How Nigerians react to economic slowdown

The devastating effect of the meltdown in the Nigerian economy on the citizenry is overwhelming. From those in the informal sector to the small and medium businesses as well as the giants in the oil and gas and manufacturing sectors, Nigerians have been hit in a disproportionate ways, as none is alienated from the negative impact.

The International Monetary Fund (IMF) expects Nigeria economic growth of 2.3 percent this year, the weakest in a decade.

BusinessDay recently conducted an online survey to ascertain the impact of the economic slowdown on the average Nigerian. The exercise lasted for four weeks in the month of March 2016.

The survey shows that most companies and industries are finding ways to stay afloat in business, by adopting a number of measures which include outright downsizing, cutting back training costs and cancellation of expansion plans, among others.

In terms of demographics, male respondents constituted 68 percent, while 32 percent were female. Sixty-five percent indicated they were employed; 31 percent in self-employment; while 4 percent were unemployed.

Also, 25 percent of the respondents were between 18 and 30 years old; 58 percent aged between 31 and 45 years; 17 percent aged between 46 and 65 years old; while no respondent was aged 66 years and above.

Interestingly, most of the respondents are literate, as only 2 percent were educated up to secondary school level, while the rest indicated higher educational attainment. In other words, 11 percent possessed ND/NCE; 58 percent possessed HND/BSc; 25 percent claimed to have MSc/PhD; while 4 percent indicated other certificates.
Does the present economy situation affect your disposable income?

On this aspect of the survey, 87 percent of the respondents indicated their disposable incomes have been affected by the current slowdown in the economy; while only 13 percent of the respondents said, their disposable incomes were not in anyway affected by the current state of the economy. This is a clear indication of how the economic is hitting hard on average citizen.

Considering the high percent of respondents whose disposable incomes are affected by the current economic conditions, it is a signal that government needs to take urgent actions to address this phenomenon in order to arrest the continuous decline in the living standards of the people and avert breakdown of social cohesion.

A steady disposable income will translate to an increase in demand for goods and services and that will further lead to expansion in production and workforce. A decrease in disposable income will have a reverse effect.

To what extent does the economy situation affect your disposable income?

Sixty-six percent indicated to have been affected badly; 15 percent respondents indicated very badly; while record of those who were not significantly affected were 19 percent.

As business owners are struggling to survive, a lot have resorted to cutting down the number of staff, reduction in staff benefits, and slashing salaries, among other variables. As the level of unemployment increases, a lot of people are being careful about how they spend their money. All these put together have adverse effects on disposable income of an average Nigeria, today.
For traders/artisans and other categories of workers: How much do you lose daily due to the economic slowdown?

The study revealed what small business owners lost per day. Forty percent of the respondents indicated to have been losing between N1, 000 to N5, 000 daily; 31 percent lost between N5, 000 to N10, 000 daily; 9 percent indicated to have lost between N10, 000 to N15, 000 daily. Those that lost between N15, 000 to N20, 000 constituted just 4 percent; while 16 percent of the respondents lost N20, 000 and above.

Small and medium scale entrepreneurs, traders, artisans and businessmen are lamenting over low turnover in their businesses. The current fuel scarcity has also made matters worse for business owners. Artisans, traders and other businessmen have sad tale to tell out there. Most have resorted to carrying generators to fuel stations daily in order to get fuel even at a very high price to run their businesses. Small business owners like welders, tailors, cobblers, electricians, among others, have suffered huge losses while the situation persisted.

For big companies: To what extent has your company revenue dropped in the last one year?

Interestingly, the study indicated 76 percent of the companies have been significantly affected; 22 percent have not been significantly affected; while 2 percent of the respondents were indifferent as to what extent the slowdown in economy have affected their companies’ revenues.

The turmoil in the economy, which has continued to bash Nigerians in the last one and a half year, has affected its status as the most viable and attractive economy on the continent of Africa. The turmoil manifested through currency depreciation in the parallel markets against major international currencies, especially the US dollars, economic downturn, high inflation, just to mention a few.

Although, the Central Bank of Nigeria’s (CBN) official rate is set at N197 to the dollar, a lot of players in the industry such as manufacturers, importers find it difficult to access the forex at the official window, therefore making it difficult for business to thrive in the country. Worse still, there is high cost of self power generation, which naturally comes with the perennial fuel scarcity.

Invariably, companies are closing down business due to reasons which range from lack of electricity supply and other infrastructural amenities. The Federal Government needs to create good economic policy that will help recalibrate the nation’s economy to attract both local and foreign investors. This policy should also address the infrastructure deficit; unbolt the rich diversity in the economy with a determined and focused turn-around programme.

Importers: How is the present economic slowdown affecting your business?

Forty percent of the importers indicated to have been badly affected; 33 percent indicated it was very bad; 21 percent indicated not so badly affected by the economic slowdown; 6 percent of the importers said they have shut down their businesses due to economic hardship.

The depreciation in naira to dollar has made importers go through excruciating pains while sourcing for forex at parallel market. It is even more difficult to access dollars at the official exchange rate and this has created serious setback for average importers in Nigeria. Some importers admitted to the fact that the economic policies of the present administration have affected them negatively.

Those who trade in textile materials and pharmaceutical products, for instance, the administration introduced the policy of $5,000 as BTA. This means you can only travel outside Nigeria with only $5,000. This is grossly insufficient for traders who import from overseas. All these put together lead to high inflation rate which in the long run reduce the purchasing power of citizenry.

Transporters: How is the present economic slowdown affecting your business?

Sixty-two percent indicated to have been hit very badly by the current state of the economy; 17 percent said they have been affected badly; 17 percent indicated the effect has not been so bad; and only 4 percent indicated to have been forced to shut down their business.

Further findings show that some transporters are not left out in the effects of the economic hardship. As fuel price increases, major transport companies (inter-states operators) have also increased their fares. While others like tricycle (Keke Napep) operators, motorbike (Okada) riders and commercial bus drivers, most of whom earn their living from transportation and in particular through higher purchase, are finding it difficult to meet up with their daily remittance. Those who obtained bank loans are also groaning due to high interest rate.

Traders: How is the present economic slowdown affecting your business?

Traders who indicated to have been very badly affected were 47 percent; while 29 percent were badly affected; just as 18 percent indicated that their businesses have not been so badly affected by the current economic meltdown; and 6 percent indicated that there was no change in the status of businesses now and when the government took over, almost a year ago.

As the current economic and fuel scarcity situations continued to take its toll on traders, civil servants, artisans and other categories of people, the crisis has affected market forces, culminating in the soaring prices of goods and commodity, just as low patronage continues to be a source of concern to traders.
Civil Servants: How is the present economic slowdown affecting your lifestyle?

Forty-five percent of the respondents said their lifestyle has been affected badly; 17 percent were very badly affected; 14 percent said their lifestyle has not so badly been affected by the present state of the economy and 21 percent said there is no difference in their lifestyle as to the impact of the economic slowdown.

Civil servants see the current situation in the economic as a bitter pill to swallow, as most are finding it difficult to maintain a reasonable lifestyle. Some can barely feed twice per day not to talk of paying their children school feels as at when due.

The minimum wages for the Nigeria civil servants is N18,500.00, even at this, some state governments are owing their workers up to six to eight months. Recently, some state governments trimmed down their workforce and also tried tracking and removing ‘ghost workers’ from their payrolls. The chances of survival for this set of people are narrow. This is likely to have a negative impact on the society, as it may lead to a surge in crime rate.

How does the slowdown affect the employers of labour?

This part of the survey shows how employers of labour are reacting to the slowdown. Here, 26 percent of the respondents said they have resorted to cut down or reduce their staff strength; 12 percent said they have cut down staff training; while 18 percent of them opted for salary slash; 12 percent of the respondents acknowledged they have reduced staff benefits. Interestingly, 32 percent of the employers said they have adopted all the aforementioned measures.

It is now evident that employers of labour are struggling to survive in the ongoing economic slowdown; the proactive ones are taking different measures to keep their business going. In recent time, the Nigerian labour market has seen an upsurge in the number of the unemployed Nigerians as a result of the unfavourable economic situations.

In what ways does the recession affect your children’s education?

Seventy-seven percent said they were not able to pay their children school fees when due; 10 percent indicated to have withdrawn one or more of their children from school; while 13 percent indicated to have changed their children’s schools to more affordable ones. In addition to non-payment of salaries, other causes include delay and cut in the salary of workers.

In summary, the outcome of this survey is an indication that the economy is growing from bad to worse and defying all solutions. The government needs to act as a matter of urgency to bring lasting solutions to the lingering slowdown in the nation’s economy.

PETER EHIGIATOR