As Nigeria’s fish processors struggle to manage disruptions caused by COVID-19 lockdowns, they are calling for government stimulus and easing of access to credit to ensure their business survive.
COVID-19 lockdowns have forced entrepreneur Olubunmi Aderinsola Agbato to make some tough decisions for her fish processing business in Ibadan, north west of Lagos. She produces and markets a diverse array of fish products, including smoked and dried catfish, catfish fish powder and spices, crayfish powder, and fish snacks. She also smokes fish for a fee to other fish processors. Like other micro, small, and medium enterprises (MSMEs) that process fish caught from Nigeria’s small-scale aquaculture and capture fishing sector times are tough. She has taken measures to mitigate the effect of the movement control order and survive the shock but continues to struggle to stay afloat.
Nigeria’s COVID-19 lockdown has immediate impact on profits
Movement control orders imposed by the Nigerian government have reduced Olumbunmi’s access to markets. Before COVID-19, she used to sell products in Nigeria’s North-West, North-Central, and Southern regions, but now these markets are challenging to access. Ground transportation of goods across Nigeria can be delayed by several weeks, which causes her to lose customers. It’s still possible for her to sell her products in markets within Ibadan, but far fewer customers are visiting her shop to buy products directly. Along with this loss of income from sales, she has experienced an increase in the price of raw inputs she needs — packaging materials, fish, and spices — to produce her value-added products. Sometimes these materials are hard to find, but she also fears producing at full capacity because of the decreased demand for her products. Other fish processors have stopped coming to her to smoke their fish; she estimates that this aspect of her business has contracted to 30 percent of what it used to be.
When Olubunmi compares her gross income from April and May this year to what she made at this time last year, she sees that her business income has decreased dramatically. In April and May of 2019, she estimated her monthly gross income was around ,600 (1.4 million Naira). This year she was only able to sell $900 worth of products each month, a 75 percent reduction in sales.
To cope with this loss in income, she made critical changes to her business. First, she scaled back her production targets to suit the low-demand environment and limited her sales to Oyo State, where she is based. She reduced her costs by laying off two of her five full-time employees. Her remaining three employees now have to perform a multitude of duties to keep the business operating. Everyone pitches in to perform the production, logistics, and purchasing tasks needed to meet their new targets. These changes have helped her keep her business afloat during the crisis. She is the only small-scale fish processing businesses that she knows of that remained open during the worst of the lockdown. Most other smallholder processors she knows have closed down their businesses, either permanently or temporarily during the COVID-19 period. Olubunmi is unsure how long she can continue to operate at this low level. To help her business survive she has also cut back on household expenses, but this has been painful since she has a small child at home. Her spouse’s income has also been badly affected by the COVID-19 lockdowns, which causes Olubunmi to work extra hard to find ways to keep her business alive during these difficult times.
Stall at a Worldfish exposition displaying a variety of local processed fish products in Nigeria. Photo by Worldfish.
Government stimuli and access to credit needed to keep businesses afloat, Olubunmi sees a clear role for government to step in and provide financial assistance to MSMEs such as hers. In the short term, she says the government can best support MSMEs by easing access to credit for small businesses. Even before COVID-19 she struggled to access loans that would enable her to grow her business; now it is even more challenging. She also sees the need for a financial stimulus package from the government. She is not aware of any policy responses to COVID-19 from that are directed at MSMEs, whether that be financial support through special credit lines, tax relief or deferrals, or incentives to retain employees. As Olubunmi’s business expenses are also highly tied to her household expenses, government policies that also are directed at households, like cash transfer programs, would also have a positive effect on her business.
Furthermore, Olubunmi adds that her business and other MSMEs operating in the food processing businesses continue battling to get a government food quality and safety certification. At the moment, it is a cumbersome and capital-intensive process that is more suited for medium- and large-scale fish processers than MSMEs. A “one-stop shop” for certifying MSMEs would help these businesses establish themselves in a competitive market and help customers have confidence in the safety and nutritional benefits of these products. Olubunmi understands that Nigeria will have to live with COVID-19 for the long haul, so she has adopted a mind-set of adapting her business to the ‘new normal’. She will continue to implement appropriate hygiene and safety measures in the workplace when her business is back up and running. Olubunmi’s resilience and ability to adapt to these new circumstances have allowed her to continue operating for at least the short term, but she knows the situation is not sustainable. She can only hope that the drastic measures she put in place will allow her business to survive until Nigeria’s business community is once again able to operate freely.
Authors: Lauren Pincus and Suni Siriwardena