COVID-19: The economic perspective of the pandemic in Nigeria

The outbreak of Coronavirus (COVID-19) has been rapid in recent times across Nigeria and it is becoming increasingly worrisome globally. The coronavirus (COVID-19) outbreak has already dampened the economic outlook of the country and there is a near economic recession outlook. This is largely due to the consequences of COVID-19 outbreak, declined crude oil price currently trading below $30 per barrel and the depressed state of the nation’s economy especially with debt service obligation. Supportably, the numbers of incidence of COVID-19 continue to escalate through community transmission, it has heightened uncertainty in our economic and social landscape. In economic terms COVID-19 outbreak is impacting negatively on government revenues, businesses, families and individuals across the world and more severely on a developing country like Nigeria. Where palliatives and stimulus packages can hardly go round to all the citizenries and businesses.

The COVID-19 pandemic is life-threatening and a huge health risks however the socio-economic impact is real and devastating, with many workers likely to face looming job loss, job cuts, salary cuts, redundancy. and SMEs facing business closures. Couple with the bleak economic outlook, many Nigerians are more than likely will go further below poverty line because majority are in the informal business sector.

However, to cushion the effect of the pandemic impact, fiscal and economic stimulatory measures targeted at taxpayers to save their businesses from collapse was considered by Nigerian Government. This step is reactive though commendable but the real subject matter for the government and other economic policymakers, is to see that the virus outbreak is short-lived in Nigeria. The economic impact of the deadly virus is very high and perhaps government might need to consider more pragmatic palliatives such as social and fiscal policy palliatives, concessions on import trades because Nigeria is import-dependent, duties and port charges waiver to reduce the value chain disruption and improve service delivery, more credit facilities and tax breaks- particularly cutting taxes to increase and improve disposable income needs to be considered. Most SMEs run their businesses on loan facilities and the current situation has impeded their capacity to service these loans effectively, so government intervention is required to forestall massive business shut down.

Further to this, it is recommended that the guidelines and requirements to access the apex bank CBN announced palliative measures worth N3.5 trillion, should be relaxed to promote wider eligible participation. Those that truly and meaningfully require it might not be able to access it especially the micro businesses and SMEs, if the current requirement is not reviewed. Most importantly, the anti-corruption drive of the government needs to be stiffened. So that all social intervention and economic stimulus packages can be managed judicially. The Nigerian Stock Exchange (NSE) and Securities and Exchange Commission (SEC) in conjunction with CBN can design policies to encourage listed companies and the capital market as a whole to benefit adequately from the stimulus packages. The listing requirements can be relaxed by NSE to accommodate more qualified companies to list on the Nigerian Stock Exchange so that they can use the platform to access funding, which is just one of the benefits of listing. More so lower transaction and listing costs will directly attract more listings and deepen market participation at this trying time. Point of note is that, the co-operation and co-ordination between and among the various financial markets regulators (SEC, CBN, PenCom, NSE, DMO & NAICOM) needs to be strengthened to assure coherent policies to reduce the negative impact of COVID-19.

In conclusion, one of the leading global rating agencies, Standard & Poor’s (S&P) downgraded Nigeria’s credit rating further into junk territory, with a B-rating, down from ‘B/B. This rating might affect future Foreign Direct Investments (FDI) into the country and expected foreign portfolio investments. Therefore, concerted efforts should be on policies to improve this rating and encourage impressive FDI into the country needs to be considered at this time. The headline inflation or (Consumer Price Index) rose to 12.26 percent year-on-year in the month of March 2020, according to data from the National Bureau of Statistics (NBS), up from 12.20 percent in February 2020, the highest in two years. Food remains a major driver of inflation in Nigeria especially with the rise in the composite food index occasioned by increases in prices of edible commodities like bread, cereals, meat, fish, yam among others. Consequently, priority attention and adequate policy response by the CBN monetary policy committee is required to address and stem the growing inflationary trend.