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Economy

Loud And Lonely On The Streets – The Life of A Lagos Hawker

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On a rainy Tuesday morning in Lekki, Lagos in Nigeria, 12-year old Ezinne Ibrahim runs frantically after a moving bus balancing a heavy load of bottled groundnuts on a tray on her head with one hand and a bottle in the other hand.

As she gets closer to the bus’s open window, a passenger hurriedly reaches out to snatch the bottle from her and tosses N500 ($1) on the ground before the bus speeds off. Ibrahim bends to pick up the drenched note, narrowly avoiding being hit by a truck from the opposite side of the road. She quickly scans the oncoming traffic for potential customers before crossing the road to get cover from the heavy downpour.

“I am here from six in the morning until 10PM with my mother,” says Ibrahim. Her mother, 45-year-old Sade, expertly weaves between traffic lanes, sells two bottles of groundnuts before joining us under the shed.

“I have been selling on the streets for the past eight years now and that is how I earn a living to feed my family. We used to sell in Victoria Island last year but we changed locations because this area has a lot more traffic and that means more money. I know it is dangerous for Ezinne and I never wanted her to do this but I cannot afford to put her into school,” says Sade.

On a good day, they make roughly N20,000 ($55). If life is already hard, it has gotten a lot harder for the pair over the past couple of years.

READ MORE: Successes Amid The Squatters

Kick Against Indiscipline (KAI), Lagos state’s environment law enforcement unit established in 2003 by the government to enforce environmental law in the state, is a constant threat to street hawkers.

“We get harassed several times a week by the task force. They arrest us and detain us for hours before releasing us if we pay them something,” says Bayo Adesina, a gum and sweets seller.

“We have a look at who calls whenever KAI is coming and we all stop selling and run. They cannot stop us from trading because this is the only way we know to survive,” says Sade.

In July 2016, in an attempt to escape the tight leash of the law, a street hawker was run over by a bus, leading to widespread violence and destruction by a mob. The incident led to even tighter regulations being enforced by Lagos State governor Akinwumi Ambode who declared a fine of N90, 000 ($250) or a six-month jail term.

“Things have really gotten a lot tougher for us because you never know when the task force will detain you. We move about a lot so they do not find us and take away what little money we have,” says Adesina.

However, Lagos State says the clampdown on street hawkers is necessary as it causes traffic jams and puts their own lives at risk.

Yakubu Mohammed, 25, sells watches on a busy intersection in Ladipo.

“Competition is tough here because there are so many of us. I make about N35,000 ($100) a month which I use to feed my wife and child,” he says.

According to the African Development Bank (AfDB), over 55% of Africa’s GDP comes from the informal sector, accounting for about 80% of the labour force. Many of those are street vendors like Mohammed who have traded in everything from windscreen wipers to mobile phone chargers in the past year alone.

“You sell what you can get your hands on. Sometimes there is a lot of supply of certain types of products and they are easy to get your hands on so you get them and start selling,” says Mohammed.

That supply is driven by an insatiable demand by customers who prefer the convenience of picking up items on their way to their various destinations.

A street vendor hawks tubers of yam in a wheel-barrow in Ketu district of Lagos. Photograph supplied.

The constant ruckus between government enforcement agencies and street hawkers has led to a debate about tighter regulation of the informal sector in Nigeria.

READ MORE: Nigeria: To Invest Or Not To Invest? That Is The Question

According to a Reuters report, unemployment in Africa’s most populous economy is at 14% and climbing. Furthermore, the International Monetary Fund (IMF) claims: “By 2035, sub-Saharan Africa will have more working-age people than the rest of the world’s regions combined. This growing workforce will have to be met with jobs.”

“Unless the government gets a firm grip on these critical macro economic issues, the potential of the informal sector can never be realized. A lot of the stress of unemployment has been taken up by the informal sector who pay no taxes but contribute significantly to the country’s wealth,” says Bismarck Rewane, CEO of Financial Derivatives Company in Lagos.

According to the IMF report, most entrepreneurs in the informal sector reported doing what they were doing out of necessity and given the chance would rather work in the formal sector.

Bashiru Amusha dreamed of becoming a doctor but his parents could not afford to send him to school. He now owns a kiosk selling airtime vouchers in Victoria Island.

“I try to make do with what I have. I used to be a security man for a company sometime ago but things didn’t work out and I had to leave. I am hoping someone can help me get a car so I can turn it into a taxi and pay him back with interest,” he says.

In view of the economy, the informal sector presents both advantages and disadvantages. On the one hand, it is a great representation of entrepreneurship development and growth in the number of start-ups on the streets.

However, this growth is negligible when you weigh up the low productivity and the poorly-skilled workers prevalent in the informal sector.

“This is actually detrimental to the Nigerian economy because the informal sector accounts for about 50 to 65 percent of GDP and that represents reduced growth for the economy. So it is actually important to provide skilled training to improve productivity and regulate the informal sector through taxation,” says Rewane.

As Africa’s largest economy struggles to come to grips with growing unemployment rates and barriers to entry, the informal sector is the only way out for thousands of unemployed Nigerians whose only need is to somehow make ends meet.

Economy

5 Tips For SMEs To Counter The Covid-19 Crisis

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It was recently reported by ratings agency S&P Global that the coronavirus outbreak has plunged the world into a recession. On the home front, a sudden surge in COVID-19 cases in the country resulted in the President of South Africa imposing a 21-day country-wide lockdown, starting from Thursday, 26 March 2020. Combine this with the fact that the country also recently announced to be in its third recession since 1994 it’s safe to say that many businesses are beginning to feel the effects of the pandemic.

The impact of the coronavirus on small businesses is likely to be substantial, especially for local businesses who are already feeling the pinch, as financial and market uncertainty can easily translate into an emotional crisis that can overwhelm our systems. However, help is on the way as the Department of Small Business Development announced that a Debt Relief Fund has been set up to assist small, medium and micro enterprises impacted by COVID-19.

While this relief is welcomed, it is still vital for leaders to step up. The world has been through crises before, but during these significantly difficult times, the economic impact may be as severe or possibly worse. As such, those in leadership positions must use past crises as examples and apply what was learnt to keep the country on course and minimise the impact of the pandemic.

Karl Westvig, CEO at Retail Capital, has pinpointed the visible areas that are affected and outlined a few pointers to help small business owners weather the storm.

Liquidity

The first victim of panic is liquidity – banks, asset managers and funders stop lending. When they cannot calculate the potential risk, they will not lend.  Therefore, it is critical to shore up cash by drawing down on available facilities and suspending any unnecessary investments. Reduce expenses and manage cash flow daily.

Get Your Best Team on It

When a business is growing, we tend to shift our best people into roles linked to growth and new initiatives. In a crisis, these people need to move into the highest priority roles. These roles would include collecting from customers, raising facilities or engaging key clients.

Morale and Communication

People need leadership. This would include authentic and regular communication about the situation, what the business requires and how this will be achieved. You can’t control the circumstances, but you can control the response and actions. This will create more certainty.

Hands-on

Events evolve quickly and every day is critical. Leaders must be hands-on. They have to be in touch with customers, suppliers, funders and staff. They have to collect data on everything – the mood, the financial metrics, even customer stories. Some of the best information is anecdotal, not just big data.

Policies

It’s tough to lead when you don’t understand all the underlying levers. These can change in a crisis. What worked in a stable environment can go out of the window in an instant. The best approach is to start again, listen to customers and then adapt your policies within your framework.

“This is not a manual on how to handle the current crisis, but hopefully, the points mentioned above can add to what you are already doing. In simple terms, it is easy to be overwhelmed, so tackle a few things very quickly and with commitment. This will create certainty and lead to action. The alternative is paralysis,” concludes Westvig.

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Current Affairs

Moody’s Downgrades South Africa To Junk

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Credit ratings agency Moody’s has downgraded South Africa to junk status on day 2 of the country’s nationwide lockdown.

President Cyril Ramaphosa’s economic reform plans have been slowed by the coronavirus pandemic. The downgrade adds salt to injury for South Africa as it currently struggles with a recession it slipped into in early March.

“The unprecedented deterioration in the global economic outlook caused by the rapid spread of the coronavirus outbreak will further exacerbate South Africa’s challenges” said Moody’s.

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Current Affairs

What You Need To Know About AfDB’s $3 billion “Fight COVID-19” Social Bond

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Landmark transaction, largest Social bond transaction to date in capital markets

Abidjan, Côte d’Ivoire, 27 March 2020 – The African Development Bank (AAA) has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.  

The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%.

The African Development Bank Group is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.

“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.

The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.

“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.

Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems. 

It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession. 

Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African

continent’s fight against Covid-19. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing”.

The Bank established its Social Bond framework in 2017 and raised the equivalent of  $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.

“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.

Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).

Press Release by the African Development Bank

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