Economic Implication of COVID – 19 on Nigeria
The recent Coronavirus (COVID—19) disease outbreak is causing economic damage in several parts of the world. Unfortunately, Nigeria manufacturers and business people are not left out, as the emergence of the new virus holds significant implications for them. The Coronavirus which originated from China has affected 167 countries and territories around the world and one international tourism ship, Diamond Princess, according to the latest data released by the Worldometer on March 18, 2020.
The Coronavirus has infected 199,095, while 7,992 persons have been confirmed dead from the virus as of March 18, 2020, 08:06 GMT. As the world struggles to contain the disease, the economic damage continues to rise. Since the outbreak of Coronavirus in December
2019 in Wuham, China, there has been a slowdown in the demand of oil from China which happens to be the world’s largest importer of the commodity. Also, reports have shown that other sectors, such as aviation, tourism, and hospitality, have experienced a loss in demand. Similarly, new studies show that the coronavirus outbreak and subsequent shutdown of many parts of China could impact more than 5 million businesses worldwide, and with China being one of Nigeria biggest trading partners, there are concerns that Nigeria would take a big hit as a result of coronavirus outbreak. Given these concerns, this week’s edition of ENGAGE NIGERIA critically analyses how the recent coronavirus outbreak would be affecting the Nigerian economy.
Current Situation of Coronavirus in Nigeria
The Federal Government of Nigeria this week confirmed a third case of the disease. The Minister of Health, Dr Osagie Ehanire disclosed that 40 persons in Ogun State and 20 in Lagos, who had contacts with the index case, tested negative to the disease which has become a pandemic globally. Though the two new cases in Lagos and a woman in Enugu have later been confirmed negative.
Since the outbreak of the virus in China and subsequent spread to other countries, one of the vital response strategies of Nigeria government at the containment stage has been to identify all contacts, ensure their strict isolation and to follow up daily with checks of any symptoms of the disease.
Nevertheless, the Nigeria Centre for Disease Control (NCDC) recently set-up a multi-sectorial Coronavirus Preparedness Group (CPG) that is mandated to carry out regular epidemic intelligence gathering, enhanced surveillance at the points of entry, intensive risk communications, strengthening laboratory capacity for testing, placing National First Rapid Response Team to highly pathogenic infections on alert, and scaling up of Public Health Emergency Operation Centres (PHEOC) in states amongst others (PHEOCs already established in 22 states). In addition, the federal government of Nigeria recently constituted a Presidential Task Force for the control of the virus.
Recent Impacts of Coronavirus on Nigeria’s Economy
There are concerns that some businesses in Nigeria are already being affected by the virus outbreak. The spokesman for the Traders Association in the northern Nigerian city of Kaduna, Alhaji Muhammad Dan recently said that currency exchange had suffered considerable losses in recent days. According to the spokesman, “people are no longer coming to the exchange office to buy foreign currency because nobody wants to travel to China. They are all afraid to come into contact with the virus, so many avoid touching banknotes at all”.
Reports have shown that many Nigerian importers cancelled overseas trips since the outbreak of the coronavirus. Hence, the importation of Chinese products has declined noticeably. Experts have argued that there are even sporadic shortages of goods in the country. Last week, the International Air Transport Association (IATA) said that airlines in Nigeria and other African countries would lose $40 million in revenue this year over flight disruption due to coronavirus spread.
Coronavirus: Driving oil price down
The spread of the Coronavirus has had a volatile impact on the price of oil. The global price of oil has now fallen to $36 a barrel. Oil prices have fallen about 13 per cent this year on plunging Chinese demand, reflecting a slowdown in economic activity caused by the coronavirus outbreak. Nigeria does not export oil to China, but financial experts disclose that”every $10 drop in oil prices costs Nigeria about $500 million per month in lost export revenue”.
The Federal Government of Nigeria remains overly dependent on oil for its revenue. The country depends on crude oil for an estimated 90 per cent of export earnings and more than 70 per cent of government revenue. Unfortunately, recent media reports reveal that three-quarters of Nigeria’s oil production earmarked for export in April is unsold. Moreover, economic analysts predict that oil demand will decline further in the first quarter – worse than during the 2008 global financial crisis – as schools and offices close, airlines cancel flights. A growing number of people sit down at home. Given this development, the federal government last week inaugurated a committee to cut the size of the N10.59 trillion 2020 budget, which is under the threat of underfunding owing to the volatility in the global oil prices occasioned by the impact of the coronavirus outbreak.
Economic Intervention Measures
As part of the measures to mitigate the impact of the coronavirus, the Central Bank of Nigeria (CBN) yesterday announced six new monetary policies to cushion the effect of the virus on Nigeria businesses and the economy. The apex body announced a credit relief of $136.6m to businesses affected by the coronavirus pandemic. According to the CBN Governor, Godwin Emefiele, “households, small and medium-sized enterprises, airlines service providers, hotels, healthcare merchants will benefit from the funds”. In addition, the governor announced the reduction of interest rates on all applicable CBN intervention facilities to five per cent from the nine per cent per annum, for one year. However economic experts are pessimistic about the actualization of the CBN monetary policies because of the country’s weak economic outlook.
Conclusion and Recommendations
Without a doubt, diseases can spread from host countries to other international borders. However, to effectively reduce the potential economic impact in Nigeria, the government needs to diversify investments to other sectors of the economy such as agriculture, manufacturing, solid minerals and human capital development for higher output and employment. This would help the country not to depend solely on oil and generate more revenue, increase for export and improve customs and excise duties (CED) and foreign exchange rate as well as a balance of payment position of Nigeria.
Secondly, the provision of adequate funding to maintain and sustain an effective national disease surveillance system backed by a reliable laboratory network service is the first step in ensuring national health security and protection of Nigerians from the ravages and deaths caused by disease outbreaks.
Thirdly, there is an urgent need for more considerable resources to enhance capacity in low and middle-income countries. The requirements for training are wide-ranging and include surveillance and monitoring of infectious, clinical practice, epidemiological research, and use of new ICTs. In many cases, international training exchange programmes are required to enable the sharing of experiences and ideas across national contexts.
Fourthly, there is a need for enhanced training on the global dimensions of infectious diseases. Medical practitioners would benefit from a greater understanding of the potentially changing profile of infectious diseases as a result of increased population mobility, intensified trade in goods and services, climate change and other factors that link globalization.