’s no doubt that this covid19 pandemic has affected many businesses adversely. It has impacted negatively on businesses in the sense that we’ve witnessed a kind of fall especially in the financial institutions. For us here, our major activity is giving loans to low income earners or to the active poor people. The microfinance sector is the most affected.
“This is so in the sense that we deal with the small business entrepreneurs, like the petty traders and artisans. The closing of the markets affected the small businesses or the small financial institutions by hindering their robust activity.”
Before the pandemic, the Nigerian government had been grappling with weak recovery from the 2014 oil price shock, with GDP growth floating around 2.3 percent in 2019.
In February, the IMF revised the 2020 GDP growth rate from 2.5 percent to 2 percent, as a result of relatively low oil prices and limited fiscal space.
Relatively, the country’s debt profile has been a source of concern for policymakers and development practitioners as the most recent estimate puts the debt service-to-revenue ratio at 60 percent, which is likely to worsen amid the steep decline in revenue associated with falling oil prices. These constraining factors will aggravate the economic impact of the COVID-19 outbreak and make it more difficult for the government to weather the crisis.
However, people like John who are operators in the informal sector and are much more concerned about their daily living know nothing about whatever economic indices projection of the country.
All he cares about is how to access credit facility to attend to his ailing business occasioned by the uncertainties the pandemic has created in the country and as well see that too much taxation imposed locally on him as a trader in the market is reduced.
Buttressing further on the number of traders having difficulty of paying back their loans, Mr. Abuchi said that the pandemic has contributed adversely to the commitment of traders as it relates to the payback of their loans to the bank.
“The lockdown affected the payment of loan schedule. We had experiences of loans that have been long overdue. The debtors couldn’t open their businesses and so couldn’t pay up. We tried to evolve some strategies to make sure that the situation does not affect the performance of the bank. Now that the markets have opened and the lockdown seems to have been relaxed, our loan staff have all gone back to the field to make sure that those loans that were due during the lockdown are paid.”
Looking forward, Mr. Abuchi called for subventions from the Federal government as part of the ways to help the bank stay afloat while providing the services it is poised to provide, especially to the very poor in the society. He also revealed that they are still getting loan requests from traders, a development he acknowledged is on a surge now.
“The Nigerian government ought to come to the aid of these financial institutions so that they can at least pay their workers because the lockdown affected the flow of cash in the system. The banks are not so strong as to meet the financial obligations of their workforce. Since these workers are Nigerian citizens too, there should equally be palliative given to the financial institutions especially to help them meet the financial needs of their workers.
“We’re still getting requests for loans. With the opening of the markets, we have started getting loan requests with no loss of customers. As compared to the situation before the lockdown, the loan activities are still encouraging. No much decrease in requests, rather we have an increase,” he said.
Meanwhile, more uncertainties lies ahead for traders and business owners as the country strategizes for a bleak future with the unstable oil price at the international market and a fast weakening naira against the dollar.