Many Nigerians struggle to survive as safety nets, incomes weaken

By Femi Adekoya
Although the working situation seems to be improving with the easing of the lockdown, Nigerian workers and consumers still face challenges in all
sectors of the economy, the second round of the COVID-19 National Longitudinal Phone survey (COVID-19 NLPS) conducted In June, by the National Bureau of Statistics (NBS), has shown.
 
According to the survey, millions of Nigerians have been struggling to survive, as there has not been any significant improvement in safety nets or other sources of income assistance from institutions and/or remittances.

The Guardian had on Monday, reported that the last three months of the lockdown imposed to check the spread of the novel coronavirus have been hectic for most Nigerians, as they struggle to find a balance between dipping incomes and rising inflation manifest in exorbitant prices of goods amid weak currency.
     
In June, there was virtually no change in the provision of safety nets; as the NBS data showed that 13% of households received food assistance, while 2% reported having received a direct cash transfer.
 
Similarly, informal mechanisms of support from friends and family seem to be affected with the share of households receiving remittances from within Nigeria falling from 22% in April/May to 18% in June.


 
Indeed, about 30% of households interviewed in June, experienced severe food insecurity due to lack of money or other resources. The incidence of severe food insecurity in June 2020 was nearly three times higher than in July/August 2018 and nearly six times higher than in January/February 2019. Moreover, 77% of households interviewed in June reported moderate or severe food insecurity.
 
PricewaterhouseCoopers (PwC) Nigeria predicted that the inflation rate in the most populous black nation could continue on upward trend based on “demand and supply shocks” from the COVID-19 pandemic.
 
It stated that the inflation outlook for the rest of the year would be influenced by two factors – the elevated base effect, and the waning household incomes.
 
Nigeria’s inflation rate rose for a ninth consecutive month to 12.40 per cent in May 2020, and several analysts, immediately, projected that the development would subsist for June.

The NBS however noted that future rounds of the COVID19 NLPS will help ascertain whether the return to work witnessed in June will be sufficient for households to meet their basic needs, and whether it will be sustained as the economic and health crisis continues.
 
Further insight into the NBS data showed that despite the observed increase in the share of respondents working, income from non-farm household businesses, which are mainly concentrated in commerce and services – remains precarious.
 
LCCI’s Director-General, Dr. Muda Yusuf, described rising prices as, perhaps, the worst enemy of the poor, adding that it erodes purchasing power and aggravates lack.
 
He, therefore, called for monetary and fiscal measures to tackle the menace.
 
Around 53% of households had a non-farm household business in April/May or before mid-March 2020, when the COVID-19 crisis hit Nigeria, while 49% of households reported operating a non-farm business in June.
 

Almost 62% of the businesses operating in June were engaged in commerce’, and a further 31% were engaged in services. In April/May, 81% of households owning a non-farm business either earned less revenue than they did in mid-March or earned no revenue at all.
 
In June, 56% of households owning a non-farm business either earned less revenue than they did in April/May or earned no revenue at all. Thus, the COVID-19 crisis continues to place downward pressure on non-farm business revenues, even if individuals are returning to work.
 
Those engaged in non-farm household businesses reported facing challenges associated with COVID-19. The most widely-reported challenges faced by non-farm businesses are difficulty raising money (87% of households owning non-farm businesses), difficulty buying and receiving supplies and inputs (77% of households owning non-farm businesses), and difficulty selling goods and services (70% of households owning non-farm businesses).
 
These challenges persist across both urban and rural areas. This suggests that both input and output markets continue to be disrupted by the COVID-19 crisis.
 
Even agriculture, which may be regarded as more robust to the effects of the pandemic than other sectors, is clearly being affected by the current crisis.
 
Since the sectoral GDP shock for agriculture is forecast to be less severe than in industry or services, and households engaged in subsistence agriculture may require less interaction with other market participants than those engaged in other income generating activities, it may appear a priori that farm work is less susceptible to the COVID-19 crisis.