According to the Lagos Chamber of Commerce and Industry (LCCI), over 80 percent of businesses were under the adverse impact of the Coronavirus (COVID-19) pandemic.
The report emerged from the Chamber’s survey on “Lockdown and its Impact on Businesses”, which was released yesterday. It also indicated that 50 percent of the businesses affected were in the services sector while only 17 percent of the businesses it covered had minimal adverse impact.
Call For Suspension Of VAT
Consequently, the Chamber called for the suspension of the implementation of the new Value Added Tax (VAT) regime till the end of 2020 to help businesses that have borne severe impact of the Coronavirus (COVID-19) pandemic.
It also has called for strategies that will allow businesses navigate through current storm brought on by the COVID-19 pandemic in order to jump-start the economy post-lockdown.
The report added that a significant number of business interests in the country have taken serious financial hit from the pandemic.
According to Muda Yusuf, Director-General, LCCI, “The lockdown had severe impact on over 50 percent of businesses in the services sector. The profound impact on services sector is as result of lower demand for services by individual and corporate clients. During the lockdown, clients prioritized food and essential items ahead of ‘relatively less important’ services, and corporate clients ran skeletal operations, which depressed demand for non-essential services.”
The Chamber noted in the survey that majority of the respondents (64%), lost of N500,000 and below daily during the lockdown, while 16 percent indicated a loss of between N 1million to N2 million. About 20 percent of businesses indicated a loss of N2 million and above daily day during the lockdown.
“A conservative assumption that sampled business operators lost an average N500,000 each day during the lockdown suggests that each operator lost N17.5 million within the five-week lockdown (March 31-May 3, 2020). This modest estimation indicates that about N2.7 billion was lost in revenue by sampled businesses (N153) to the lockdown. This translates to trillions of naira losses for thousands of businesses operating in Lagos,” Yusuf said.
He, therefore, called for joint actions to sustain output and commitment to cooperate and protect the market from significant damages, while the government should redesign or develop national policy to protect jobs and income.
“This must be done in collaboration with private sector operators and substitute debts with equity. There should be valuation of national assets and make strong attempts should be made to attract equity into assets to boost foreign exchange liquidity. This will eliminate intractable burden of debt services and avail government more resources to build infrastructure and provide necessary public goods.
“Implement reforms to enhance governance capacity and leverage private sector expertise and experience for efficiency in allocating resources, a year tax break for healthcare and pharmaceutical companies, airlines, manufacturers, agro-processors, SMEs and hospitality players, suspension of the implementation of the new VAT regime rate till year end and solution focused coordinated advocacy are also required,” he added.