Although the impact of COVID-19 on the Nigerian economy and other sectors has been acute, it, however, provides an ample opportunity for the government and policymakers to pursue structural reforms and put in place home-grown policies that will sober up the economy
It is barely one week after the partial lifting of the lockdown in Abuja, Lagos State and many other states, but the impact of COVID-19 on the Nigerian economy is still traumatic with sharp decline in productivity, jobs and revenues. Although, the easing of the lockdown has been described as hasty, but some others believe that the imposition of the lockdown was rather unnecessary in view of the peculiar nature of the nation’s informal sector with a large population of people who rely on daily activities for sustenance.
But in his nationwide broadcast to announce the partial lifting of the lockdown, President Muhammadu Buhari admitted the economic difficulties that the measure had caused, acknowledging that many citizens had lost their livelihoods. According to him, many businesses have also shut down and no country can afford the full impact of a sustained lockdown while awaiting the production of vaccines or cures for the virus.
However, a review of the impact of the lockdown shows that virtually all the sectors were badly hit and the few that could be said to be operational did not perform optimally.
For instance, the nation’s economy, which was already fragile before the outbreak of coronavirus late in 2019, was among the sectors worst hit by the pandemic.
According to Buhari, the federal government has since revised its 2020 budget, slashing its revenue projection by about 40% and seeking emergency support from the International Monetary Fund of $3.4 billion to be able to execute the 2020 budget.
In its review of the impact of the COVID-19 on the domestic economy, the Lagos Chamber of Commerce and Industry, LCCI, noted that following the fallout of the covid-19 pandemic, “we see the short to medium-term outlook for the economy as bleak, as the pandemic has led to an unprecedented collapse in commodity prices, capital flight, turmoil in the capital market, supply chain disruption across sectors and destabilization of commercial and economic activities.
Hence, we resonate with the International Monetary Fund’s position on a looming severe contraction of the economy by year end-2020”.
But the chamber believes that the current covid-19 experience presents an ample opportunity for the government and policymakers to pursue structural reforms and put in place home-grown policies.
“Reforms such as the liberalisation of the petroleum downstream sector, exchange rate convergence, securitizing government’s equities in joint ventures, privatizing government’s redundant assets, PPP-led infrastructural development, export diversification, agro-based industrialization and cut in governance costs are direly needed to aid the rebound of the economy going forward and especially in times of adversity,” the president of the LCCI, Toki Mabogunje said in Lagos on Wednesday May 5, 2020.
The Oil and Gas Sector was not spared by the pandemic as the slump in crude oil prices due to weakening global demand for Brent crude, Nigeria’s benchmark grade, dropped by over 60 percent since the beginning of the year.
The crash in global oil prices has necessitated the downward adjustment of the reference price of crude oil from $57 per barrel to $30 and further down to $20 per barrel for the implementation of the 2020 budget.
The Aviation Industry is still locked down and according to the minister of aviation, Hadi Sirika, over 100,000 jobs had been lost in the aviation sector due to the coronavirus pandemic.
Sirika said on Thursday, May 7 at the daily briefing of the Presidential Task Force on COVID-19 that the aviation sector had been dealt a severe blow by the pandemic, noting that airlines have lost nearly N17 billion monthly since their operations were grounded, as part of efforts to curb the spread of the virus.
“We are the worst hit, than any other sector. Some N17 billion monthly is being lost by the airlines, thanks to COVID-19,” the minister said, adding: “we will not be able to open up after closing for several weeks and perhaps for some months.”
The other sectors that have been impacted negatively include: The Banking sector experienced limited operations during the lockdown and the plan by some of the banks to lay off staff due to difficult operating environment had been halted by the Central Bank of Nigeria.
The Hospitality and Entertainment Industry has been one of the worst hit sectors in the country. The lockdown resulted in the cancellation of many bookings and the closure of many hotels.
The Entertainment section was also affected negatively as all the film and entertainment companies had to close down for the period of the lockdown and after easing the lockdown. Some of the managers in the industry have lamented the closure of their businesses, especially the cancellation of the bookings made before the pandemic.
There are speculations that it will be extremely difficult to revive the sector after the pandemic and some stakeholders predict that there could be a number of court cases to resolve some of the contracts entered into before the pandemic.
Small Businesses: This group of businesses was significantly destabilized, especially in the informal and the Medium and Small Enterprises space due to their lack of adequate cash buffers to withstand the shock. The findings from the survey by the LCCI on the covid-19 crisis impact on the Lagos business community revealed that 81 percent of the respondents were ‘severely’ affected by the pandemic with the median daily revenue loss of N500, 000.
The Agriculture and Health sectors can be said to belong to the gainer list of the sectors with less impact from COVID-19.
For instance, with Covid 19 induced lockdown in some states, the joint technical task team on emergency response to COVID-19, facilitated free and unhindered movement of food, livestock and agricultural inputs and farmer’s movement across the nation during the lockdown, and 2020 farming season to avoid food crises.
For some of the farmers, it was a boom period for them. However, the federal government failed to cash in on this development to buy the locally produced rice for distribution as part of the palliative package instead of distributing the imported rice seized by the Nigerian Customs Service, which some states have rejected as unfit for human consumption.
For the Health sector, the pandemic exposed the rot and the dearth of basic infrastructure in that sector. Although the federal and state governments are making tremendous efforts to provide some basic facilities and equipment needed to battle the virus, it is necessary for these governments to resolve never to pay less attention to the health sector.
