Our Response to the New Economic Reality
The outbreak of Covid-19 is only getting started in Nigeria and we are beginning to see signs of a devastating impact on our country; not only in terms of the health impact but poverty as well. And like the Spanish Flu in the early 1900s, both can come together to devastate a large percentage of society.
Reports indicate that Nigeria is in for a long period of low oil prices, which means our government will not have the macroeconomic buffers needed to minimize the ongoing Covid-19 outbreak. It also means that our currency will continue to face significant devaluation pressures, making food costs in our import-based economy expensive.
In addition to the new harsh macroeconomic realities, there will be increased unemployment as businesses are beginning to close down or relieve their staff of work, to minimize the spread of the virus. In order to minimize human contact, fewer workers like (e.g. plumbers and carpenters) are being engaged in the informal service industry. Nigerians are afraid to buy things from street vendors who typically live on daily incomes and spending is shifting towards health and essentials.
There has never been a greater need for reorienting markets and people towards a new economic reality. While some kind of shutdown of all but essential services is necessary to minimize the spread of Covid-19, we need to acknowledge that our markets are not structured like those in the west. Our food supply and social infrastructure are more fragmented. Our response needs to, therefore, consider our own realities.
Over the past week, the team at CoAmana has been grappling with what to do in this time of crisis. Initially, the priority was staff safety, but we came to the realisation that there has never been a more important time for us to rise to the occasion. We developed Amana Market to shift the dynamics of poverty, and our focus over the next few months will be to use the platform to coordinate existing local resources in a way that reduces the economic hardship people will inevitably face.
From data on the Amana Market platform, there are some indications that people are looking for options to sustain themselves through this terrible time. Recently, the platform began to receive more requests than expected, enough that they created issues on our servers. While we can’t draw a direct link to the ongoing pandemic, this has given us a renewed drive to deliver on what we are set out to accomplish.
As our team works remotely, we are thinking about two economic realities that Nigerians will face, and how Amana Market will address them and provide a cushion for the many small businesses on the platform.
Reality One (1): Worsening Macroeconomic Conditions combined with lower Government Revenue
One way we will counter this is to strengthen internal supply chains by more efficiently channelling existing resources towards them. How can governments stabilize markets with minimum revenue? Our solution is to give them greater capacity to match and coordinate market actors. Government needs to be able to identify informal businesses in essential sectors that have to remain open, such as food suppliers etc. For instance, Government can identify people that support food supply chains such as farmers, processors, input suppliers, logistics and distribution.
Reality Two (2): Decline in Employment within Non-essential Sectors
There is a need to reorient our markets towards absorbing or supporting the people that are currently out of work. In the middle of this panic buying phase, someone asked us if we had thought about what the poor and unemployed will eat. If the worst does happen, how do we ensure that poverty does not ravage the disadvantaged?
We will refocus Amana Market users in non-thriving sectors toward more essential sectors such as agriculture, logistics and manufacturing. We will digitally engage those in failing sectors within our platform, via SMS and Web, and prepare them for the worst. Carpenters and plumbers can be channelled toward farming infrastructure; public transport workers can be moved toward food logistics and even cleaners can be shown how they can make soap and sanitizers in their homes.
In the next few months, our priority will be to safeguard livelihoods. We will generate data to point us to the right course of action. As a startup, data on our platform will allow us to observe the dynamics of supply and demand within our market. We will:
1. Identify small businesses that face declining demand and send them SMS advice on the businesses they can easily enter into, which will be businesses that have stable or rising demand.
2. We will also observe areas where there are mismatches between demand and supply. In cases where these goods are essential goods, we will identify the causes for the mismatch and send recommendations to entities or authorities that are in positions to resolve these issues.
In summary, we will work hard to ensure that we are helping small businesses to plan and respond more efficiently. We implore all other organizations that have some capacity to minimize poverty to think hard about how to help our people survive in these tough times. The only way we can pull through this is by thinking about each other and working for each other. There is no selfish way to get through this successfully.
