Ebola outbreak holds economy to N340bn ransom in 3 months

By the end of the first quarter of its outbreak, the much-feared Ebola Virus Disease would have caused the economy about N340 billion ($2billion) and if the outbreak is to continue into the third quarter, Nigeria may be gazing through a $3.5 billion hole in its books.

These figures are estimates provided by Bismarck Rewane, CEO, Financial Derivatives Company (FDC).

“Though, it may be difficult to quantify for now, as a result of unavailability of sufficient data in the country, the result would be evident in the Q3:2014 growth rate of the affected sectors, says Ayodeji Ebo of Afrinvest.

According to Ebo, the tourism and aviation sector has received its fair share of the negative impact of the EVD, as most tourists cancelled their planned summer tours to Nigeria, hence reduced revenue. Moreover, the shrinking disposable income has received further pressure in terms of the increased cost of personal hygiene (sanitizer and hand wash), hence, lower standard of living.

The estimates are based on cancellation of flights, hotel bookings, abstinence from consumption of certain items, social dislocations and shrinking disposable income, occasioned by the increased cost of personal hygiene through purchase of sanitizers and hand wash, with the attendant lower disposable income.

They singled out sectors like Air transport with contribution of 0.9 percent to GDP in the first quarter of 2014; accommodation and food services (1.01%); trade (17.35); Agric. (19.65), human health and services (0.71%) and food, beverages & tobacco (4.85) with total contribution of 43.66 to be impacted negatively by the outbreak of the disease.

Air transport, the second most used means of transportation after road has been hard hit since the outbreak as several airlines including Arik Air, Asky, British Airways and Emirates have either suspended or cancelled flight operations to and from any of the Ebola affected countries.

The implication is that these sectors would experience reduced revenue in their third quarter financials.

The capital market is also gripped in the Ebola ‘bear hug’ as nervousness of the investors occasioned by the virus scare has continued to diminish the stock prices.

According to Rewane, “By this time in 2013, the market had gained 29.1% compared to a loss of (-0.23%) this year. Corporate earnings have paled in comparison to last year. Cadbury, GT, Guinness, Dangote have all underperformed their 2013 figures. As if the market blues were not enough, the Ebola scare added more to the nervousness and anxiety of investors.”

The education sector is not spared the scourge either. Suspension of academic activities following extension of holidays for primary and secondary schools in Nigeria means schools (public and private), would have to find a way around the new cost induced by the extension.

It is understood that most private schools have suspended payment of teachers’ salaries and the funding of pre-resumption activities.

Kenneth Iwelumo, managing partner, CKX Partners Limited and former senior vice president Merrill Lynch Bank of America, said Nigeria will require a robust national electronic learning strategy to curtail the impact of the EVD scourge on primary and secondary school education in the country.

“We do not know how long this Ebola issue will last”, said Chris Uwaje, former president of the Institute of Software Practitioners of Nigeria (ISPON). “We need to create e-schools, and e-learning platforms and strategies for these children. Government needs to bring teachers at all levels and technology experts together to brainstorm on how best to build tools based on technology to aid learning.”

John Omachonu