Nigerians have, like people over the world, rapidly adopted new survival tactics to cope with the harsh health threats to cope with COVID-19 pandemic which showed its first victims in the country on February 28, 2020. But at the same time, they have become victims to the overwhelming global demand in, and price for, oil, Nigeria’s principal export earner.
Nigeria’s oil revenue dropped by 80 per cent as a result of the decline in global demand because of Covid-19, closure of economic activity in many client countries, and the dispute between OPEC members Saudi Arabia and Russia in which Saudi Arabia increased production.
The Nigerian Centre for Disease Control (NCDC) issued practical protective guidelines on the Federal level with the sole aim of protecting the citizens. They include social distancing practices, usage of hand sanitisers, (washing of hands with soap and water thoroughly) and mandatory use of face masks. But the boldest of their measures was the lockdown that was instated in some select cities. The most notable of which is Lagos and Kano – the two most populated cities.
Since the lockdown was instated, it has unveiled the deep-seated issues within Nigeria’s polarised community, exposing most particularly the nation’s deteriorated health sector. As a result, Nigeria’s President Muhammadu Buhari announced that the lockdown would be relaxed in Abuja, Lagos and Ogun states of the country on the 27th of April 2020, presumably for the sustenance of the Nation’s economy. This may turn out to be a double-edged sword. On the one hand, people’s lives are at risk. On the other, the economy will collapse if the lockdown is not eased. As it has been proven in other countries, rushing to ease the lockdown, increases the contagion of the virus.
But it’s clear that, sooner rather than later, the government will have to strike a balance between protecting Nigerians’ livelihoods and protecting their lives.
Factories around the world have shut down, flights have been grounded and countries have shut down their borders disrupting the world economy. Developed countries have pulled out their fiscal bazookas, like record-breaking stimulus packages in countries such as the United States and Singapore, to reduce and control the effects of the lockdown on their economy.
This pandemic has put Nigeria in a challenging situation, alongside other oil-dependent economies. Lockdown around the world means there are no cars on the roads, no aircraft flying and reduced production and commerce, reducing the demand for crude oil which contributes more than 70 per cent of Nigeria’s economy and 90 per cent of its foreign exchange earnings, a record low There is no clear path as to how Nigeria can cope with the pandemic and sustain its economy in the immediate post-pandemic years.
There are three channels through which the pandemic is expected to affect Nigeria’s economy: The supply channel; the demand channel and finances. Relating to the supply channel, Nigeria’s imports from China in 2019 alone amounted to N4.3 trillion (25 per cent of the total imports), while imported manufactured goods took up approximately 70 per cent of the total imports. This could place more pressure on the inflation figures going forward, as the cost of local production goes up. Secondly, the demand channel has been depressed worldwide due to the lockdown policy implemented to curb the spread of the virus.
Nigeria’s top five oil export destinations, India, Spain, Netherlands, South Africa and France are battling the virus and currently on lockdown.
Lastly, concerning the financial channel, global capital flows to emerging markets is expected to be interrupted by COVID-19, Nigeria inclusive. Foreign Portfolio Investment (FPI) serves as a major source of income in our capital markets as well as fixed income markets, and more importantly, a pivotal source of forex (foreign exchange) inflow into the country. Undoubtedly, gloomy global capital gains will significantly affect the nation’s foreign exchange reserve and exchange rates.
The International Monetary Fund (IMF) has forecasted a 3.4 per cent shrink In Nigeria’s economy and a recession that would last until 2021. The country is also going to face an increase in the unemployment rate which is currently at 23 per cent.
The Presidency has set up several task forces which include state governors, the governor of the central bank Mr Godwin Emefiele, all the different ministries, the economic advisory council and the national economic council led by Nigeria’s vice president Prof. Yemi Osinbajo and other stakeholders to come up with strategies and solutions that will reduce the effects of the pandemic on the country and position the country on a growth trajectory.
For instance, the Central Bank has arranged a fiscal stimulus package of N50 billion Naira for households and small and medium enterprises affected by the pandemic, N100 billion to the health sector and N1 trillion Naira to manufacturing. It has also adjusted the exchange rate from 306 to 360 to regulate the exchange rates across the bureau de change, retail and wholesale markets.
Those are some of the steps taken by the Nigerian government to reduce the negative effects of COVID-19. Other steps could also be implemented such as: wavering the payment of taxes for the second quarter of 2020, provision of additional liquidity to the forex market to ease up forex shortage in the financial market.
Furthermore, the pandemic does not have a uniform effect on all citizens. There are those with privileges, whose jobs or sources of income remain uninterrupted. These privileges contrasts with the reality of the less privileged who rely on their daily wages to survive, that is, those under the informal sector. According to the UN, 80 per cent of Nigerians fall under the informal sector or “vulnerable employment”. Finding enough food and getting the means to purchase ,it leads to persistent anxiety. For some the troubles are just beginning, for others, it is an everyday reality.
Nigeria’s federal and state governments should ensure the rights to food, shelter, and other necessities for people losing jobs during these trying times. Earlier the ministry of humanitarian
assistance approved the distribution of food items and the sum of N20 thousand Naira to citizens with Bank verification Number(BVN) . However, the people who are in desperate need of this assistance do not own bank accounts. Therefore, it is paramount that the government creates a more effective method of distribution that can help these distributions reach all Nigerian citizens.
This is a time of great speculation mixed with fear and nostalgia for the recent past when so much was taken for granted.
The Pandemic should serve as a wake-up call to policymakers to invest and improve other sectors, addressing the country’s high oil-dependency.
Socially, the lack of effective testing, especially for states that are densely populated is disastrous. With the two most populated Nigerian states struggling with the virus – protective equipment has become scarce, hospitals are overwhelmed and there is a shameful lack of testing capacity. With these failures, if care is not taken Nigeria may as well become the global epicentre of the virus.
As it stands now and today, it is apparent that not nearly enough is being done to protect frontline workers —armed forces, health workers and the likes. The lack of training and protective gear has rendered the first line of defence as most vulnerable to the virus.
As much as the pandemic is a health issue, it has evolved to become economic and societal. Hence, the solution must be holistic and consider our nation’s peculiar developing state. According to the maxims of The Art of Victory, “Victory which depends solely on a single element–whether the strength of force, religion or belief, wealth, culture, or intellect will fail”. If we are to survive this pandemic, we have to tailor our solution to reflect our society’s unique geopolitical structure.
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