The Impact of COVID-19 on the Nigerian Economy and the Way Forward -By Adedimeji Quayyim Abdul-Hafeez

The Chinese use two brush strokes to write the word “crisis”. One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger – but recognize the opportunity.”

– John F. Kennedy

It is of no doubt that the world is going through hard times and global economies are going to suffer the crux of the brunt. The emergence of COVID-19 as a global health emergency has been the hallmark of these times, with very drastic futuristic implications. The weak capabilities of the health sectors in developing economies like Nigeria, coupled with state-enforced curfews and lockdowns, close-down of businesses and inadequate healthcare facilities portends disastrous economic consequences. The impacts of the COVID-19 needs to be examined to find possible and implementable solutions to the pandemic and its looming impacts on the Nigerian economy.

The COVID-19 pandemic has posed serious challenges to the world economic sectors, necessitating countries around the world to adopt stringent measures such as complete or partial lockdowns in order to contain the spread of the pandemic. This has had adverse implications on national economies and rural livelihoods. As at the time of this writing, millions of individuals had tested positive while thousands had lost their lives to the virus. The United Nations Trade and Development Agency (UNCTAD) estimates the cost of the outbreak around US$2 trillion in 2020. This had put world economies to complete standstills, harboring fears of a worse reoccurrence of the Global Financial Crisis last experienced in 2008, with chances of worst hits in Sub-Saharan Africa. However, experts at the KPMG, predict that the COVID-19 pandemic would soon fade away just like the Ebola, Zika, and Severe Acute Respiratory Syndrome (SARS) viruses. This could only be actualized through adequate policy responses.

The pandemic, no doubt, has charred the Nigerian economy with impacts. The pandemic had led to the fall in aggregate demand and rise in governmental expenditure. According to research, the public budget increased from 8.83 trillion naira ($24.53 billion) in 2019 to 10.59 trillion naira ($29.42 billion) in 2020, representing 11 percent of the national GDP, while small businesses have been exempted from company income tax, and the tax rate for medium-sized businesses has been revised downwards from 30 to 20 percent. Professionals are evicted from jobs as workforces are increasingly downsized and remote-based, entrepreneurs forced to lock down businesses and teeming populations are deprived of sustenance and livelihood. With no economies spared from the pandemic’s malaise, deep fall in oil prices and halts in economic activities, the PWC predicts that “worse events still ahead as demand may dip further in half year 2020 and beyond, if factories and airlines remain closed”.

Nigeria has taken steps to combat the virus, although there are veritable arguments that the country was not prepared to combat the pandemic.  The Central Bank of Nigeria (CBN) has arranged a fiscal stimulus package, contingency funds released and establishment of an Intervention fund, distribution of palliatives, amongst others, have been deployed to lessen the impact of the virus. This is all in a bid to lessen the blows of the virus on the economy.

The increasing spikes in figures of COVID-19 cases in Nigeria is a huge indication more has to be done to curb its looming negative consequences. Diversification of revenue bases, strengthening appropriate policies, obtaining debt reliefs, enhancing trade, tax reliefs, employment retention would help in surviving the pandemic. This all would go a long way in creating a pathway towards economic sustainability and development in the post COVID-19 era.

Adedimeji Quayyim Abdul-Hafeez is a creative, multi-potentialite, budding journalist and legal practitioner. He receives mails at quayyimadedimeji@gmail.com and tweets @quayyimbakr