The high cost of private PCR tests and results delays are inhibiting a key weapon in Nigeria’s fight against COVID-19.
Lagos, Nigeria – Every morning, Esther George rises before dawn to prepare a cooler of rice and a large pot of beans, as well as yams and an assortment of other staple foods to reheat and sell to customers from a roadside table in Lagos.
Before the coronavirus pandemic, the mother of three would clear a monthly profit ranging from roughly 10,000 ($24.40) to 15,000 naira ($36.60), she said. But this year, she’s fallen deeper and deeper into the red, racking up monthly deficits between 30,000 ($73) and 40,000 naira ($97.40).
The reason – soaring food prices.
“Before [the pandemic], we used to buy one derica [a local measurement named after a brand of tomatoes ] of beans for 300 naira ($0.73). Now we are buying it for 600 ($1.50). The price of two is now the price of one,” said George.
And she’s bracing for more price hikes.
“What you are buying for 500 naira ($1.20) before, tomorrow it will be 550 ($1.34), the day after that it will be 600 naira and so on,” she told Al Jazeera.
Nigeria’s annual inflation rate hit 16.3 percent in September. Though that is lower than this year’s 18 percent peak in March, higher prices for food, fuel and other raw materials are squeezing small business owners, forcing them to either cut back on production, fall into debt, or pass on cost increases to customers who are also feeling squeezed.
George has tried to slash expenses by producing less and dropping some items from her menu – like eggs. She used to sell ten dericas of beans on average a day, but has cut back to five. And even if she could afford ten, she can’t absorb the cost of the three butane-propane gas cylinders needed to reheat that volume of food – because prices for the fuel cylinders have increased threefold.
Global price pressures, local pain
George, like millions of small and medium-sized business owners in Nigeria – not to mention, the world over – has had to persevere and adapt to the slings and arrows of COVID-19 pandemic disruptions and distortions.
Nigeria’s economy shrank 1.8 percent in 2020 – the sharpest decline since 1983 – and is expected to grow only 2.5 percent this year, according to the International Monetary Fund.
One drag on growth is rising prices. As nations have cast off virus restrictions, supplies of raw materials have not kept pace with demand, causing prices for food, fuel and other raw materials to soar.
Global food prices hit a decade high last month, according to the United Nations.
Nigeria also has local factors that are worsening the pain of global price pressures.
“Noneconomic factors like insecurity have affected the economy and contributed to the inflation, because for example, farmers cannot go to farms because they are scared,’’ said Sheriffdeen Tella, a professor of economics at Olabisi Onabanjo University.
Tella told Al Jazeera that monetary policy and exchange rate management have further contributed to Nigeria’s economic problems.
“The economic factors include the exchange rate. First, the Central Bank devalued the currency, which caused a high inflation rate. And most products are exchange rate-dependent because they are import-dependent,’’ he said.
All of this makes it an especially tough time for the small and medium-sized firms that account for 96 percent of businesses in Nigeria and 84 percent of jobs.
Moreover, passing on higher raw material costs to consumers carries risks because it could compel customers to either take their business elsewhere or simply go without.
“The fear is if it is products people can do without, it will be difficult to transfer the costs to the consumers,” said Tella.
That fear is felt by Oluwaseun Kareem, who runs a printing shop in Lagos.
Back in June, when a ream of paper cost 5,100 naira ($12.4), he landed a contract to supply monthly notebooks for a school at a fixed price. By October, the price of a ream of paper had climbed to 7,000 naira ($17) – obliterating his profit.
‘’I went to the school and told them I can no longer continue with the job because of the price margin. For me to continue on that job, it means that all the profit that I will gain will be spent on [buying] paper,” the 41-year-old told Al Jazeera.
Kareem said the school understood his situation and agreed to suspend the contract until further notice. But that is not the only business he’s lost.
“I have lost a lot of opportunities,” he said. “When you came in, did you see me doing anything? I was sleeping. The people I work for are not ready [to pay the new prices].’’
Official inflation, market realities
Though September’s inflation rate was not as blistering as it was in March, Tolulope Afolayan, a business analyst, questions the official figures.
“The market realities are showing evidences against the numbers that are being portrayed,” she told Al Jazeera. “I don’t think the numbers we use in our economic measurements have integrity.”
Rising prices have also sown uncertainty into the outlook for small businesses, she said, making it harder for them to effectively navigate inflation and stay afloat.
“It is not sustainable that a business owner cannot reasonably predict how their business would be in the next six months, which is very important for a business,” she said. “A bag of beans, for example, sold for 100,000 naira at one point. I don’t think that six months ago, any beans seller saw that or even fathomed if that could be possible.”
While George hopes conditions will improve for her and other small business owners, she has little choice but to resign herself to the current crunch, and hang on as long as she can.
“I did not stop the business because where is the alternative?” she said. “There is nothing I can do.”