‘How small businesses can hedge market disruptions with technology’

To avert another economic crisis and more Nigerians slipping into poverty, stakeholders in the financial inclusion sector have urged small businesses, especially women-owned businesses to deploy technology to hedge further disruptions to their businesses.

Noting that the lockdown measures deployed in response to the COVID-19 pandemic further impoverished most people doing business in the informal sector and widened the poverty gap, the stakeholders advocated inclusion strategies that will empower and strengthen the informal sector.

Speaking at an online media parley on how COVID-19 has impacted the informal business, that was hitherto over-burdened and its implications for increase in poverty level, the Executive Director of Micro-Enterprises, Bank of Industry, Toyin Adeniji stated that the pandemic has affected a lot of small businesses.

She noted that for the about 41 million MSMEs in Nigeria, many of who operate with a small capital base, but remain a significant contributor to the nation’s economy, the pandemic has proven to be a tough time, given the fragility of businesses within the informal sector and the dependence on daily incomes which have been cut down by restrictions in movement.

“The ecosystem is quite complex and the pandemic has shown the fragility in the system and disruptions in the system. People who had to be at their business places could not go because of restrictions to movements. There has been shortage of revenue, inability to get funding, while capital was grossly eroded in the course of the pandemic.

“At the BOI, data collected over the three-year period of running the different schemes like TraderMoni, FarmerMoni & MarketMoni, has made it possible to study the informality in the different regions of the country and helped to structure a strong response to tackle eroding capital at this time.

“Informality has to studied in order to be able to understand them and help intervene. We need to stay close to them and work with them. Exclusion has to be a thing of the past. We need to identify those in the informal sector and build data/records. We also need them to understand the products that we are offering”, she added.

She said many of the government programmes are already subsidised and palliatives were equally given in the form of loan repayment suspension and extension of moratorium for different businesses.

“We are trying to build capacities of small businesses. The need to create a blend is key.
Financial inclusion is key and sector-specific policies are needed to address inclusion gaps. Grants cannot build anything sustainable. There is a need for coordination among the stakeholders”, she reiterated.

The Special Adviser to Ekiti State Government on Investment, Trade, and Innovation, Akin Oyebode, said the key challenges the relationship between the state government and the informal sector need to surmount are those of rural and suburban connectivity using technology and the supply chain issue of depending more on external demand, which the interstate restrictions have exposed as possibly disastrous if not well managed.

He advocated that States should leverage special purpose vehicles to drive development and innovation in their states.

“At the sub-national level, we are addressing issues relating to the ease of doing business and that was why the issue of the RoW was addressed. Access to technology will further open up the economy and help to increase connections and development of small businesses.

“There is an economic reason for supporting women-businesses. The NBS data showed the differences in income levels of women and men-led households. Resilience can be achieved if we support more women-led households. We need to ensure women don’t just become a conduit for producing children by empowering them economically”, he argued.

Thelma Ekiyor and Nkem Okocha who run private sector initiatives – SME.NG and Mamamoni, both of which support women with funding and vocational skills, stated that the pandemic has necessitated a slight change in how they provide support to their target audience who are mostly women building small businesses.

To the Managing Partner, SME.NG, Ms Thelma Ekiyor, 2020 was supposed to be the decade of women but the pandemic may erode 10 years of progress if stakeholders are not careful.

“Our team conducted surveys at the beginning of the pandemic, which caused them to switch their approach to include stimulus packages that can keep these women’s businesses in survival mode at the very least. We need to invest in the sector in the long term. We structured our businesses to make it relief-oriented in order to remove barriers to access to help.

“We knew it was important to have a triage to address the situation. Though they are called the informal sector, they are indeed the employment sector. The available stimulus packages had too much bureaucracy and excluded a lot of such businesses.

On her part, Founder and CEO, Mamamoni, Nkem Okocha said: “Most of the women that we work with have been negatively impacted by the pandemic. They are no longer requesting for loans but help in terms of stimulus. A lot of women do not default but after the first week of the lockdown, some of such people with good track record of loan repayments could not fed their households.

“We are initiating a new platform and stopping lending for the next one year and looking at ways to help our partners restart their businesses. Teaching them to launch sustainable business is key as many of these women do not have a sustainable business and low loans.

“We need to teach them how to take their businesses online so that they can connect their businesses to people who have demands for their products. Using technology to scale their businesses is key. We piloted the scheme with two women and gave them grants to see how they can leverage technology to do their businesses”.