Nigeria’s Shaky Economy and Covid-19 Exigencies: How Bad Could Things Be?

Wole Olajide  

The outbreak of COVID-19 pandemic took the world by surprise and has engulfed nearly the entire world, claiming lives and damaging businesses and at large hitting hard on economies of world. The impact of this novel occurrence that put the whole world on a stand still is enormous and has in a way bring about a paradigm shift in the way we do things.

Covid-19 outbreak in combination with fall in oil price resulted in decrease in global demand for crude oil in which Nigeria economy largely depends on. This resulted in reduction of the 2020 budget by over N300 billion in order to accommodate the new oil price benchmark.

In a bid to curtail the spread of the Coronavirus outbreak in Nigeria, the Federal Government gave an order for a total lockdown of Lagos, Abuja and Ogun State. Till now, Nigeria has being battling the novel virus as the cases keep increasing geometrically on daily basis.

 

In a chat with Mr Atanda Isiaka, Head of Market Control, NASD OTC Securities Exchange, he posited that coronavirus outbreak will lead to drop in GDP, decline in companies’ profitability and decline in government revenue.

According to him “The economy has been on a stand still for about 6 to 7 weeks now. There is no activity. In fact, the only activity that has been on is agriculture.  Agriculture is just coming up; for now, it does not contribute significantly to the economy. Those that contribute significantly to the economy have been on stand still, they are just coming back since lock down has been relaxed.’’

“There is no way this is not going to affect the Gross Domestic Product (GDP). It is going to affect the performance of companies in the second quarter. By the end of second quarter which will be in June, we will start seeing the effect as companies’ profit will start dropping.

“The economic real production will be below threshold. It is going to affect the economy in a bad way. It now depends on the policy put in place by the government’’.

‘’If the government put strict measures in place, people will adjust, the economy will come back and everything will start to flourish’’.

 

‘’As long as the COVID-19 vaccine or the cure has not been found the economy of Nigeria will be affected. Nigeria economy is dependent on the economies of the western countries because they are the ones that buy our crude oil. We also get patronage from India and China. As long as this countries are coughing, Nigeria will be having headache. So of the economy of these countries is affected by the COVID-19 pandemic, it will also affect Nigeria.’’

 

‘’Due to this COVID-19 pandemic, our revenue is declining and our expenditure is going up. Even if government workers don’t go to work, they earn salary. In the whole of April, there was no revenue for the government from different sectors due to the lockdown. People working did not say they don’t want to work, they were told to stay at home. Even if there is pay cut in workers’ salary, government expenditure will be more than what it is generating during the lockdown.’’

 

“Our government need to be more transparent. The government need to be proactive to put things in place against future occurrence.

 

 Mr Oluseyi Idowu, a capital market investor, in his reaction as regards the fate of the capital market in the midst of this pandemic said there is a positive outlook for the Nigerian equities market. According to him, the locals have been able to sustain the capital market in the midst of the pandemic.

In his words “I think the local people have been able to sustain the capital market. The level it is now, I think it’s okay. If the half year results come in, for me I think the outlook is positive. I don’t see the market coming down as much as one will fear.’’

As regards the easing of lockdown, he however expressed a lot of concerns due to the fact the cases of coronavirus infection keep rising every day.

In his words “My take is that, this is the period to lockdown but unfortunately people have been kept home for too long. There is this anxiety. Some people have not even collected March salary, talk less of April salary. So keeping people further at home and no money in their pocket, there is nothing the government can do about it than to allow people to come out.

‘’Unfortunately, we are going to see spikes in the number of people that will get the virus. We are left in the hand of the almighty God to protect us.’’

We are going to have too much pressure on our healthcare system and unfortunately we are not equipped to take care of large number of people.

 

In another chat with Mrs Bunmi Osuntuyi, Secretary- General, International Chamber of Commerce Nigeria, on gauging the impact of coronavirus outbreak in Nigeria, she pointed out that a lot of people will lose their jobs due to the coronavirus outbreak.

According to her “the fallout of the coronavirus outbreak is a situation that everybody is going to feel the impact for a long time to come. Being a very novel situation that we find ourselves, I think that for Nigeria, we have to be ready for change. Change in the way we do business. Change as in how we relate with each other. Change in governance. Change in how we run the economy, by prioritizing on areas which are most important and crucial.

A lot of people will lose their jobs due to the Covid-19 pandemic. The Central Bank of Nigeria just said something about appealing to the banks not to lay off their workers. I can assure you that it will happen eventually, not only in the banking sector, but in many other sectors of the economy.

‘’There is a saying, necessity is the mother of invention. May be there will be more new companies being set up and more innovations globally. May be there will be initiatives to set up industries that will bring about the sustainability of the environment. In Nigeria, there will be more local production, rather than depending on oil or depending absolutely on getting every basic need from outside the country.’’

It is often said that health is wealth. Now everybody is giving priority to hospital facility, things to sustain the lives of the citizens. This something that should have been done before now.

We need to know to manage this type of crisis should it reoccur and resources will be channeled towards this area and sustenance of it. It is not just to have facilities.

‘’Medicine and pharmaceutical industries are new areas where resources should be channeled to.’’

‘’I appreciate the way we were able to take decision to do a lockdown because otherwise the calamity rate would have been higher than what we are looking at right now. I also appreciate the fact that we cannot lockdown forever, we also need to find a way to get back to the reality of time, and be able to  accommodate both situations as we go along, working as well as taking care of those who have been impacted by the coronavirus.’’

“We also need to look at areas where we will be our brother’s keepers. I hear of people escaping from the isolation centres. There should be a reorientation. I think people should know that the error of keeping somebody who is already infected under their roof is a danger to the entire community. There is need for people to have it in mind that when you tell the government or the authorities about someone who has a virus, you are protecting to your entire vicinity and environment.”

‘’We are going to have a lot of initiatives to cut down on excesses. Some things that are not necessary would be cut down and focus on the most important and critical. This will run through all government, be it federal, state and local government. For instance, the Lagos State Government initially said that workers should resume, but then they had to give priorities first to make it a gradual process, so that we are not given to error, not taking step to scatter the positive impact we have been able to achieve in the fight against coronavirus.’’

‘’This is not something that will fizzle away in the next one month or in the next few weeks. I think it is something that we need to watch going forward. Even those who are older than us said that they have never witnessed this type of thing in their lifetime. So we need to begin to focus on things we have not witnessed, and be able to plan to appropriately address them when they reoccur.’’

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