The outbreak of the COVID-19 pandemic continues to devastate economies worldwide, and the states that were persistently showing a positive growth rate prior to the outbreak of the virus are now forced into a recession and severe contraction. Nigeria is no different in that regard. Since the COVID-19 related regulations had to be implemented simultaneously with abiding by the OPEC resolution on voluntary adjustments of the oil productions, the country’s economy was hit hard, and quickly dropped from the positive growth rate to a significant level of contraction. However, with the price per barrel being increased by almost twice the amount it cost in April this year, Nigeria is yet to enlarge its foreign exchange earnings and stabilize the overall state of the national economy. Thomas Harlow, Chief Market Analyst at topforexbrokers.net claims that the damage is so deep, that even the recovery of the oil prices will fail to fix the current state of the Nigerian economy: “ Nigerian economy relies heavily on the oil export, so when that collapsed, and, coupled with the preventive measures to contain the spread of the virus, the damage became too significant to handle. No one should expect a quick recovery, desire the oil prices climbing up”. Mr. Harlow added that increasing interest rates could be a way for Nigeria to limit the negative impact of inflation.
With another recession in sight, it is necessary to divide deep into the assessment of the factors that led to one of the most promising economies to the state of near-collapse.
Pre-Pandemic Economy – Positive Growth And Promising Tendencies
Prior to the outbreak of the global pandemic, Nigeria was showcasing the shining example of the success within its region. After effectively recovering from the recession of 2016-2017, Nigeria secured a positive growth rate for 12 quarters in a row and managed to significantly increase its GDP that reached 2.3 % in 2019 as compared to 1.9 % in 2018. Transportation, enhanced oil production, and telecommunication sectors were all growing steadily, and the inflow of foreign capital has reached a peak of 3.8 billion USD in 2019. Although foreign investors were still largely wary of engaging with the Nigerian economy, and the agricultural sectors were still highly dependent on the natural conditions to align right, the prospects for Nigerian development were promising – until the outbreak of the global pandemic undermined all of the aforementioned achievements.
The Outbreak Of COVID-19 – Oil Crisis vs Healthcare Crisis
April 2020 became what was later known as one of the most devastating periods for the Nigerian economy. With the rapid growth of the confirmed cases and the government struggling to impose regulations to contain the spread of the virus, there was yet another shock coming along. The pandemic has shaken the crude oil market and decreased the oil prices from about 60USD per barrel down to 20USD per barrel in March 2020. In an attempt to conceal uncertainties and stabilize the market, OPEC set in motion a resolution according to which oil producers would voluntarily adjust the oil production. Nigeria, among many others, decreased its oil production from 1.81 million BPD as of 2019 to 1.412 million BPD as of May-June this year. Consequently, the prices dropped from an average of 60 USD down to 19 USD. Although the PBD has gradually recovered and reached 42 USD, there is still a long way to go for Nigeria to maintain the numbers achieved prior to the pandemic outbreak.
Emergency policies implemented to decrease the spread of COVID-19 have also damaged the state of the Nigerian economy. Numerous sectors suffered from the lockdown, the agricultural sector was undergoing a disruption of the seasonal food supplies, the VAT rate rocketed and the exchange rate had to be adjusted. The Nigerian government, is, therefore, faced with a difficult task of both containing the spread of the pandemic and gradually improving the country’s economy, said Godwin Emefiele, the Governor of the Central Bank of Nigeria.
Future Prospects And Predictions
Despite the clear hardships that the Nigerian economy is currently subjected to and the prospect of a second major recession in sight, government officials are maintaining a positive outlook. Although the Nigerian economy shrugged by 6.1%, the number was significantly lower than the predicted 7.4%. Moreover, countries like Great Britain, India, and South Africa were faced with a significantly worse decline in their respective national economies. Nigeria’s Minister of Finance, Budget, and National Planning claimed that she is confident that the Nigerian economy will make a quick recovery with the right policies and regulations in place, and cited increasing liquidity to support government’s attempts to contain the spread of COVID-19, ensuring that financial services are delivered to the Nigerian public undisrupted and further encourage economic activity.
YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE
MONDAY LINES: Nigeria’s Cattle Routes
Former President Olusegun Obasanjo, a few days ago, declared that Nigeria was becoming a failed state. He said the nation’s hitherto healing fault lines had been reopened by Buhari’s Fulani-first regime. Victims of the ongoing tragic experiences applauded Obasanjo. They said he spoke their pains and gave voice to the tears…
Now Is The Time To Invest In Your Leaders
How well are your leaders doing during the Covid-19 pandemic? Are they leaning in or retreating? Are your teams following them or rebuking them for implementing necessary….
LEADERSHIP & MANAGEMENT: Beating The Peter Principle’s Bug
One of the world’s most respected management experts, Dr. Laurence J. Peter, posits that, “In a hierarchy every employee tends to rise to his level of incompetence.” This statement is now known as the Peter Principle. The thrust of the principle is that in an organisation, employees will eventually get to their highest level of…
VERITATEM: Notes From The Underground
YOU never know the value of freedom until you’ve lost it. The hard-won freedoms that our fathers bravely fought for are being systematically eroded in our country today. Evil swaggers across the land like the proud harlot of Babylon…
Edo 2020: The Politics Of Majority Speaker
SUYI AYODELE, South-South Bureau Chief, writes on the seeming mist surrounding the September 19 governorship election in Edo State against the backdrop of violence that has characterised campaigns by the political parties and their candidates…
Fuel Pump Price Increase: Two Sides Of Rusty Coin
Recently, the Petroleum Products Marketing Company (PPMC) announced a new price band for the month of September for Premium Motor Spirit (PMS), popularly known as petrol, which spiked the pump price to N162 per litre. JUSTICE NWAFOR takes a look at the two sides of the increment debate…
EDITORIAL: The Increase In Fuel Price
ON Wednesday September 2, the Petroleum Products Marketing Company (PPMC) announced a new ex-depot price of N151.56 for premium motor spirit (PMS), otherwise known as petrol. This is an increase of 14 per cent from the previous N138 price. Ex-depot price is the price marketers buy products from depot owners…
Subscribe To Our E-Copies By Clicking Here
and then