The unforeseen outbreak of the novel Coronavirus which has since been declared a pandemic by the World Health Organization (WHO), has not only affected the health of humans all over the world but also our general way of life. It has also impacted negatively on the world’s economy with most countries posting negative GDPs. Nigeria’s reported GDP in Q2, FY2020 contracted by more than 6% (Year on Year).
The world is learning to live with the virus as various lockdowns and restrictions all over the world are being lifted. The disruptions and impact of the virus are still very present as various industries are yet to begin full operation. This article aims to highlight some of the financial impacts of the virus in Nigeria.
The following are some of the financial impacts and considerations of the virus in Nigeria:
The impact of the covid-19 pandemic varies across different industries in Nigeria.
Entertainment: Cinemas have been shut since the pandemic started; players in this industry are currently out of business with their employees also out of employment.
Corporate Real Estate faces an uncertain future with companies now working from home. A lot of corporate rental buildings are empty and there is a high possibility that companies could adopt working from home even post-pandemic and hence stick with virtual meetings. Some organizations may decide to rent much smaller office spaces compared to the size of their current office spaces for physical transactions – if or when the need arises.
The Telecommunication industry is one of the few industries in Nigeria enjoying a favorable impact of the COVID-19 as many businesses are going virtual. This has led to a surge in data subscription and demand for airtime.
The Tourism and Aviation industry is still experiencing restrictions in their operations which in turn has led to massive reduction in revenue and unemployment in that sector.
The Education industry is also facing challenges due to the pandemic in Nigeria as schools are yet to open. This not only affects income generation for schools but also the educational growth and development of students in Nigeria.
The Manufacturing industry and some other industries that cannot operate from home are still facing serious operational challenges while others have shut down.
Compliance and Administrative Issues:
Due to the COVID-19 pandemic many companies in Nigeria have adopted work from home policy which in turn has presented companies with the challenges of ensuring that employees adhere to the compliance and administrative policies even while working from home.
Clearly one of the major effects of the COVID-19 pandemic in Nigeria is the subsequent increase in unemployment rate which has affected the finances of various homes invariably affecting the standard of living in Nigeria and the economy at large.
Restriction of movement and subsequent shutdown of some industries in Nigeria led to the disruption of cash flow. Household spending has reduced significantly as people now hold on to what they have at hand due to the uncertainty of how long COVID-19 would be around, while others simply do not have enough to live by.
Businesses are also experiencing low patronage while receivables are increasing; it is important for individual businesses to re-evaluate the situation around the current COVID-19 realities. Reevaluate their liquidity forecast to understand the actual situation of their cash flow and spot actions to be taken in order to preserve cash for short and mid-term obligations.
Financial institutions may need to reevaluate their loan policy and payback terms. Persistent engagement with customers to control expectations, constant contact with customers will help businesses evaluate the level of future patronage.
We are in an ever-changing world hence it is important for businesses and individuals to manage the now and reevaluate future effects of the current and future disruptions in order to manage financial implications.
At Kennedia consulting, we understand the financial impact of COVID-19 on businesses and individuals, we have a team of financial experts who can provide financial advisory services to organizations that require effective strategies to manage their finances.
Does your organization require financial management services? Contact us TODAY, send an email to firstname.lastname@example.org
This article was written by Mayowa Olasode (Accountant) – Kennedia Consulting