What could have been prevented by restricting international movement into the county at the early stage, is costing the Nigeria economy a lot more.
Africa’s largest economy has the record of being the second country in the continent behind South Africa, with the highest number of confirmed cases of the coronavirus pandemic, with over 11,000 of its populace so far infected with the virus, according to World Health Organisation (WHO) data.
That’s an increase of over 3000 percent from the levels seen a month earlier, showing how the virus is fast spreading in the West African state. As of today 36 states of the federation including the Federal Capital Territory have reported at least one case of the virus.
Wrong timing and Lack of preparedness
The outbreak of the novel coronavirus was first discovered around December 2019, in Wuhan, central province of China, and on January 30th 2020 the World Health Organisation declared the outbreak a public health emergency of international Concern.
As was the case with many others, Nigeria claimed it was ready for the coronavirus in terms of detection and response in case of its importation, even though it’s glaring that the Western African nation was not.
It was clear that like many other countries, Africa’s most populous nation undermine the extent of the virus by not swinging into action that would help in averting the importation of the virus
First, at the time, there were several public outcries over the non-screening of chartered flight passengers coming into the country from high risk countries where the virus had spread to.
It was not until March 23rd that the Federal Government restricted international flight to and from the country.
Sadly, the index case of the virus had already been reported in late February by an Italian Man who flew into the country through Ethiopian airlines.
If the approach of closing the borders or following guidelines by quarantining international visitors for a minimum of 14 days, impending dangers from the virus probably would have been averted.
Analyst have tasked the government to always be proactive in handling issues that calls for public concern
Coronavirus leaves Nigeria with no alternative to critical Infrastructure Spending
If Nigeria needed a reason to stop paying lip service to the country’s infrastructure needs and return the country to full economic strength, the fallout of the new coronavirus outbreak makes a compelling case.
Nigeria has a huge infrastructure deficit from health to power down to education; which the coronavirus pandemic has further exposed.
As the earlier normal, the health sector and education sectors, two critical factors necessary for human capital development, have suffered years of infrastructural neglect and low budgetary spends that has placed both sectors with some of the worst statistics in the world.
That has been the case for years since the country’s political and elite class could conveniently seek medical treatment abroad leaving the masses and the most vulnerable to grapple with the country’s failing health system.
Official data shows that Nigeria spends at least $1 billion annually on medical tourism.
But as advanced countries of the world took the steps of shutting their borders from visitors, a move designed to contain the spread of the virus; it dawned on Nigeria that its only hope was to fall back to its failing infrastructure which has suffered years of neglect and decay.
Both the masses and elite have been stuck in the country’s lean health care resources.
The situation could have been much precarious for the country but for the private sector that came in to support the fight by building isolation centres, donating of test kits as well as other Personal Preventive Equipment (PPE).
Yet the health sector is still being overwhelmed due to the spike in the virus as on a daily basis, the number of infected cases continue to rise in relation to the fewer isolation
For example in Lagos, which is the epicentre of the COVID-19 pandemic in Nigeria, it is facing a new challenge. It is running out of bed space for patients of the disease.
The government of the city now says it would adopt a strategy of home care treatment for mild cases, a move that has triggered criticism across fronts from experts who are warning that it could be dangerous.
As of 4th of June, Lagos has recorded over 5400 cases, about half of total cases reported in the country, including the over 850 discharged cases and 67 deaths, data from the Nigerian Centre for Disease Control (NCDC) shows
The call for the government to focus on critical infrastructure investment in the country of 200 million people isn’t new.
The African Development Bank (AfDB), The World Bank, IMF, trade unions and associations, economists and even public office holders have clamoured for more investment in the country.
Last year, Zainab Ahmed, Minister of Finance, Budget and National Planning said Nigeria’s infrastructure gap would require an estimated sum of $3trn to bridge over a 30-year period.
Compared to emerging market economies, Nigeria’s infrastructure gap is 35 percent of GDP, with major challenges in the electricity sector, low and inefficient capital spending, and road and port infrastructure constraining transport and trade, according to the IMF in 2019.
The Fund’s Indicators of Public Infrastructure shows that Nigeria has less than 2 secondary teachers per 1,000 persons, compared to around 6 for Emerging Market Economies and 3 for sub-Saharan Africa.
Asides ranking low on public education infrastructure, Nigeria underperformed in Electricity production per capita, Roads per capita, Public health infrastructure and Access to treated water.
The low ranking has been due to low spending on capital projects over the years although Capex as a percentage of the total budget has risen from around 23 percent of the total budget in 2014 to around 33 percent in 2019.
For 2020, the government had proposed to spend 2.14 trillion for capital expenditure (excluding the capital component of statutory transfers) compared to Debt service of N2.45 trillion in its N10.33 trillion budget (Data from Budget Speech delivered by President Buhari on October 8 2019) and slightly much higher spending on MDA Personnel cost.
Due to the pandemic outbreak that cut Nigeria’s revenue significantly, the 2020 budget was revised down to N10.523 trillion from N10.594 trillion signed into law by President Buhari.
Although the share of the budget for Capex has increased in the last six years and Nigeria’s borrowings have spiked, actual spending on capital projects has been below amounts earmarked. For instance capital release for the 2019 budget took-off in the third quarter leading to the release of N1.2trillion as Capex by mid-December, and a 50 percent performance of the capital for the whole year 2019.
Other critical setbacks for infrastructure over the years and across various administrations have been getting the PPP framework right, lack of political will, partisan politics, corruption and budget misalignment due to Nigeria’s expensive bureaucracy
Coronavirus has exposed Nigeria’s fragile economy
Like many other countries, Nigeria is not left out from the heat of the coronavirus pandemic.
From Job losses to threat to livelihood, the impact of the coronavirus pandemic has been severe especially on the Nigerian economy which relies on one commodity export (oil) for virtually its entire dollar revenue.
The fall in global oil demand has hurt the government finances, limiting it from carrying out the needed fiscal stimulus that could wage off the economic impact of the pandemic.
The economy grew by 1.87 percent in Q1 2020, a slower pace when compared with 2.55 percent growth recorded in the 4th quarter of 2019.
Both the non-oil sector and oil sector recorded a slower growth in the period, no thanks to an outbreak that brought about an almost halt in economic activities.
With economic activities in the country almost grinding to a halt due to the coronavirus pandemic, Nigeria could see a host of its population becoming jobless, worsening its already heightened unemployment figure.
Data released by the International Air Transport Association, IATA, the umbrella body for 290 airlines globally, shows that no fewer than 22, ooo people would be lay-off from the aviation sector alone, as disruptions to air travel is forecasted to shave off N160. 58 billion from the industry as a result of a loss of an approximately million passengers; a move that would further pressure the country’s already ballooning jobless figure.
A lot of small businesses are gasping for breath as their businesses are being threatened by the pandemic.
Manufacturers are faced with dwindling sales and huge stock of inventory due to a slow demand. Those that have managed to see a spike in demand due to the production of essential services like drugs, cannot expand production due to inability to access dollars to import major inputs.
The education sector is also reeling from the pandemic with many students at home due to a lack of technological adoption in most schools
The virus-related economic disruption and oil market downturn is expected to hammer a 3.4 percent contraction on the economy going by IMF’s predictions and has caused the FG to roll out palliatives to households and businesses.
While paying people’s wages, supporting the most vulnerable and keeping businesses afloat are important priorities in the immediate term during an unprecedented crisis, these measures alone will not bring long-lasting results, said Ernst & Young Global in a report on “Repairing the damage from COVID-19.”
By contrast, investment in new infrastructure, such as hospitals, schools, renewable energy and digital networks, will create jobs and deliver tangible assets that will fuel long-term economic growth.
The idea that the government can help stimulate the economy through its spending is one that can be traced back to the economist John Maynard Keynes during the 1930s. The relevance today is unquestionable.
According to a 2014 study by the IMF, an unanticipated increase in capital spending of 1.0 percent of GDP leads to a 0.4 percent uplift in output that same year and a 1.5 percent rise four years later.
“This economic dividend occurs because building new infrastructure lays the groundwork for future economic growth, whether that’s an improved transport network to move goods, a digital backbone to power a new economy or education facilities to train a skilled workforce for the future,” said E&Y. “Moreover, countries that spend on new capital stock tend to attract more private investment …”
For Nigeria which will need a quick rebound from COVID-19 blows as opposed to the low growth cycle suffered post-2016-recession, this means investing in new infrastructures is the only way out.
The New Normal
While there is still much to be done, recent steps by the government have been in the right direction, for example, earmarking recovered loots for road and similar infrastructures, plans to cut down the number of government agencies and parastatals, removal of petroleum subsidies, and pre-COVID-19 plans to create an infrastructure-focused fund that draws contributions from pension funds, Development Finance Institutions (DFI) as well as foreign investors to be managed by the Nigerian Sovereign Investment Authority (NSIA).
The world the COVID-19 outbreak will leave behind will, however, be more digital which means “investments enabling “InfraTech” may well be more valuable than those in concrete and steel,” according to E&Y.
Already, businesses in Nigeria across various sectors are exploring the opportunities in remote working beyond the lockdowns due to the pandemic.
Some say productive hours due to traffic gridlock in states like Lagos, or overhead cost for the day-to-day operation could drop and at the same time output of workers could increase.
But issues around quality and cost of data, availability of power and regulatory framework are some of the challenges that must be addressed.
This implies Nigeria would need to increase investment in infrastructures that will support its digital economy drive.
Last year, the World Bank said the world’s digital economy (worth about USD 11.5 trillion or 15.5 percent of the world’s overall GDP) is expected to reach 25 percent of the global GDP in less than a decade, quickly outpacing the growth of the overall economy.
“Nigeria is currently capturing only a fraction of this growth and needs to strategically invest in the foundational elements of its digital economy to keep pace,” the World Bank said.
