Post COVID-19: Recession, the survival of MSMEs and consumers’ dwindling buying power
By Ezedi Udom
Containment remains the most viable response strategy to the escalating Coronavirus pandemic until there’s a cure.
However, the increasingly negative health, social, economic, financial and humanitarian impacts of COVID-19 are already seen as clear pointers to a probable global recession, if not halted. Many countries including Nigeria are already in a recession panic mode.
But, surprisingly, respected global institutions like the World Trade Organisation (WTO) have assigned the critical role of steering consumers and businesses especially micro, medium and small enterprises (MSMEs) out of likely downtime to e-commerce and logistics operators like Jumia.
The WTO in a recent report on the role of e-commerce in an effort to mitigate the Coronavirus pandemic said inter alia: “The pandemic has made it clear that e-commerce can be an important tool/solution for consumers. E-commerce can also support small businesses and, by making economies more competitive, be an economic driver for both domestic growth and international trade.”
Due to the rising rate of infection, fatalities and growing concern over Coronavirus transmission and attendant weakening of socio-economic activities, countries as a matter of rule have continued to strongly enforce social and physical distancing protocol of which e-Commerce is at the forefront.
The International Monetary Fund (IMF) and the World Bank have predicted the global economy to go into one of the worst recessions this year with most countries in Sub-Saharan Africa expected to be worst hit due to their weak infrastructure and fragile economies.
The Nigerian government acknowledged this reality recently when the Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed that the country might go into recession if the pandemic persisted for the next six months.
A recession amidst COVID-19 means tougher times for the Nigeria consumers who will face scarcity of goods, and whose buying power will be eroded amidst rising inflation. For small and big businesses, it portends severe impact on their operations because access to raw materials, semi-finished goods and ingredients from across the country and other regions would be further hampered.
Nigeria has been reported to be at risk of a serious demand-supply crisis and faces possible domestic scarcity and loss of N2.27 trillion in the trade from its top five import countries. Four of Nigeria’s top trading partners and import sources including China, USA, Spain and Netherlands that account for 45% of Nigeria’s imports, are all battling COVID-19 and strategising solutions to recover their badly hit economies.
Supply chain disruption, in particular, would hamper manufacturing operations, availability of consumer goods and retail operations in Nigeria, coupled with likely low activity in the local productive sector, both in the pandemic and post-pandemic.
Consequently, there would be more job losses and worsening unemployment in the country. Revenue to the government will also dwindle especially as a result of plummeting global oil price, which is currently at its all-time low USD22 per barrel.
The good news, however, is that there is tremendous leverage in the e-commerce and logistics ecosystem and Jumia is already positioned to offer the needed respite to MSMEs, startups and large corporations not only to stay afloat but to maximize profits. There is also so much for consumers to make the best out of their little resources and earn big bang savings notwithstanding the intensity of COVID-19 negative trends.
Jumia through its innovative marketplace offers millions of consumers and thousands of sellers to connect and transact online, while Jumia Logistics absorbs the end-to-end logistics shock for businesses, ensuring quicker and faster movement of products to its warehouses and facilitates onward delivery to consumers.
With inventories leaving the factories faster and Jumia last-mile system enabling the delivery of millions of packages to customers through its data-driven and technology infrastructure and strategic partnerships with a network of partners, businesses will increase their production capacity and efficiency.
By offering MSMEs increased online presence, Jumia is also enabling businesses to become more competitive online as well as reduce their cost of operations unlike when they have to move or display goods in brick-and-mortar shops.
In the post-COVID-19 phase, JumiaPay is out there to facilitate online transactions that save buyers time and money whenever they make purchase orders online, pay online and have their goods delivered to their homes or any preferred location at no extra cost.
In fact Jumia platform is a go-to for consumers who are really smart about getting more for less money. Loads of incentives when ordering essential products on the Jumia platform, and opportunity price discounts through Jumia partnership with FMCGs manufacturers like Reckitt Benckiser, Procter & Gamble, The Coca-Cola Company, and over 25 restaurants and kitchens.
Other perks that can become big money gains and savings for consumers are regular deal offers, discount sales, price slash and promos across multiple product categories including FMCGs, pharmaceuticals, home appliances like electronics, washing machines and cookers, mobile phones, computing and devices, fashion wears, wine and spirits etcetera.
As Jumia enables MSMEs and other businesses to thrive and run efficiently, Nigerians will be empowered to increase their buying power; workers will keep their jobs as opposed to retrenchment while new jobs will be created across value chains. Government, in turn, will earn revenue from value-added tax, employee taxes, company income tax, duties and other levies.
As enunciated by WTO, the importance of e-commerce and logistics operators like Jumia in the overall response strategy to COVID-19 cannot be over-emphasised.
According to the world trade body, the experiences and lessons from the Coronavirus crisis showed that e-Commerce could help to facilitate cross-border movement of goods and services, narrow the digital divide, and level the playing field for small businesses. Nigeria cannot be an exception.
Ezedi Udom, a Business Communications Expert writes from Lagos