Home ViewpointOpinion Implications of COVID-19 on Nigeria’s Economy

Implications of COVID-19 on Nigeria’s Economy

by telegramnews
The council of state should meet now (2)

By Chukwuemeka Anowu

Like a tsunami, the coronavirus pandemic which brought ill-wind to our national frontiers has exposed both our soft-underbelly and the obsolete medical facilities in our country.

The continued vulnerabilities which assail us in the face calls for a prompt response; thankfully the pandemic is only gradually making its impact felt on the African continent which attendant loss in the means of livelihood in which daily wages are dominant. The pandemic is an assault on both the health and economic well-being of people.

As the world grapples with the coronavirus, the economic impact is wailing with the G20 Finance Ministers and Central Bank Governors having a conference call on 23 March to discuss how to address the emergency.

From the meeting, it is discernible to realize that except something is done quickly and comprehensively, the country might collapse under the weight of what is the greatest threat to human civilization in the 21at century.

The International Monetary Fund’s Managing Director Kristalina Georgieva issued a statement following the call, in which she outlined the outlook for global growth: “for 2020 it is negative-recession at least as bad as during the global financial crisis or worse but she added: we expect a recovery in 2021.

The pandemic has led to disruptive economic activities and also that African economies and by extension is vulnerable to external shocks and devastating consequences in death, the near-collapse on the informal sector, and lack of necessary leadership responses.

The ravaging global health epidemic is threatening to expose Nigeria’s economy at risk as seen from the negative impact on oil price, which Nigeria’s economy and for the implication of 2020 budget is solely dependent on.

Oil prices have declined from $70 / barrel at the beginning of the year to close to $30/ barrel on the back of declining demand and a glut in supply. When this is considered against the 2020 budget predicated on a benchmark of $57 / barrel in Nigeria, the full effect of the economic pandemic starts to be even clearer.

This may well prove an even larger challenge in the long run where there will be a substantial drop in oil price.

As global oil prices trend lower at $57 per barrel as of mid-February, the subsistence of the coronavirus will continue to dampen appetite, which will put a lid on oil prices well into March. If oil demand continues to fall with no OPEC intervention in the form of production cuts, tightening supply, a country like Nigeria will be negatively impacted by the downward price trend.

The international oil benchmark, Brent crude, plunged to its cheapest in 18 years on Monday as it traded around $22 per barrel. This comes amid growing fears that the global coronavirus shutdown could last months and demand for fuel could decline further.

Brent crude, against which Nigeria’s oil is priced, fell by $2.83 to $22.10 per barrel as of Monday 31st of March 2020. It earlier tumbled to as low as $21.76 per barrel, its lowest since March 2002, according to Reuters.

As a result of the sharp decline in crude oil prices following the coronavirus, the pandemic has forced the Federal Government to propose the reduction of the oil price benchmark for the 2020 budget to $30 from $57.

Despite the significant reduction in its official selling prices aimed at attracting buyers, Nigeria is still struggling to sell its crude oil refiner are cutting back its output while industries are considering closures.

Nigeria as a developing country with a population of over 200 million people would require demonstrable leadership and sound policy and fiscal discipline to grapple with the ensuing harsh realities for the aftermath of the coronavirus in terms of Economy, health and socioeconomic variables which at the moment one don’t know how long it is going to last with no vaccine in place.

Where we have the developed countries with the best healthcare system struggling with this epidemic, it is better to imagine than experience the sweeping and indefensible harvest the pandemic will make on vulnerable countries such as Nigeria. With over 1 million reported cases, 100000 recoveries, and 9000 dead as of March 2020, this pandemic is not what Nigeria can toy with.

As a way to limit the spread of coronavirus, the Federal Government issued a lockdown in Abuja, Federal Capital Territory, Lagos, and Ogun. Where other states government has issued Lockdown and closure of Borders as see in Kano and Port Harcourt, it is about time to have a vigorous testing scheme to determine the status of the citizenry.

As the world battles with the uncertainty around the spread of the coronavirus, it worries me about the economic strains it is causing, with markets crashing out of panic and the inflation of prices of commodities which creates panic and inflicts pains on Nigerians.

Where the prices of commodities in the market have soared up due to panic buying by Nigerian as a result of the lockdown which might even be extended. Lots of people are put on risk of facing hunger which might not keep them indoors for long.

The market women, transporters, food vendors, and other people who earn their daily living through daily activities are at greater risk with no economic package by the government to protect the peoples financially during the lockdown.

As some economic analysts predicated saying Nigeria is at the early stage of the pandemic where it has been seen some countries have evacuated their diplomats and citizens out of Nigeria.

Now with the mounting figures of people inflicted with the pandemic, the country should make adequate preparations for flatting of the curve as a matter of national survival.

With some implying that Nigeria is likely to hit rock bottom if effective and efficient measures are not put in place to curb the virus. Certainly, the realities in the West, especially in Spain, Italy, the United Kingdom, and the United States of America clearly show that why the curve may be low at the advent, it peaks within the shortest possible time.

We all have a role to play in fighting this pandemic as we ought to wash our hands with soap and water or use hand sanitizers as frequently as we can. Also to clean our surroundings with disinfectant.

Also, report to the isolation centers once you have any symptoms of the coronavirus and most importantly we stay safe.

Vanguard



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