The ongoing COVID-19 crisis is exerting a heavy human cost, affecting both lives and livelihoods of not only people but also businesses. Since the pandemic started, over 1,200 Nigerians have died and over 1,000 households have lost their livelihoods.
As economic growth slows globally, developing countries like Nigeria have slumped into recession. This has put more strain on startups and businesses that are struggling to recover from the initial COVID-19 crisis.
Nigeria’s economy fell into recession after Its GDP declined by 3.62% in Q3 2020, following an earlier 6.10% drop in Q2 2020
According to the CEO of Chuuse companies, Daniel Olowokere, startups that felt the brunt of the pandemic were lending, savings, crowdfunding and mobility start-ups.
However, despite the downward economic effect of the pandemic, startups in some sectors have seen increased growth both in revenue and traction.
Coincidentally, the growth was also driven by COVID-19 which accelerated a shift to the new norm of digital working in these sectors. The digital adoption extended beyond social media and financial services to other needs like entertainment, educational, and health.
Here are some of the sectors that have benefited from the pandemic based on regulation (ease of operation), the level of technology disruption, and the depth of funding that saw companies in the sectors succeed.
Although many planned for the initial start of the lockdown, most didn’t expect it to last up to a month. So when households ran out of foodstuff and groceries, many people who never really tried e-commerce platforms had to turn to it to replenish their stocks.
Similarly, once businesses noticed that the lockdown wasn’t easing anytime soon, they turned to Social e-commerce. The introduction of online storefronts by Flutterwave for instance, helped a lot of businesses move online.
More importantly, the launch of Facebook Shops – free storefronts on Facebook and Instagram, was effective in allowing SMEs to quickly take their business online. Nigerian retail chain, Spar is among the many businesses that have used this platform to create an online shop in the past few months.
According to UNCTAD survey, about 64% of third-party marketplaces like Jumia have seen a spike in sales. However, 58% of businesses selling their own products or services online have recorded a drop in monthly revenue.
The report explained that the drop was due to the fact that most businesses have struggled to adapt and scale-up their operations online even with the growing demand for e-commerce.
With mobility restricted during the COVID-19 Lockdown, the federal government’s exception of logistics company’s moving essential goods boosted logistics companies.
This made the top of the list of anyone that wanted to move anything, from SMEs to Health and e-commerce companies. Femi, Founder of Kwiki Karts, a logistics company based in Ibadan affirmed that logistics was one of the top beneficiaries of the pandemic.
He explained that “Despite the lockdown logistics companies and food services were considered as essential service providers. In fact, most logistics businesses had a spike in revenue and profit during that period.”
Femi added that after the lockdown, more businesses sprung out in the sector. For example a lot of delivery startups were established in Post-COVID Ibadan.
Apart from logistics, Femi also highlighted that there was an uptick in e-commerce especially food service delivery.
When the pandemic broke out schools were one of the first institutions that were shut down. However, it didn’t take long for students, parents, teachers as well as institutions to begin to feel the effects of schools being closed.
Apart from the fact that students were losing weeks of classes, many schools also began to feel the financial strain of the students’ absence. Unlike other countries where infrasture were available to move classes online, Nigeria had little capability in that regards.
Despite that, there were several who stepped forward to fill in the gap and help students study even while at home. So many parents were opting for various educating platforms to help their kids study at home.
This need sparked a boom in membership for several edtech startups foreign and local. It similarly helped the launch of new startups like uLesson and Chuuse that launched into the edtech space this year.
Chuuse CEO, explained that Edtech sector benefited significantly from the pandemic. He added that other sectors like e-commerce, mobile money (e-pos) and peer to peer (social payments) also benefitted.
uLesson reported that it registered 40,000 Downloads in just 4 Weeks and also raised a $3.1 million seed round from TLcom Capital. Similarly, Chuuse was one of the beneficiaries of the $1 million Shift fund.
The novel coronavirus proved too tough for everyday medicine as the rate at which the virus spread sent many into panic. Remote working became a way to stay safe from the virus.
However, that was not enough to curb the virus. So several health tech startups sprang up to help provide solutions to various problems. From startups that helped to track virus spread to those helping frontline workers test samples and manage the infected or quarantine patients, several innovations were born from the necessity.
With the threat to life, people had no choice but to embrace the various innovation that were being created. This lead to a high rate of adoption of health-tech apps as well as an increase in revenue raised by startups.
Some notable startups that stood out during the pandemic were Lifebank, 54Gene, WellaHealth, Wellvis Health and RxAll. Wella Health CEO, Ikpeme Neto was selected for the $100,000 PandemicTech Innovation Fellowship for 2020.
RxAll also secured N135m Investment from Founders Factory Africa while 54Gene has raised $15 million and has partnered with Illumina to build a world class genome sequencing lab in Lagos
When most people returned home to work, mobile service providers saw an increased spike in data subscription as many turn to them to cater for their internet needs while working from home.
The forced lockdown also saw more people buying more data to watch movies, study and surf social media. According to NCC stats, internet subscribers in the country crossed the 150 million mark this year.
In terms of operators, MTN was the highest gainer with more than 64 million subscribers, Airtel follows with 40 million while Globacom is third with 39 million.
Some sectors are seeing approximately two years’ worth of digital adoption in just two months, with online grocery shopping having grown by more than 1.7 times during COVID-19.
Other sectors like fintech, gaming and movie streaming also benefited from the pandemic. The Fintech sector especially profited from the adoption of online payments platforms for all forms of transactions
For other sectors like Agritech and mobility that suffered from the pandemic, the Central Bank of Nigeria (CBN) has reduced interest rates on all intervention funds from 9% to 5% and the government has also created a N50 billion intervention fund for households and SMEs affected.
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