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DIFFICULTIES AND SURVIVING MECHANISMS OF SMALL SCALE INDUSTRIES AFTER THE COVID-19 LOCKDOWN PERIOD IN NIGERIA

  • Project Research
  • 1-5 Chapters
  • Quantitative
  • Correlation
  • Abstract : Available
  • Table of Content: Available
  • Reference Style: APA
  • Recommended for : Student Researchers
  • NGN 3000

BACKGROUND OF THE STUDY

Because SSIs come in a variety of forms and have made significant contributions to nation building, the promotion of small scale industries has been a priority for governments all over the world (Aderemi et al. 2019; Tehseen & Ramayah, 2015; Kayadibi et al., 2013; Khalique et al., 2011). According to the World Bank, SSIs are businesses with a maximum of 300 employees (2018).

Small scale industries, on the other hand, are described as enterprises with less than 50 employees in Nigeria. Essentially, these enterprises have a little investment in machinery and equipment of less than 600,000 naira and are independently owned and managed with the purpose of creating jobs and meeting sales targets (CBN, 2018). In Nigeria, these commercial organizations accounted for over 90% of all businesses (Gbandi & Amissah, 2014). Nigeria has 41.4 million SSIs, according to the National Bureau of Statistics (NBS). SSIs are distinguished by the utilization of locally obtained raw materials, the creation of jobs, the encouragement of rural development, entrepreneurial growth, the mobilization of local funds, and the provision of a platform for self-employment.

The disastrous repercussions of a COVID-19 pandemic in early 2020 on both people and material resources, on the other hand, must not be disregarded. Wuhan-COVID-19 emerged in China in 2019, just like Ebola did in West Africa in 2014. COVID-19, on the other hand, caused a global epidemic that spread unabated throughout the world (WHO, 2020)

The sudden and quick outbreak of the Coronavirus pandemic (Covid-19) in late 2019 and early 2020 shocked governments worldwide. Nigeria will join the majority of nations across the world in suffering a health crisis by 2020.

A pandemic is a disease outbreak that hits many countries or continents at the same time. It impacts and kills more people than an epidemic, which the World Health Organization (WHO) declared a pandemic when the illness grew severe and spread swiftly across a vast territory.

Economic pandemics are prevalent in Nigeria, but she had never seen a health pandemic. On January 30, 2020, the World Health Organization (WHO) declared the Covid-19 a Public Health Emergency of International Concern (PHEIC). On February 27, 2020, the Federal Ministry of Health announced that the first case of Coronavirus sickness has been detected in Lagos State, Nigeria. The Nigeria Center for Disease Control (NCDC)-led Multi-sectoral Coronavirus Preparedness Group has activated its National Emergency Operations Center, according to the same statement from the Minister of Health.

In less than two months, Nigeria has already achieved more than 50 occurrences around the country. Looking back at previous economic pandemics in Nigeria, the most recent being the 2016 recession, during which the Nigerian monetary authority defended the local currency against forced devaluation against the dollar and implemented a managed float foreign exchange system that worked well from 2016 to 2019. Following the 2016 Nigerian recession, it was practically widely agreed that the most major reason of Nigerian recessions was an unanticipated and extended decline in oil prices. Nigeria had two economic crises within a decade.

The global financial crisis precipitated the 2009 economic crisis, while the unexpected decline in worldwide oil prices precipitated the 2016 economic crisis. The 2009 recession was caused by a mixture of the consequences of the 2007–2008 global financial crisis, bad loan underwriting procedures in banks, ineffective risk management systems, and poor bank corporate governance (Sanusi, 2010). Banks had a crucial role in the 2009 financial crisis. The 2016 economic crisis was precipitated by an unexpected drop in oil prices, which resulted in a large drop in oil income, severely depleting Nigeria's foreign reserves (Adeniran and Sidiq, 2018). This resulted in massive balance-of-payment deficits, which, when combined with Nigeria's existing massive debt burden, forced the country into its second decade-long recession.

This new virus resulted in a wave of limitations on people, goods, and services. Factory closures and output cutbacks were not forgotten as a result of the stay-in-doors instructions. This has an unavoidable influence on the functioning of SSIs worldwide.

COVID-19, a novel vaccine, has lately piqued the interest of researchers from a wide range of fields, including health, pharmaceuticals, economics, politics, and social sciences, with the purpose of assessing the possible multiplier effects of COVID-19 on the world economy. Small-scale enterprises are the backbone of rising economies (SSIs). SSIs have been identified as economic drivers in Nigeria due to their capacity to increase productivity, create employment opportunities, and improve people's well-being (Abosede & Onakoya, 2013; Ariyo, 2005).

As the COVID-19 epidemic devastates the global economy, the implications for both people and financial resources are undeniable proof that good health is the driving force behind economic success (Meer et al., 2003; Bloom and Canning, 2000). COVID-19 has presented a number of threats to various economic processes, including the 2008 global financial crisis (Dang and Nguyen, 2020). Because of the current state of globalization, no one nation is immune to the devastating effects of this new sickness on human and economic health. To keep the virus from spreading further, officials adopted a variety of measures, including blocking borders with neighboring nations. As a result, the government declared a state of emergency in three major states: Lagos, Ogun, and the Federal Capital Territory of Abuja on March 29th, 2020, halting all non-essential activity in these regions. Later, the remaining states declared a state of emergency, barring non-essential interstate travel.

Many analysts foresee a decline in aggregate demand and supply, a fall in exports, and a rise in government expenditure across all sectors of the Nigerian economy as a result of the lockdown. The country's SSIs, on the other hand, were put in jeopardy as a result of the lockdown. In Nigeria, SSIs account for the vast majority of businesses. According to the National Bureau of Statistics (NBS), Nigeria's SSIs account for 41.4 million enterprises, employing more than 70% of the working population (ILO, 2017). This illustrates that a vast number of people are directly or indirectly involved in SSIs. As a result, any severe economic shocks brought about by the COVID-19 pandemic on these firms expose roughly 70% of Nigeria's working population to the new virus.

As a consequence, taking into account the importance of small scale firms in job creation and economic growth in Nigeria, as well as the unavoidable risks and shocks caused by COVID-19 to all sectors of the economy, notably SSIs.

1.2 STATEMENT OF THE PROBLEM

A quick and mysterious Coronavirus (Covid-19) outbreak that swept the globe in late 2019 and early 2020 is best described as an unanticipated and daunting task for nations, governments, corporations, individuals, and schools. Outbreaks of the disease spread over the world, halting schooling, politics, and economic activity in a number of countries. Covid-19 infection affects people and communities all throughout the world, causing fear, limitation, anxiety, and death. Nations' activities were prohibited save for the necessities. Banks, ministries, and businesses were all obliged to close their doors as the infection spread.

The global COVID-19 (Coronavirus) outbreak caused devastation on the global economy. To prevent the virus from spreading further, lockdown, a social distancing measure that involves the closing of markets, public offices, commercial organizations, places of worship, and activities, has been implemented. Consumers and investors have fled for safer consumption and investment due to the degree of the virus's spread and the uncertainty surrounding the situation (Ozili & Arun, 2020). Furthermore, in many countries, limitations on the free movement of people, goods, and services cause major losses for businesses and industries such as aviation, entertainment, hospitality, and sports. It was projected that more than $4 trillion will be lost globally (Ozili, 2020).

The imposed lockout had an impact on consumer purchasing rates, which fell from 59.2 percent to 41.1 percent between January and June 2020, hurting SSI productivity (Central Bank of Nigeria, 2020). According to data, unemployment in Nigeria is anticipated to climb from 23.1 percent in 2019 to 33.5 percent in 2020, according to COVID-19, which puts the unemployed population at over 39.5 million people (National Bureau of Statistics, 2020). Furthermore, during the lockdown, the poverty rate increased by 8.7 percent, going from 43.5 percent to 52.2 percent, implying that 17 million more people plunged into poverty (Andam, Edeh, Oboh, Pauw, & Thurlow, 2020).

As a result of cash flow concerns, numerous SSIs were unable to withstand the situation for more than one month (Farrell & Wheat, 2016). Furthermore, as a result of the pandemic, SSIs may be compelled to close altogether, in part due to an inability to settle accruals during the closure (Schrank, Marshall, Hall-Phillips, Wiatt, & Jones, 2013). Many businesses were forced to lay off workers, while others were forced to reduce the number of hours they worked (Edgecliffe, 2020). The global outbreak had serious economical implications, including the cancellation of sporting, religious, political, and cultural events, as well as significant supply shortages (Turner & Akinremi, 2020). The drop in Chinese demand, along with a disruption in production, disturbed global supply chains, harming multiple firms in various countries throughout the world (Fernandes, 2020), particularly Nigeria, which is strongly reliant on China.

Environmental shock exposed SSIs to a higher level of strategic uncertainty, which affected their day-to-day operations and, in certain cases, jeopardized their survival (SullivanTaylor & Branicki, 2011). Following the lockout, many SSIs experienced a variety of problems, including an overstock of obsolete items, financial pressures, and profit losses due to discount sales, among other things. Because of the problems that SSIs encountered, they employed strategies such as online sales, the use of social media influencers to promote their businesses, the use of government and bank loans, home delivery, and so on. As a result, the goal of this study is to examine the problems and surviving mechanisms of small-scale industries in Nigeria, after the covid-19 lockdown period in Nigeria.

1.3 OBJECTIVES OF THE STUDY

The study seeks to achieve the following objectives:

  1. To examine the difficulties small scale industries in Nigeria faced during the covid-19 lockdown period.
  2. To examine the surviving mechanisms small scale industries in Nigeria adopted during the covid-19 lockdown period.
  3. To analyse the difficulties small scale industries in Nigeria were faced with after the covid-19 lockdown period.
  4. To assess the surviving mechanisms small scale industries in Nigeria adopted after the covid-19 lockdown period.

1.4 RESEARCH QUESTIONS

The following research questions guide this study:

  1. What are the difficulties small scale industries in Nigeria faced during the covid-19 lockdown period?
  2. What are the surviving mechanisms small scale industries in Nigeria adopted during the covid-19 lockdown period?
  3. What are the difficulties small scale industries in Nigeria were faced with after the covid-19 lockdown period?
  4. What are the surviving mechanisms small scale industries in Nigeria adopted after the covid-19 lockdown period?

1.5 RESEARCH HYPOTHESES

The study will test the validity of the following null hypotheses:

H01: There is no positive relationship between the lockdown period surviving mechanisms adopted by small scale industries in Nigeria and their effective operation.

H02: There is no positive relationship between the post lockdown period surviving mechanism adopted by small scale industries in Nigeria and their effective operation.

1.6 SIGNIFICANCE OF THE STUDY

This study will be of immense benefit to small scale industries in all states of the federation by exposing to them the different coping strategies other small scale industries adopted during the lockdown and post lockdown era in Nigeria.

This study will also add to existing literature on this study domain and serve as a reference material for further research in this or topic in the future.

1.7 SCOPE OF THE STUDY

This study focuses on examining the difficulties small scale industries in Nigeria faced during the covid-19 lockdown period. This study also examine the surviving mechanisms small scale industries in Nigeria adopted during the covid-19 lockdown period. The study will also analyse the difficulties small scale industries in Nigeria were faced with after the covid-19 lockdown period. Finally, the study will assess the surviving mechanisms small scale industries in Nigeria adopted after the covid-19 lockdown period. This study shall be delimited to some small scale industries in Ijebu Ode, Ogun State.

1.8 LIMITATIONS OF THE STUDY

During the course of this research, the researcher was limited by the availability of funds, inadequate materials and time constraints to fully expatiate and execute the investigation into the challenges and coping strategies of small scale industries in the post-lockdown era in Ijebu Ode, Ogun state.

Also, inability of this work to cover other states apart from Ogun state was a limitation to this study because conclusion will be made only with the information gathered from the study respondents which may vary from that of other small scale industries in other states.

1.9 DEFINITION OF TERMS

Challenges: Difficulty small scale industries encountered in business after the covid-19 pandemic lockdown era.

Coping: A system or strategy that small scale industries adopted to survive after the covid-19 pandemic era

Strategies: This means the idea or methods small scale industries adopted or applied to survive in the post lockdown era.

Post-lockdown Era: This means the period after the covid-19 pandemic lock down.

Small Scale Industries: Small Scale Industries (SSI) are those industries in which the manufacturing, production and rendering of services are done on a small or micro scale.





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