The lack of a well-diversified economy coupled with a weak healthcare system are challenging to the economy of Nigeria requiring urgent steps. COVID-19, the sensational virus, has led to unprecedented disruptions, affecting all markets and economies globally. Things will not be the same again, at least, for quite a while. Nigeria faces a greater challenge than most from the COVID-19 pandemic as a result of being the largest economy in Africa, with a population of 200 million people (approx.).
While there is an ongoing effort to curtail the spread of the virus, as we still hope and wait for a vaccine to be produced, the economic uncertainties and disruptions present a real threat. With this dangerous health emergency developing in the country, the economic impact of COVID-19 has been projected to be profound for Nigeria, especially with the fall in the price of crude oil (which has greatly affected the government revenue) and the general downturn in major sectors in the Nigerian economy.
Currently, the exportation of crude oil accounts for over half of government revenue and generates 87% of Nigeria’s foreign exchange. The collapse in oil prices by 60% since the start of the year to below $30 per barrel has affected government revenues, which could fall by as much as 45%.
The lack of a well-diversified economy, coupled with a weak healthcare system, pose challenges to the economy of Nigeria requiring urgent steps to be taken to avoid the deepening crisis. Several sectors of the economy have also been greatly affected, both in the formal and informal sector. Let us cursorily review a few issues.
The transportation sector
This sector contributes greatly to Nigeria’s GDP and is the lifeblood of all economic operations. The importance of the sector to the economy of nations cannot be overemphasized, most especially because transportation is an essential service. Moving passengers, goods and services with safety and security is a fundamental objective and should be a top priority for the government (the regulators) to ensure everyone working in the sector and using it in Nigeria are secured and safe.
However, the pandemic has led to creating a wide gap in the transportation sector that needs to be closed. The government is investing heavily in infrastructural development. These investments have to be seen to completion and complemented with the nodal security architecture to ensure, not just free passage, but safety of lives and properties. As the government begins to close the widening gap created, meeting essential needs of steady supply of food, medical supplies, and emergency goods with minimal delays or restrictions during this period as well as assuring the economic prosperity of the players in the sector would benefit the country in the long run.
Labour force (formal and informal)
Most small businesses in the country are ill-equipped to handle a crisis of this sort, especially as they were predominantly previously focused on survival. Teeming job losses have been announced, and many earning significantly low incomes have been subjected to half salaries and such abnormalities.
Active steps need to be taken for tighter labour laws and actionable job creation projects. Ongoing efforts are appreciated, but if they were insufficient prior to the outbreak of the pandemic, they would need further focused strengthening during this challenging period.
The pandemic has seen small businesses crashing and the unemployment rate increasing. Nigerians, already famously multi-taxed, will find it difficult to meet those fundamental obligations when juxtaposed with personal survival. This will greatly affect the effort to diversify the economy and widen the tax net and brackets. Businesses and individuals have been observing social distancing and self-isolation due to the pandemic; meeting obligations will be extremely hard.
Increased Borrowing and Foreign Reserves Challenges
The harsh realities of the times mean that increased borrowing and reserves depletion is inevitable. We are left with the question of what if? What if things get tougher? What would we have as a nation to fall back on? Saddled with debts and depleted reserves, the country is at a precarious stage. We are grossly unprepared for any minor shake in stability; thus, our continued corporate existence is threatened greatly due to cash-flow constraints.
The advent of the pandemic has largely shifted focus away from our security challenges. While we celebrate the victories of our gallant men of the Nigerian Armed Forces, the increased rise and boldness of bandits and criminals need to be urgently addressed. These evil forces have seized the initiative and are entrenching themselves comfortably.
The government needs to address this matter urgently because, without security, every economic aspiration and effort will be futile. Our police need to be trained and properly equipped to meet the challenges presented. We cannot in good faith continue to accept the loss of lives and properties, nor be subjected to Mafioso styled ‘tax’ regimes in our own country.
These are a few of the issues facing us post COVID-19 pandemic. The economic fallout for Nigerians subsequent to the pandemic will be severe. In times like this, it is important we start looking ahead as a country.