#EndSARS Protest, Covid-19 Push Businesses Toward Extinction

With the double barrel of Covid-19 pandemic and the recent civil unrest having its toll on the nation’s economy, businesses across the country are currently suffocating for fresh air.  OLUSHOLA BELLO writes.

The lingering crisis witnessed in the country will have significantly impact on businesses activities, further compounding the woes of the manufacturing sector which is yet to recover from the COVID-19 induced decline.

Over the past three weeks, the front wheels of economic activities have been deflated due to the protests across the country against police brutality and the excesses of the Special Anti-Robbery Squad (SARS). The reported cases of the protests being hijacked by the hoodlums have forced some state governments to impose curfews to douse the tension and restore law and order. This has added pressure to the slow recovery process predicated on the persistent FX liquidity constraints, improved compliance with OPEC oil production cuts, and general low level of business activities.

Experts have said manufacturing sector is expected to be the hardest hit, while the sector is currently being hampered by foreign exchange (FX) related issues and an unfriendly business environment.

For the trade sector, the decline in household consumption brought about by higher food prices and shrinking consumers’ income will cascade into weak wholesale and retail trade in conjunction with the pre-existing supply chain constraints.

The Lagos Chamber of Commerce and Industry (LCCI) expressed its deep sense of loss and pain, the loss of lives, property and livelihoods arising from the subsequent regrettable events following the recent peaceful EndSARS protests.

“We bemoan the unprecedented levels of destruction, plundering, arson, looting and vandalization that took place, this is one of the darkest moments in our recent history.

“We empathise with the families of all those who have lost loved ones during and in the aftermath of the protests. We share the pain of all investors: micro, small, medium and large that suffered losses as a result of the arson, looting and the destruction of their valuable fixed and moveable assets.

“We share the grave concern of employees who are at the risk of losing their jobs as a result of these deplorable and debilitating incidents.  We empathise with the Lagos State government over the wanton destruction of public properties around the state,” LCCI stated

The LCCI reiterated its position on the imperative of peace, dialogue and engagement as major ingredients for social and economic stability that will enable a conducive environment for investments and the prosperity of businesses, saying that the Chamber implores all stakeholders (the government and the governed) to prioritise dialogue and constructive engagement.

The national president of Nigerian Association Of Chamber Of Commerce Industry Mines And Agriculture (NACCIMA), Hajiya Saratu Iya Aliyu, said the impact of the crisis and wanton destruction of property as being witnessed is clear for all to see, saying that billions have been lost in arson and looting going on.

“Business operations have also been seriously impacted. NACCIMA’s efforts as a National Chamber, to help project our country as a favourable and investment friendly destination to our Business partners abroad, and other Foreign investors over the years is now suffering a serious setback.

“At a period we are still struggling with the negative impact of COVID-19 on our economy and working on economic recovery, we must not, by acts of commission or omission, aggravate our economic situation,” she said.

Some companies in the country have reported declined in the profitability and revenue due to COVID-19 pandemic in the first half (H1) of the year.  Guinness Nigeria Plc, notified that the adverse impact of the sharp contraction in economic activities, and the knock-on effect of the COVID-19 lockdown took a toll on the on-trade segment of the business across all its markets.

According to the brewer, production and revenues have thus been negatively affected, adding that due to a combination of the impact of COVID-19 and the asset impairment, it expects the profitability of the company for the Financial Year to June 30th, 2020, to be impacted.

Unilever Nigeria also posted its H1 2020 losses since at least 2013, according to available Nigerian Stock Exchange (NSE) records, suggesting that the firm and others in similar industries may be up for a significantly challenging year.

For Tantalizers Plc, revenue and profit dwindled during the period. Profit dropped to N200.67 million in H1 2020 from N283.26 million, while revenue closed lower at N433.8 million from N638.75 million. UAC of Nigeria Plc followed in the same manner as revenue declined 8.7 per cent year-on-year to N36.6 billion in H1 2020 from N40.1 billion in H1 2019, while gross profit fell 16.1 per cent YoY to N7.0 billion.

Speaking on the performance, group managing director, UAC of Nigeria, Folasope Aiyesimoju, said: “In the first half of 2020, our plans were disrupted by the impact of the COVID-19 pandemic. Revenues declined 1.8 per cent year on year with operations impacted by necessary but stringent restrictions to the movement of people and goods, particularly in the month of April. We are encouraged by the performance of our businesses in May and June but remain concerned about continued input cost pressure.”

For Nestle, however, impact on revenue was marginal but profit took a hit. Revenue dropped by one per cent from N141.9 billion in H1 2019 to N141 billion in 2020, while profit closed lower at N21.8 billion from N26.2 billion in 2019.

Speaking on the half year 2020 results, managing director of Nestlé Nigeria, Mauricio Alarcon said, “These results illustrate the resilience of our company. Amidst the on-going COVID-19 pandemic, Nestlé Nigeria has delivered consistent results in terms of revenue while exchange rate variations and increase in the price of some key materials have affected profitability.”

The same story did apply to Cadbury Nigeria Plc as revenue declined by 18.2 per cent to N15.9 billion from N19.5billion in the previous quarter, while profit after tax fell 19.9 per cent to N537 million.

Meanwhile, the president of LCCI, Mrs Toki Mabogunje appealed that the federal and Lagos state governments to collaborate to provide support in the form of grants to all the victims of the unfortunate outcomes of the protest and the subsequent attacks and destruction of properties and assets.

She stated further that the families of all those who lost their loved ones should be adequately compensated, calling on the federal government to come to the aid of the Lagos State Government to rebuild the large number of assets that were destroyed by the hoodlums that hijacked the protest.

According to Mabogunje, this has become necessary in view of the current challenging economic conditions that the state was already grappling with.

Read the Source post on Leadership Newspaper.