EXPLORATION OF COVID-19 AND ITS IMPACT ON SMALL AND MEDIUM-SIZE BUSINESS SUSTAINABILITY IN NIGERIA
1.1Â Â Â Â Â Â BACKGROUND TO THE STUDY
Since the beginning of time, regions and continents have remained relatively separated, with trade and the ambition to conquer other regions serving as the primary drivers of interaction and racial mixing. However, technical progress, the technological gap, globalization, and tourism have led to an increase in international migration, and the national geographical boundaries of the world's states have become permeable. This permeability has enabled the transmission of innovations and global ideas between continents, as well as the transmission of diseases and infections from a local outbreak to a global epidemic and pandemic.
The Spanish influenza was the first and mother of all epidemics to strike the entire world. Between 1918 and 1919, an estimated one-third of the world's population, or 500 million people, were infected and manifested clinical symptoms. Recent research indicates that the deadly influenza did not originate in Spain, but rather in “Etaples,” a massive military staging camp in Northern France, where at any given time, more than 100,000 men might be found in close contact to pigs and poultry. In March of 1918, this lethal strain of influenza attacked American military training camps where soldiers awaited transportation to the war in Europe. The virus moved from Camp Funston in Kansas to neighboring camps and then to Europe through troop ships. In the span of three months, 43,000 American soldiers perished from the sickness.
The majority of influenza viruses do not kill humans directly; rather, mortality is caused by bacteria that invade the victim's weakened lungs. However, the 1918-19 Spanish flu epidemic was a direct killer. Acute cyanosis, a blue staining of the skin and mucosal membranes, affected the victims. They threw up and coughed up blood, which also flowed uncontrolled from their noses and, in the case of women, their genitalia. As many as 71 percent of those infected who were pregnant women perished. If the mother lived, the fetus always perished. As a result of encephalitis, the virus destroyed the brains and spinal cords of numerous adolescents. And millions were affected by acute respiratory distress syndrome, an immunological illness in which disease-fighting cells overload the lungs in their struggle against invaders, causing lung cells to become collateral damage and patients to choke.
The fatal Spanish Influenza virus was introduced to Nigeria by S. S. Bida, a merchant from the Gold Coast (now Ghana), whose passengers and personnel arrived from abroad. Thus, coastal ports were the primary source of the disease's spread. Improvements in transportation technologies aided in the disease's spread to the interior. Neither marine quarantine nor patient isolation prevented the disease's spread. Over half a million Nigerians killed between the 14th of September, when the outbreak was first recorded, and the middle of 1919, when it was finally forgotten.
Several additional viral outbreaks, including bubonic plague, smallpox, cholera, dengue, an unique strain of influenza, SARS, HIV/AIDS, Ebola, and the novel corona virus, have devastated large cities and states in Nigeria. The novel corona virus strain is a highly contagious illness, and the World Health Organization (WHO) has declared it an international public health emergency (Wang et al., 2021). A case of unexplained pneumonia was reported in Wuhan, Hubei Province, People's Republic of China (PRC) in late December 2019. (Huanget al., 2021). PRC Centres for Disease Control (CDC) experts determined that novel coronavirus pneumonia (NCP) was caused by a novel coronavirus, and the World Health Organization (WHO) gave the disease the formal name COVID-19 (Huang et al., 2021). However, the International Committee on Virus Taxonomy (ICTV) designated the virus as severe acute respiratory syndrome coronavirus 2. (SARS-CoV-2). There are numerous potential natural hosts, intermediate hosts, and ultimate hosts for this class of -coronaviruses.
Covid-19, as designated by the WHO index case in Nigeria, was disclosed on February 27, 2021, when an Italian national in Lagos tested positive for the SARS-CoV-2-causing virus. On March 9, 2021, a second incidence of the virus was recorded in Ewekoro, Ogun State, involving a Nigerian with whom the Italian had contact. The infectious disease, with a fatality rate ranging from 2% to 5% in different geographic places and a recovery rate of over 90%, rapidly spread throughout Nigeria's diverse states. Currently, there are about 76,207 confirmed cases, 67110 discharges, and 1201 fatalities. The virus has been detected in 35 states and the Federal Capital Territory (FCT).
The World Health Organization labeled the COVID-19 outbreak a global pandemic on March 11, 2021. To prevent the spread of the disease, a number of countries across the globe instituted national lockdowns, resulting in a significant drop in global economic activity. There was a major decrease in production, a decline in demand, and job losses across a variety of international businesses. Small enterprises are distinguished by their unusual adaptability, predisposition for entrepreneurship, smaller production quantities, straightforward organizational structure, and informal internal communication (Lazarevic-Moravcevic, 2019, p.106). However, they are typically more vulnerable during economic downturns. Early information suggests that the impact of the COVID-19 epidemic on small and medium-sized enterprises is greater than the 2008 financial crisis. Given that SMBs are the driving force behind economies.
Small-scale businesses utilize local raw materials and technology, thereby contributing to the achievement of self-reliance. Due to their contributions to the Nigerian economy, such as alleviating poverty, generating employment, enhancing human development, and improving the social welfare of the people, the Nigerian government formulates policies to facilitate and empower the growth and development of small-scale businesses. Therefore, the only lasting means of alleviating poverty is to promote economic growth and development by creating jobs and wealth. UNIDO Report (2003), as referenced by Kehinde, Abiodu, Adegbuy, and Oladimeji, states that in certain developing nations, small-scale businesses are the primary source of revenue, a breeding ground for entrepreneurs, and a major employer (2016).
In Nigeria, a bigger proportion of all registered companies are small businesses, and they have existed for a very long time. Numerous small-scale industries grew from cottage industries to small enterprises, and from small enterprises to medium and big enterprises. Small businesses have been identified as a vehicle for the creation of employment possibilities, as well as a source of entrepreneurial training, development, and economic empowerment. In the Nigerian economy, small scale enterprises are the most prevalent form of business; the goal of any economy (whether industrialized or not) depends largely on how well small scale industries are managed; for instance, if we examine the standard practice of small scale industries in economically developed countries such as the United Kingdom or the United States, we can see that they rely heavily on small scale industries to reach out to the people (Etebefia & Kinkumi, 2013).
Globally, there is no specific criterion for defining businesses as small, medium, or large. In a research conducted by the International Labour Organization (ILO, 2005), fifty different nations identified over fifty classifications for small scale industries. However, when defining small scale industries, quantitative indicators such as the number of employees, the investment outlay, the yearly sales turnover (sales), and the enterprise's asset value, or a combination of these, are typically used. Currently in Nigeria, according to the National Council for Industries NCI (2002), cited by Etebefia & Akinwumi (2013), small scale industry is defined as an enterprise with a capital of between N1.5 million and N50 million, including working capital but excluding the cost of land occupied, and a workforce of between 10 and 50 employees. Currently in Nigeria, small scale industries account for approximately 90% of the industrial sector in terms of enterprise; they also account for approximately 70% of the national industrial development if the threshold is set at 10-70 employees and contributed 10% of the manufacturing sector output and a paltry 1% of the gross domestic product; they also significantly contribute to economic development through employment, job creation, and sustainable livelihood.
In terms of the magnitude of the worldwide economic recession precipitated by the pandemic, the April-June 2021 economic estimates are becoming progressively pessimistic. In its June 2021 Economic Outlook, the OECD predicted a 6% reduction in global GDP and a 7.6% decline in the event of a second pandemic wave by the end of 2021, with double-digit declines in some of the hardest-hit nations, followed by a minor 2.8% rebound in 2021. (OECD, 2021). This follows a prediction made in late March, which showed that the initial direct impact of the shutdowns might be a loss in output of between one-fifth and one-quarter in many economies, along with a probable drop in consumer spending of roughly one-third (OECD, 2021).
In recent weeks, a number of different international organizations have made projections regarding parts of the coronavirus pandemic's economic impact. The IMF June 2021 Economic Outlook Update forecasts a fall in global GDP of 4.9% in 2021, which is 1.9 percentage points below the April projection, followed by a minor recovery with growth of 5.4% in 2022. (IMF, 2021). The June 2021 World Investment Report (Unctad, 2021) predicts a loss of up to 40% in worldwide foreign investment in 2021, followed by a further decline of 5-10% in 2021.
The purpose of this study is to investigate the impact of the global pandemic on the mode of operation of Medium and Small-Scale Businesses in Nigeria. The study investigates the effects of the imposed border restriction and lockdown on corporate operations and the financial sector's crippled as a result of the pandemic.
1.2 STATEMENT OF THE problem
The Covid-19 Pandemic affected the global economy in two ways: one the spread of the virus encouraged social distancing which led to the shutdown of financial markets, corporate offices, business and events, two, the rate at which the virus was spreading and the heightened uncertainty about how bad the situation could get led to a flight to safety in consumption and investment among consumers and investors (Oziliand Arun, 2021). (Oziliand Arun, 2021). People's movement was restricted in a number of countries, resulting in enormous losses for the events industry, airline sector, entertainment industry, hospitality industry, and sports industry. The global losses were anticipated to exceed $4 trillion (Ozili, 2021). Some small and medium-sized enterprises cannot survive beyond one month due to cash flow concerns (Farrel and Wheat, 2016). Therefore, SMEs are at a significant risk for permanent closure after large-scale disasters, in part because they are unable to pay their bills while they are closed (Schrank, Marshall, hall-Phillips, Wiatt, and Jones, 2013). The coronavirus (Covid19) pandemic has caused significant disruptions to the global economy and enterprises, regardless of whether they can continue operations. These disruptions have a wide range of effects on businesses, and many of them are experiencing financial difficulties (OECD, 2021). In many major industrialized economies, the initial direct impact on the level of GDP is often between 20 and 50 percent (OECD, 2021). Many businesses have had to lay off employees, while others have had to restrict working hours (Edgecliffe-Johnson, 2021). The pandemic has caused major socioeconomic disruptions on a global scale, the postponing or cancellation of sporting, religious, political, and cultural events, and widespread supply shortages (Turner and Akinremi, 2021). The combination of a decline in consumption and production pauses in China has disrupted global supply networks, impacting businesses worldwide (Fernades, 2021). As a result of the Covid-19 pandemic, many businesses have closed, resulting in a massive disruption of trade and commerce across numerous industrial sectors. The workforce, health and safety, cash flow, supply chain, consumer demand, sales, and marketing provide numerous short-term obstacles for retailers and brands. Numerous markets, particularly in hospitality and tourism, have disappeared, while online buying, online communication, and online entertainment have experienced remarkable expansion (Donthum, and Gustafsson, 2021).
In addition, usage of social media and the internet has increased throughout the lockdown (Donthum and Gustafsson, 2021). This is a result of the isolation caused by lockdown, since people prefer social media over human contact (Newland, Necka, Cacippo, 2018). Larger enterprises may be able to withstand shocks better than SMEs since they have greater financial resources than SMEs (Verbano and Venturi, 2013). Environmental jolt or the possibility of an extreme event (Neyer, 1982) exposes a small and medium-sized enterprise to greater levels of strategic uncertainty, which effects its daily operations and may, in certain situations, threaten its survival (Sullivan-Taylor and Branicki, 2011). As a result of the Covid19 Pandemic, the United States faces extraordinary challenges, as do many other nations (UNDP, 2021). Nigeria and its citizens are not an exception. As Albert Einstein famously stated, “in every crisis lies a great opportunity,” the Covid-19 dilemma affords management the chance to enhance transiliency and better prepare for the next Pandemic (Craighead, Ketchen, and Darby, 2021).
- PURPOSE OF THE STUDY
This study aims to investigate COVID-19 and its effects on the viability of small and medium-sized businesses in Nigeria. The paper explores the following primary aims critically:
To investigate the impact of the COVID-19 imposed lockdown on the operations of small and medium-sized enterprises (SMEs) in Lagos State, Nigeria; To investigate the sustainability strategies adopted by SMEs during the COVID-19 imposed lockdown in Lagos State, Nigeria; To investigate the current challenges facing SMEs as a result of the COVID-19 pandemic in Lagos State, Nigeria.
1.4 RESEARCH QUESTION
The study aims to provide responses to the following research questions:
What effect does the COVID-19 lockout have on SME operations in Lagos State, Nigeria?
During the COVID-19 lockdown in Lagos State, Nigeria, what sustainability methods did small and medium-sized enterprises employ?
What current obstacles do SMEs in Lagos State, Nigeria face as a result of the COVID-19 pandemic?
1.5 Significance of the Research
This study's conclusion and findings shed light on the economic effects of the COVID-19 pandemic on the operations of small and medium-sized companies in Lagos State. The outcome will illuminate the financial impact of the lockdown and the susceptibility of small and medium-sized enterprises (SMEs) to external environment constraints. In addition, the results of the study demonstrate the precarious status of many SMEs in Nigeria and the severe impact COVID-19 had on these enterprises in the weeks following the onset of interruptions caused by COVID-19. In addition, the results provide data regarding company expectations regarding the long-term effects of COVID-19 and their impressions of government-sponsored relief initiatives.
1.6Â Â Â Â Â Â SCOPE OF THE STUDY
This study examines the different conceptual aspects surrounding COVID-19 and its impact on small and medium-sized businesses in Lagos, Nigeria. The scope of the study will include Ojo, Alaba, Okokomaiko, and Trade Fair. The researcher has chosen a geographical scope that is close to her place of study, Lagos State University, and hence offers simple accessibility and convenience.
1.7 ORGANIZATION OF THE STUDY
This study consists of five chapters. What constitutes each chapter is described in detail below:
Background of the study, statement of the problem, purpose of the investigation, research questions, research hypotheses, significance of the study, delimitation of the study, structure of the study, and definitions of significant words are covered in the first chapter.
The second chapter discusses the literature review, which is organized according to the following themes: Economic Crisis and covid-19, COVID-19 Spillover to the Nigerian Economy, and Conclusions. Using Measures of Monetary and Fiscal Policy, Structural elements aggravating the economic crisis, Small and Medium Scale Enterprise, SME in Nigeria, Contributions of Small Scale Business to Economic Development in Nigeria, SME in Latin America and Other Regions. Principal sources of SME financing in Nigeria, The Characteristics of Small Enterprise, Government Intervention in Small-Scale Enterprises, Challenges of Small-Scale Enterprises in Nigeria, Government Intervention to Stimulate the Establishment of Small-Scale Enterprises, Prospects of Small-Scale Enterprises, Survival of Small-Scale Businesses in a Turbulent Environment, Factors in an Organization's External Environment, Covid-19 and SME development in Nigeria, Transformation of SME Sustainability in COVID-19, Digital Transformation.
The third chapter presents the research methodology by examining the research design, area of study, sources of data collection, instruments for data collection, population of the study, sample and target population sample size sampling procedure data collection and analysis techniques to be employed.
The fourth chapter discusses data processing, presentation, interpretation, and findings discussion.
The fifth chapter provides a summary of the study's conclusions and suggestions.
1.8 OPERATIONAL DEFINITION OF TERMS
This term refers to enterprises with low capital and few employees.
Sustainability refers to the procedures and strategies employed by business owners in order to survive and prosper.
COVID-19 is a unique type of the coronavirus that is transmissible from person to person through physical contact.
Lockdown: The imposition of restrictions on the cross-border and intra-state movement of people in an effort to prevent the spread of an infectious disease.
Social distancing, also known as “physical distancing,” is maintaining a safe distance between oneself and other people who are not from your household by maintaining a distance of at least 6 feet (about 2 arms' lengths) in both indoor and outdoor places.
Work from home (WFH) is when an employee works from their home, apartment, or other place of residence as opposed to the office.
EXPLORATION OF COVID-19 AND ITS IMPACT ON SMALL AND MEDIUM-SIZE BUSINESS SUSTAINABILITY IN NIGERIA