Essay: COVID-19 Pandemic Costs world economy $280 Billion: The Need for Innovation and Entrepreneurship in Nigeria’s ICT Sector

The COVID-19 disease was characterized as a pandemic (the highest level of health emergency) by the World Health Organization (WHO) in March of 2020. The Centre for Disease Control (CDC) defines a pandemic as a global outbreak of a disease that happens when a new virus emerges and usually presents an alarming health crisis. In addition to the disturbing human impact of the COVID19 pandemic, significant economic, business and commercial impact can be felt globally. According to forecast analysis by a London-based global financial consultancy firm, Capital Economics, COVID-19 will cost the world economy over $280 billion in the first quarter of this year, meaning that global GDP will not grow from one quarter to the next for the first time since 2009 financial crisis. The coronavirus (COVID-19) outbreak has already brought considerable human suffering and major economic disruption with confirmed cases reported of over 11million persons globally and over 28,000 persons in Nigeria as at 5th July, 2020 (WHO).
NIGERIA is a developing country, located in West Africa and lies at the gulf of guinea coast. The Federal Government of Nigeria, through the Federal Ministry of Communications and Digital Economy (FMCDE), is leveraging ICT for national development, just as every nation is embracing the use of Information and Communications Technologies (ICT) for its economic development. Nigeria ranked 143rd on the ICT development index (International Telecommunication Union, 2017) and has a vibrant and growing ICT sector as seen in its contribution to the National Gross Domestic Product (GDP), which rose from 11.22 percent in the second quarter of 2018 to 13.85 percent in the second quarter of 2019. According to a report released by the National Bureau of Statistics (NBS) in September 2019, the ICT nominal contribution to GDP surpassed that of Oil and Gas in the second quarter of 2019. This is a good indication for Nigeria who has been very dependent on oil and gas since its discovery in the 1900s. The recent technological revolution has necessitated the need for innovation globally. As the American inventor Robert Metcalfe once said “Innovation makes the world go round. It brings prosperity and freedom.” Therefore, economies worldwide are making efforts to develop and promote innovation for economic growth. Innovation and technological advances have been closely linked to entrepreneurship. Nigeria recognizes the importance of innovation and entrepreneurship for socio-economic growth and is evident in the Nigeria ICT Innovation and Entrepreneurship Vision policy document, in which key themes and strategies that foster grassroots economic empowerment namely; digital literacy, affordable internet access, competitive workforce and enabling environment are detailed (Nigeria, 2019). According to (Akinyemi & Adejumo, 2018), “Entrepreneurship and small business development are the heart of many countries’ economy and any country giving its entrepreneurs special attention has a better chance of an improved economy.” Entrepreneurship plays a significant role in the growth and development of any nation as it is a process that produces new output or outcome from a previously unnoticed profitable opportunity. It can generate employment, innovation, increase production, and diversify the economy source of revenue, thereby fostering the development of a nation. This is why a number of countries are striving to reinvigorate their economies by concentrating on entrepreneurship and innovative businesses. Even though, entrepreneurs are high achievers, government policies affects them directly or indirectly (Akinyemi & Adejumo, 2018). This has necessitated the need for policies that promote entrepreneurial activities and growth. The Nigerian government’s recognition of Innovative ICT entrepreneurship as important enablers of socio-economic growth and drivers for realizing national strategic goals is evident in its ICT policy formulation affecting business and entrepreneurial activities. Policies have always been a key part of decision making and are necessary for nation building. The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established by the SMEDAN Act of 2003 to promote the development of the MSME sector of the Nigeria Economy. SMEDAN formulated the National Policy on MSMEs in order to foster the growth and development of the sector. The policy also recognizes the use of ICT in improving Government’s efficiency, effectiveness and service delivery to MSMEs. For instance, in order to “enable a regulatory environment that supports MSMEs”, SMEDAN established a one-stop business registration points accessible in MSME clusters, federal institutions and some select post offices. This is similar to the South Korean “Start Biz Online”, an online system managed by the Small & Medium Business Administration to simplify business incorporation processes and facilitate easy, efficient and cost effective start-up environment (Agusto & Co., 2015).
The COVID-19 pandemic is much more than a health crisis, it has the potential to create devastating social, economic and political crises that will leave deep scars (United Nations Development Programme). In response to COVID-19, many countries have resorted to a complete lockdown, travel restrictions, etc. in order to control the virus spread. Control and preventive measures like lockdown implemented, has resulted in significant business disruptions worldwide, especially for those who must be in contact with customers or fellow workers (Hicks, Faulk, & Devaraj, 2020). The Nigerian President announced the start of lockdown in major cities of the country on 30th march 2020. The lockdown directives have led to the shutdown of many businesses, especially those that cannot be performed from homes. Only businesses proffering essential services have been exempted from the lockdown directive; hence, the nation’s economy is adversely affected it has been difficult to balance business as usual with public safety during the crisis.
The significant contribution made by the small and medium-sized enterprise (SME) community worldwide to employment, regional development and innovation is well established. In Nigeria, SMEs contribute 48% of national GDP, account for 96% of businesses and 84% of employment (Small and Medium Enterprises Development Agency of Nigeria, 2017). Unfortunately, SMEs are also subject to high rates of business failure and such rates are likely to exacerbate due to the current global pandemic. For startups and entrepreneurs, who typically can’t handle drops in consistent cash flow, business becomes a bit more challenging. Innovative strategies are clearly needed within the SME sector to improve survival and growth and effective deployment of information and communication technologies (ICT) is likely to be a critical part of such innovative strategies. In their research on the use of information technology by SMEs in a developing economy, (Afolayan, Plant, White, Jones, & Beynon-Davies, 2015) found out that ICT adoption by SMEs is encouragingly spreading in Nigeria, therefore it is expected that with the COVID19 disruptions and the need to stay afloat during difficulties by entrepreneurs, that adoption should have increased. Also, ICT like SNS have become important for information sharing and online business effectiveness during the COVID19 pandemic (Ahani & Nilashi, 2020). Therefore this study aims to discover the level of ICT adoption by Nigerian SMEs and also document the effectiveness of its use considering the potential effects of the pandemic.