THE EFFECT OF COVID-19 IN NIGERIA

By Emmanuel Yusufu Esq

Emmanuelpistoss@gmail.com

26th May, 2020

The Outbreak of pandemic COVID- 19 in Nigeria has disturbed the political, social, economical, religious and financial structures of Nigeria. World’s topmost economies such as the USA, China, UK, Germany, France, Italy and many others are at the verge of collapse. Covid-19 is harming the economy because the world has been experiencing the most difficult economic situation since World War II.

Coronavirus is immeasurable, therefore we need to work together with cooperation and coordination to protect human beings as well as to limit economic damages. For instance the lockdown has restricted various businesses such as travelling to contain the virus. Consequently businesses are coming to an abrupt halt in Nigeria.

THE EFFECT OF COVID-19 ON THE NIGERIAN ECONOMY

Before the Outbreak the outlook for the world economy especially the developing country like Nigeria was fragile as global GDP growth is estimated to be only 2.5% in 2020. Nigeria has recorded 8068 cases with 2311 recovered and 233 deaths as at 26th May 2020. The weak capacity of healthcare systems in Nigeria is likely to worsen the pandemic and its impact on the Nigerian economy.
Before the pandemic, the Nigerian government has been grappling with weak recovery from the 2014 oil price shock with GDP growth campaign around 2.3% in 2019. In February the IMF revised 2020 GDP growth rate from 2.5% to 2% as a result of relatively low oil prices and limited fiscal.

The country’s over dependence on oil is what we have been worried about even before the Outbreak of the pandemic. It is never too late for government to focus on other areas of income like agriculture, sport, health, education etc.

The country’s dept profile has been a source of concern for policymakers as the most recent estimates put the debt service to revenue ratio at 60% which is which is likely to worsen amid the steep decline in revenue associated with falling oil prices. This constraining factors will aggravate the economic impact of the Covenant in outbreak and make it more difficult for the government to weather the crisis.

The Federal Government has imposed a lockdown in Lagos ,Kano, Ogun and Abuja which has the highest number of coronavirus cases combined. State government has quickly followed suit by imposing lockdowns in their States. There is a fall in household consumption, thus causing consumers to spend primary on essential goods and services, low expectations of future income, particularly by workers that are engaged on a short term contract basis, as well as the working poor in the informal economy.

Movement restrictions have not only reduced the consumption of non essential commodities in general, but has affected the income generating capacity of these groups thus reducing the consumption expenditure.
Investment by firms will be impeded largely due to the uncertainties that come with the pandemic – limited knowledge about the duration of the Outbreak, the effectiveness of policy measures and the reaction of economic agents to these measures. Indeed the crisis has led to a massive decline in stock prices as the Nigerian Stock Exchange records the worst performance since the 2008 financial crisis which has eroded the wealth of investors.

The restrictions on movement of people and border closures forshadow a decline in exports. Countries around the world have closed their borders to non-essential traffic and global supply chains for exports have been disrupted.
It would be unreasonable to discuss some of the implications the pandemic has caused on the Nigerian economy without highlighting the possible Solutions or the way to revive the economy even in the midst of the pandemic.

Thus, some fiscal and monetary Policies are recommended.

• The Federal Government should improve efforts toward enhancing the efficiency and effectiveness of the distributive mechanisms to reach household that are affected by the pandemic.

• The Federal Inland Revenue Service (FIRS) and State Inland Revenue Service (IRS) to waive payment on personal and corporate income tax considering that the pandemic has affected the income and profit of households and businesses. This step has already been taken by the Cross River State government by excluding hotels with less than 15 rooms, shop owners, taxi drivers etc from paying tax I highly commend the governor of the State.

•While the naira has been adjusted as a result of the forex shortage, it is important that the CBN maintains exchange rate stability by deploying external reserves in order to avoid the investors selling off Naira- denominated assets.

With the above recommendations and many other recommendations from others, I hope the government listens to the cry of the common man to ease hardship in this period. Hopefully the pandemic will be over soon!