Effects of Covid-19 Pandemic on Micro, Small and Medium Scale Enterprises in Kontagora Local Government, Niger State, Nigeria

This article is published by the Zamfara International Journal of Humanities.

Murjanatu Garba Ayawa*1Mohammed Baba Jibril*2 and Ibrahim Baba Kudu*3

1, 2, 3 Department of Geography Interest-Free Partnership loan Scheme Unit




 Abstract: The outburst of coronavirus disease (Covid-19) has seriously affected the world and the Kontagora economy. Foremost victims of the Covid-19 outbreak are micro, small, and medium-sized enterprises (MSMEs). The study aims to examine the effect of the Covid-19 outburst on these enterprises and provide policy recommendations to assist MSMEs to ease business losses and survival the ravaging situation. The study adopted exploratory methodology broadly revising the available literature including research papers, policy documents and reports in relevant fields. Data were collected from five hundred and forty-six MSMEs by administering the questionnaire. The data were analyzed through descriptive statistics. The result revealed that the Covid-19 pandemic significantly affected cash flow and other areas like revenue, sales, and salaries & wages across the various sector of the businesses. Also the survey found that the majority of the businesses did not receive any form of support from any private sector/enterprise or even government. However, based on the result of the study, it was recommended that the government should provide and fast-track direct social assistance as a stimulus package for businesses capital to help revive all the affected areas and sectors and the government should facilitate assess to flexible financing support packages through grants interest-free loans and bridge financing to meet critical needs like salaries.


Keywords: MSMEs, COVID-19, Kontagora, Crisis, and Business survival

Micro, Small and Medium Enterprises sector (MSMEs) is the  spine  of  many  economies  globally  that  provide income and employment generation to a large number of people  around  the  globe.  Similarly,  in  the  case  of  Nigeria MSMEs  is  the  largest  employment  generator  and  acts  as  a breeding   ground   for   entrepreneurs   and   innovators   with considerable support in strengthening the business ecosystem. As the socio-economy engine of the economy and according to the 2017 MSME Survey carried out by the Nigerian Bureau of Statistics and the Small and Medium Enterprise  Agency of Nigeria (NBS/SMEDAN) MSME study, they account for 76.5% of  the  total  workforce  and  49.78%  of  the  country's  Gross Domestic Production (Oyewale, Adebayo & Kehinde, 2020). The estimated number of MSMEs in Nigeria is 41.5 million and employs 32 million individuals (SMEDAN,  2020).   Various reports, researches and surveys have proved severally that this sector act as a catalyst for the socio-economic development of the country (Obiakor, 2020).

However, the year 2020 was unusual. It was filled with lots of surprises, to say the least. One that the world will never forget is the COVID-19 pandemic which grounded almost all facets of life. In January 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a public health emergency, and a pandemic in March. On the 27th of February, the first case of coronavirus was recorded in Nigeria, after which the virus started spreading fast to other parts of the country.

To curtail its spread and adverse effects on health the Nigerian government imposed a lockdown first in Lagos, Ogun, and Abuja, and later extended it to some other states of the federation, Niger state inclusive. 


The result of the lockdown caused by the pandemic affected Micro, Small and Medium Enterprises (MSMEs). Many MSMEs which were struggling to stay afloat, couldn’t survive the economic hardship caused by the lockdown. During the lockdown, the sector faced challenges related to debt repayments, wages/salaries, statutory dues and so on (Adenomon, Maijamaa, & John, 2020).

Survey reports by Fate foundation in partnership with BudgIT have shown that disruptions caused by the Covid-19 pandemic have affected MSMEs earnings by 90.4%, micro and small enterprises faced the maximum heat, mainly due to liquidity crux (cash flows, sales and revenue) and customer demands. The necessary implementation of a lockdown and social distancing measures led to a near-complete shutdown of economic activities, lay-offs across most sectors, loss of income, and a drop in average household purchasing power (Ahmed, 2020).

 These unprecedented economic woes caused by the pandemic cut across every level eaten deeply into the society. 

In Niger state either, MSMEs also stand as the main sector that generates mass employment to the citizens. These businesses are spread all over Niger state in rural and urban areas and represent a significant portion of agriculture, manufacturing, retail, wholesale, trade, and service sectors. Due to the COVID-19 outbreak and lockdowns, the entire state and Kontagora businesses inclusive faced unprecedented adverse effects on their businesses. Nothing could have prepared them for the hard-hit they received from the COVID-19 crisis. The outbreak vehemently affects business continuity/survival, cash flow, and job/employment. The study of Ahmad, Suraiya, & Mohammed (2020) admitted that the pandemic also affects sales/revenue and low product order/demand. While in the study led by Otache (2020) the emphasis was on the pandemic effect on the labour force. The effects on business continuity, labour force, revenues and occupational health and safety have been, and continue to be, devastating on these MSMEs as infection surge around the world, the entire country, Niger state and Kontagora in particular. It is on this premise that the study intends to examine the effect of COVID-19 on MSMEs in Kontagora LGA.


Literature Review and Conceptual Clarifications .

1. Effect of COVID-19 on the Global Economy:The effect of the infection on society and the economy can be witnessed from the lockdown of cities all over the world, labour mobility restrictions, travel bans, airline suspensions, and most importantly slowdown of the economy. The first wave of the COVID-19 crisis went global from February to October 2020 and still the number of cases is growing rapidly every day. It is predicted and confirmed that the COVID-19 outbreak has major consequences for global GDP growth (Word Economic, 2020). Due to the global outbreak of COVID- 19, the global GDP is affected between 2.3% to 4.8% (ADB, 2020). Additionally, the current pandemic outbreak caused` global foreign direct investment to shrink by 5%– 15% (UNCTAD, 2020). Further, according to the UNCTAD report, the world needs a support package of up to $2.5 trillion to cope with the damage (UNCTAD, 2020). Hence, based on these statistics, the current global crisis will likely be worse than the 2008 crisis (UNCTAD, 2020).


Further, according to International Labor Organization (ILO), almost 25 million and above people around the globe lose their jobs (ILO, 2020). A more recent report of ILO shows that lockdowns (full or partial) measures are influencing 81% (around 2.7 billion workers) of the total global workers (ILO, 2020). “It is the worst global crisis since the Second World War” (ILO, 2020). it was estimated that the U.S. would lose three million jobs by midsummer in 2020, the trend in Europe and other parts of the world is similar (Siddiqui, 2020). According to ILO the effect of COVID-19 on the economic output of accommodation and food services, real estate, wholesale and retail trade, repair of motor vehicles and motorcycles is ‘high’, while utilities, public administration and defence, social work activities, human health, and education is ‘low’4 (ILO, 2020). COVID-19 have a more profound effect on developing countries that will make it much more difficult for them to implement effective stimulus without facing binding foreign exchange constraints (UNCTAD, 2020).


Most vulnerable countries are those that have weak health infrastructure, are heavily dependent on trade and tourism sectors, heavily indebted, and that depends on unstable capital flows (World Bank, 2020). Controlling the COVID-19 outbreak will revive the economy, but the risk of continued financial stress is very high even after 2020 (World Bank, 2020). Further, it has also been estimated that poverty has increased by around 11 million people (World Bank, 2020). Although the economic impact of the outbreak is continuing and is increasingly unpredictable, it is clear that the situation in developing economies will get worse before it gets better (UNCTAD, 2020). According to the United Nations Development Programme (UNDP), income losses in developing countries are likely to exceed $220 billion (UNDP, 2020). In addition, World Bank in its recent report has predicted that Africans could face its worst economic performance ever recorded years with almost all of the countries falling into a deep recession (World Bank, 2020). This is the case, particularly for Nigeria. 

2.  Effect of COVID-19 on the Nigerian economy and MSMEs: It has been reported that Nigeria lost one-third of its revenue and exports dropped by 76% due to the COVID-19 outbreak and lockdown (Junaid, 2020). Economists warn of recession amid virus lockdowns in Nigeria (, 2020). Similarly, the World Bank also warns that Nigeria might fall into a recession (World Bank, 2020) and Nigeria fell into recession in October. Due to the ongoing crisis caused by the COVID-19 pandemic, real GDP growth in FY20 contract by 3.6% as national and global economic activity slowdowns abruptly during the last few months of the fiscal year (World Bank, 2020).

The biggest and most immediate effect of the lockdown is the cessation of business operations. Lockdown was first announced in Lagos, Ogun and FCT on March 23, 2020. Lagos as the largest commercial city is considered the country's largest industrial zone accounted for 30% of total exports. Due to lockdown, out of 2700 factories in Karachi less than 50 were operating on the first working day (Hussain, 2020). Further, Hussain (2020) reported that there are around 83 million people in Nigeria who live just at or below the subsistence line, while there are the masses of largely unskilled or low-skilled people (such as labourers, waste recyclers, construction workers, transport workers, and domestic workers) who work in different industries, services, and agriculture, and rely on daily wages to meet their needs. 

These daily wagers have been hardest hit by the lockdowns. After them, there is a class of micro-enterprises (also known as self-employed persons) such as small shop owners, household businesses, and street vendors, among others, who heavily rely on their micro-businesses.

These businesses are usually operated by family members in different industries ranging from agriculture to education. Further, these micro-enterprises are considered a part of the informal economy, and most of their activity is undocumented. Hence, the accurate number of these businesses is not known. According to the recently available statistics, micro-enterprises or self-employed persons are accounted for 35.7% (2017–18) of the total national employment (Chukwuka and Mma , 2020). Furthermore, 55.6% (2017–18) of these businesses are vulnerable, out of which, more than 87% of employment in agriculture, three-fourths of jobs in wholesale and retail trade, 50%of employment in restaurants, three-fifths of the job in real estate and business, and more than two-fifths of employment in transport and communication is vulnerable (Otache, 2020). For further details about sector wise vulnerability of micro-enterprises (self-employed persons). From the above statistics, one can quickly get an idea about the severity of the impact that the COVID-19 outbreak had on micro-enterprises. After then, come the small and medium-sized enterprises. Many small and medium-sized enterprises are also facing huge issues. For instance, the textile and apparel industry has been affected mainly due to the imposition of lockdown. 74% of Nigerian manufacturing sector exports are beverages, food sub-sectors and textile, a reduction in export demand for these sectors will have an uneven effect on Nigeria (World Bank, 2020b). In the same way, the agriculture sector is no exception. For instance, cereal crop harvesting usually began in Sindh and southern Punjab provinces in late March until mid of June. Due to the non-availability of labour and transport, this sector also faced several issues. Similarly, in the case of the transport industry, many drivers of local transportation, including bus, taxi, and rickshaw, have been sent home. The closure of businesses and disruption of national supply chains are having a significant impact on retail and wholesale, transport, warehousing, and communications services (World Bank, 2020).


 Likewise, the situation of other industries is no different. Most importantly, during the holy month of Ramadan, many sectors such as clothing, saloons, food, electronics, and shoes, among others, were severely affected. These small and medium businesses are expected to face liquidity issues and be hard hit by the ongoing crisis. Additionally, those firms that are still operating their businesses are facing extra costs to buy masks, gloves, and sanitizers, among others in terms of managing the health and safety of employees.


Further, amid COVID-19, Nigeria’s currency has been devalued, which poses another threat for businesses. According to a recent report of the World Bank, Nigerian's exchange rate that remained soar has further been devalued by 7.3% in March (World Bank, 2020b). According to the Nigerian Labor Force Statistic (2017–18), the unemployment rate in the country is 33.3 3% (Sohail, 2018). However, due to the ongoing crisis and lockdown, the unemployment rate has reached 27% during the fiscal year 2020–21 (Siddiqui, 2020). The above discussion indicates that Nigeria will suffer disproportionately. The impact of coronavirus on the global and Nigeria economy will leave deep scars. Therefore, it is extremely important to empirically assess the effect of the COVID-19 outbreak on MSMEs to assist policymakers and practitioners to streamline their strategies to help these businesses survive the ongoing crisis.


3.  Effect of COVID-19 on MSMEs

1. Effects on Business Continuity


Many businesses faced continuity problems as pandemics hit harder. Some have completely grounded while some are struggling for survival Of the 1,000 companies surveyed from eight countries across four continents, 70% have had to shut down operations (Bartik & Stanton, 2020). Half (50%) have temporarily closed their business by following direct instructions from the authorities, while the other 50% have closed temporarily due to a reduction in orders, cases of staff COVID-19 infection, or more sadly, permanently. In Nigeria, more businesses do not have only temporarily closed down but are completely grounded. This was witnessed across the country which local areas were not left out.


2.   Lower Revenues


Revenue expected by businesses is hardly realized due to the pandemic. More than 75% of MSMEs experienced a reduction in revenues through 2020 (Fairlie, 2020). In some cases and according to the entrepreneurs surveyed, Fairlie, (2020) reiterated that the reductions in revenues are very high that one-third (33%) of businesses lost more than half of their revenues—and the situation is not expected to improve. In a country, such as Ghana, there was relative optimism about the future, balanced with a healthy dose of uncertainty (Apia,


2017). However, in Nigeria, significant losses are experienced, with a higher proportion of entrepreneurs faced losses well above 35% (Ashagibi, 2020). However, in local areas like Kontagora, businesses are said to have lost well above fifty per cent.


3. Reduced Demand for Orders


The situation is similar for customer orders, with 75% of companies suffered from reduced demand and one-third (33%) experienced a more than 50% drop in customer orders (Bartik & Stanton, 2020). Although those surveyed expect demand to recover somewhat through the rest of 2020, the majority experienced a reduction of up to 50%. These are the same countries like Nigeria that are the least pessimistic about revenues (Otache, 2020). Local areas businesses with local demands cannot figure out the exact reduction in order.


4. Cash Flow Shortages


The situation is critical for MSMEs and becomes even more so when looking at cash flow. Nearly 9 out of 10 businesses have experienced a shortage in cash flow in Nigeria (Chukwuka & Mma 2020). The situation is not expected to improve throughout 2020, according to those surveyed (Ashagibi, 2020). Businesses cash flow is expected to improve insignificantly even after the locked down which means fewer business activities and in turn low economic boom. The situation adversely affect MSMEs in

local areas leaving them with no choice to halt business while some eventually folded up.


5. Effect on the Labour Force


The effects on SMEs are dramatic, and so are the measures concerning the labour force in Nigeria. Seven out of ten firms have reduced production capacity due to a lower number of temporary workers, reduced working hours, or employees taking paid leave (Hussain, 2020). A significant proportion of firms have taken more drastic measures. These include asking workers to take unpaid leave, work for reduced pay (twenty per cent surveyed), or even by laying off (ten per cent surveyed) permanent staff (Siddiqui, 2020). Nearly one-third, or thirty percent of companies report a shortage of workers resulting from containment measures, family care responsibilities, or fear of infection by Covid. These are alarming statistics for those concerned about working conditions in MSMEs across Nigerian include Kontagora LGA.

Study Area


Kontagora local government is one of the 25 local government areas of Niger state with a projected population of 213,500 (NPC, 2016). Kontagora LGA is surrounded to the north and east by Mariga LGA to the south by Mashegu LGA and the west by Magama LGA. It has a landmass of 2,081 km², making it one of the largest towns in Niger State. The dominant tribes are Hausa, Kambari, Dakkarkari, Dukkawa, and other tribes that exist are Nupe Gbagi (gwari), Kamuku, Basawa etc. Economy activities of the inhabitants are farming, agro-allied and agro-based business, plastic manufacturing, sachet and bottle water production, bakeries, restaurants and eateries, petty trading and so on.

Methods and Materials

The exploratory methodology study was adopted extensively revising the available literature, including research papers, policy documents, and reports in the relevant field. To further add value to its empirical evidence, data from micro, small, and medium-sized enterprises (MSMEs) operating in Kontagora were collected. The data were collected by administering a questionnaire and instantly collected due to various reasons including time and financial constraints, and most importantly, due to restrictions on the COVID-19 outbreak. This was done with the help of seven research assistants. Interpreters were also used to obtain information from non-literate respondents where the researchers could not speak the languages.


The questionnaire comprised a total number of 16 questions. The survey included several questions regarding basic information about enterprises and their characteristics (such as stage/level and industry sector), the effect of COVID-19 outbreak on business, decline in sales and profit/ revenue cash flow, disengagement of employees, and business support to ease the burden. Participation in the survey was voluntary and no financial compensation was offered on completion of the survey. The questionnaire items were pretested among a small sample of business owners to evaluate the clarity and relevance of the questionnaire items to identify and eliminate any potential issues, before formally launching the survey.


The Snowball sampling technique was utilized to collect the data as it is widely used due to its time-saving and cost-effectiveness benefits (Fairlie, 2020). The data were collected during the period from April 10, 2021, to August 10, 2021. A total number of registered 546 MSMEs in Kontagora LGA partook in the survey and provided their perception. A descriptive analysis approach was employed for data analysis.


Results and Discussions

Table 4.1 Business Owners Demographic and Employees




Source: Researcher’s Compilation (2021)

It is observed from table 4.1 more male-owned businesses among the respondents with young businessmen aged 18 – 35 making the biggest age group at 53.5%. Also, the majority of the respondents indicated their businesses had been in existence for 1 – 5 years (62.3%), and about 57.5% indicated that they employed between 1- 9 people stressing that most respondents ran micro-enterprise.

Table 4.2 Owners Business Level, Sector or Industries


Source: Researcher’s Compilation (2021)

Table 4.2 depicted that micro-businesses were the majority which according to the Small and Medium Enterprises Development Agency of Nigeria definition are businesses employing less than ten people with an asset base of less than N10million. These businesses were spread across the Agricultural sector 21.9%, Fashion sector 13.1%, Service sector 11.2% and Retail sector (8.6%).

Table 4.3 Business Offerings and Customer Segment Type

Source: Researcher’s Compilation (2021).

  The survey in table 4.3 displayed that 47.6% of the respondents offered both products and services while 39.6% provided services alone with 12.8% providing products alone. However, more than half of the businesses recounted operating a business-to-customer relationship with 33.0% operating a business-to-business relationship and 13.9% operating to both businesses and customers.

Table 4.4 Effect of Covid-19 Pandemic on MSMEs, Areas Affected and their Survival


Source: Researcher’s Compilation (2021)

Table 4.4 displayed 90% of the respondents reported being affected by the pandemic negatively particularly in the areas of Revenue, Sales, Cash flow and Salaries & Wages etc. Notwithstanding the negative effect, about 46% of businesses sensed positive that they will survive the pandemic. While 31% were confident their businesses will not survive the pandemic, and 23% were not sure.

Table 4.5 Availability and Sources of Cash Flow 

Source: Researcher’s Compilation (2021)

Table 4.5 only 19% of the respondents reported they had enough cash flow to survive for 1 year and above. While 37.4% had enough cash flow for 6-12 months and 43.6% for 1-6 months. The majority of these businesspersons reported they leverage savings and reserves 54.6%, others had to result to loans 13.8% or turned to family and friends 9.7% for help.


Table 4.6 Staff Disengagement and Factors Influencing Disengagement



Source: Researcher’s Compilation (2021)

Table 4.6 showed that 74% of businesses employees were disengaged largely because of prolonged periods of the pandemic, poor sales, inability to pay staff, and restriction of movement. While 83% of the businesses reported that between 1 – 5 employees were disengaged.


Table 4.7 Business Support and Kind of Support Needed

Source: Researcher’s Compilation (2021)

Table 4.7 displayed more than half of the businesses 64.0% reported that they did not receive any form of support and reported Revenue, Cash flow, Sales, and Salaries & Wages as areas where they needed support.

Conclusions and Recommendations

Micro, Small and Medium Enterprises (MSMEs) sector is said to be the bedrock of many economies globally that provide income and employment generation to a large number of people around the globe, Nigeria inclusive. The narrative has changed due to the COVID-19 pandemic which almost shut the economy of the world has affected MSMEs prompted this study found micro-businesses negatively affected the most which spread across the agriculture, fashion, service and retail sector of Kontagora LGA. This is unconnected with the fact that the inhabitants of the LGA are predominantly farmers which progressed to other economic activities. Also, the study found Covid-19 pandemic significantly affected cash flow and other areas like revenue, sales, and salaries & wages of the businesses. In addition, it was found that only a few entrepreneurs can survive if the pandemic persists over a year only if the business operators can save enough as a source of cash flow to stimulate/finance enterprises as the pandemic hit harder. Furthermore, in the course of the Covid-19 effect examination, it was revealed that many businesses employees were disengaged because of prolonged periods of the pandemic, poor sales, inability to pay staff, and restriction of movement during the lockdown. In the end, the survey found that the majority of the businesses did not receive any form of support from any private sector/enterprise or even government.

 However, the study offers the following recommendation. First, the government is to provide and fast-track direct social assistance as a stimulus package for business capital to help revive all the affected areas and sectors. Secondly, the assistance should be focused on providing direct stimulus to MSMEs that do not have sufficient cash flow during the pandemic and the recovery process which include policies that offer lending facilities to MSMEs. Third, the government needs to offer a social assistance scheme to help disengaged employees survive the crisis due to the Covid-19 pandemic. Lastly, the government should facilitate assess to flexible financing support packages through grants interest-free loans and bridge financing to meet critical needs like salaries.


Adenomon, M.O., Maijamaa, B., D.O. (2020). Effects of COVID-19 0utbreak on the Nigeria Stock Exchange performance: Evidence feom GARCH Model. Preprints 2020. Doi: 10.20944/ 202004.0444.v1.

Ahmad, R., Suraiya, I., and Mohd, J. (2020). The Impact of Covid-19 Movement Control Order on SMEs’ Businesses and Survival Strategies. Malaysian Journal of Society and Space. DOI: 10.17576/geo-2020-1602-11.

Apia, S. A. (2017). Scaling up Agricultural Innovation for inclusive livelihood after Covid -19 outcomes in sub-Saharan Africa: The case of Nigeria. African Development Review29(S2), 121-134.

Ashagibi, W. M. (2020). Evaluating the Distributional Impacts of Covid-19 Pandemic on Productivity and welfare Outcomes. Climate and Development, 6(14), 1-11.

Bartik, A. W. and Stanton, C. T. (2020). How Are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey NBER Working Paper, Environmental Science and Pollution Research, 27(13), 15375–15387.

Chukwuka, O., Mma, A. E. (2020). Understanding the Impact of the COVID-19 Outbreak on the Nigerian Economy.


Fairlie, R.W. (2020). The Impact of COVID-19 on Small Business Owners: The First Three Months after Social-Distancing Restrictions. NBER Working Paper No. 27462. (DOI): 10.3386/w27462.

FATE Foundation and BudgIT (2020). Impact of COVID-19 on Nigerian MSMEs. 

19impactonnigeriaecononmicsector. NBS/SMEDAN (2017), National Survey.https//smedan.gov.ng Obiakor R. A. (2020). COVID_19 and the Informal Sector in Nigeria: The Socio-Economic Cost Implication, Journal of Disaster       Risk       and       Reduction,       4(12),        5-16.



Otache, I. (2020). The Effects of the Covid-19 Pandemic on the Nigeria’s Economy and Possible Coping Strategies. Asian Journal of Social Sciences and Management Studies, 7(3): 173-179 Oyewale, A., Adebayo, O. Kehinde, O. (2020). Estimating the Impact of COVID-19 on Small and Medium Scale Enterprise: Evidence from Nigeria. Academy of Management Review, 14(4), 27-45.

Post a Comment