• Tuesday, July 23, 2024
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The pandemic and soaring inflation have stolen “Santa” for most Nigerians

Nigerian economy

Nigerians are having what can be described as one of the most low key Christmas celebrations in decades, courtesy of the global pandemic which has cut short the income of many amid a period of soaring commodity prices and rising poverty levels.

It’s Christmas season, a period known to be booming with lots of activities, but it appears to be a cold one for many Nigerians.

The second wave of the pandemic is gathering pace, with businesses and individuals freting over the potential impact of the virus resurgence.

To curb the second wave of the virus, the government has banned social gatherings, clubbing and funfairs, which are the usual features of the festive celebration, over fears of the disease spreading further.

The economy also slipped into its second recession within five years this year and is forecast to contract by the most in over three decades by the World Bank. Companies are struggling with 50 percent of the largest companies in the country declaring a loss or profit decline this year.

A lot of companies that depend on the year-end rally to get increased sales and rake in more revenue to get their books to make up for the loss in previous quarters have met their biggest disappointment as they complain of low patronage from customers.

BusinessDay findings show that a lot of companies are struggling to meet up with the payment of their workers December salary, after a year of slow demand dealt a big blow to their revenues.

That’s despite a massive lay-off of staff by many of these companies to cut down on operational cost.

“All the festive bonuses my company used to give to staff were stopped this year,” said Boluwatife, a 25-year old Nigeria, who works in one of the private firms in Victoria Island.

“Christmas gifts and food items which were a sure thing for my company, was also stopped as well. What we were told was that they are looking for money to at least pay December salaries on or before 23rd,” she said.

Four in every 10 Nigerians who were working before the first case of the was announced in late February, stopped working at the peak of the pandemic in April and May, according to a survey by the National Bureau of Statistics. Those who got engaged in their jobs saw a huge cut in income by at least about 50 percent.

It’s been a tough year for Nigerians who were already battling with a falling per capita income whose growth has been negative for the past five years but was made worse by the pandemic.

Per capita income in Africa’s biggest economy at $2000 is nowhere compared with Malaysia’s ($11,414.8), Brazil ($8,717.2), Indonesia ($4,135.6), Turkey ($9,042.5), and the United Arab Emirates (43,103.3), according to World Bank data.

It is also lower than South Africa’s per capita GDP of $6,000; and Egypt’s ($3,012), the data shows.

In the wake of falling income from the pandemic, Nigeria’s inflation at 14.8 percent in November, the highest in 32 months, ignited pains for most Nigerians to the point that many now see basic items as a thing of luxury.

Many Nigerians became unmoved about the health impact of the pandemic, but we’re more concerned about putting food on the table for their families.

Unlike in other countries where people who became jobless due to the pandemic, were getting some funds into their account, courtesy of the government’s fiscal bill; it wasn’t so for Africa’s biggest economy whose government fiscal buffer suffered a huge fiscal strain due to the collapse in both oil and non-oil revenue.

Oil prices which account for over 70 percent of the government’s revenue, took a deep dive at the international market, after various lockdown measures to contain the spread of the virus, slowed demand, and triggered a glut in the oil market.

The government from its already lean purse had flouted an N2.3 trillion fiscal package to lighten the burden of the pandemic off the shoulder of its over 200 million citizens, as well as businesses, but that was too little to move the needle.

Nigeria’s unemployment rate rose to an all-time high of 27 percent in the second quarter of the year, according to the National Bureau of Statistics data. But a lack of proper data/identity management, and also the lack of political will, meant that the fiscal stimulus packages were not judiciously channelled to the over 22 million jobless Nigerians, and the vulnerable in the society, who need them more.

Those dependent on family members abroad for bread and water were also not spared following the millions of people who have filed for unemployment claims in advanced countries.

Diaspora remittances which is also a strong source of dollar inflows for the country has also been affected, falling by about 50 percent this year.

That, with higher commodity prices which have headed north for 15 consecutive months, squeezed the lives of many and dealt a steeper blow to their living standard.

Basic food prices like rice and other ingredients which are used in festive celebration have headed north, caused by the country’s protectionist policy to shut its land borders in a bid to curb smuggling and drive local production, as well as the increasing spate of killings in the Northern region of the country.

The price of a bag of rice has almost doubled to N30, 000 this year, compared to the low of N15, 000 which it sold last year. Other food items including oil, fish, bread, tomatoes and onions have also increased in prices. Cost of moving goods and people from places to places have also increased abruptly due to increase in fuel prices as well as directives by the government limiting the number of passenger’s occupancy in the bus.

BusinessDay visits to some of the travel parks around in Ojota, Oshodi, and Maza- Maza shows that the prices of fares have more than doubled. Nigerians who are travelling to the Eastern part of the country paid as much as N15, 000. Due to the pandemic and the high cost of transportation, many Nigerians shelve off plans of travelling, with Transportation Company’s complaining of low patronage.

“Our buses are all parked in the warehouse because of the low turnout of people who are travelling,” said Emeka Okafor, a manager in one of the transportation companies.

“It’s never so in past years. During the festive season as this, all our buses would be in use. But this year, they are parked due to low customer patronage,” Okafor said.

With commodity prices heading North amid declining income, more Nigerians are being dragged into poverty.

According to the World Bank, the economic impact of the coronavirus pandemic will send personal incomes in Nigeria, Africa’s largest economy, back to levels seen some four decades ago, while the country’s poor will rise to 100 million by 2021.

The country ‘middle class is almost non-existent. It’s either a person is rich or is poor.

Nigeria’s gross domestic product (GDP) shrank 3.6 percent in the three months through September from a year earlier, compared with a 6.1 percent decline in the second quarter, the National Bureau of Statistics (NBS) said, as a lockdown to contain the Covid-19 outbreak, lower oil prices and rampant dollar shortages weighed on output.

Companies are struggling to keep up operation in a country where as much as 40 percent of the population leaves below $1.9 a day.

To meet up with shrinking consumer wallets and stay on track with market share, most companies, including the premium brands, have modified their business plan, producing goods in a sachet to meet those in the lower end of the pyramid.

Yet, they still faced a difficult time. In the third quarter alone when the country slipped in its second recession in five years, nearly 50 percent of the 30 most capitalised firms listed on the stock exchange reported losses or lower profits.

Many companies especially those who rely on imported inputs for their production processes met their worst headache yet with a three time devaluation of the naira.

Despite the devaluation, many businesses, as well as manufacturers, still face the bottleneck of accessing the greenback.

Africa’s most populous nation hopes for a better next year but the year 2020 is a sure tough one for many.