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The resurgence in coronavirus infections in Europe and the United States, which has resulted in the re-imposition of some form of lockdowns by a number of countries, represents a major setback to growth, and it signals the stalling of the recovery of the world’s economy on the back of the global pandemic that could see the Nigerian economy, businesses and individuals lose billions of naira, just as it did in the first wave.
A whitepaper report by the International Food Policy Research Institute (IFPRI) estimates that during the earlier lockdown periods, which stretched from March to May only witnessing full-fledged easing in August, Nigeria’s gross domestic product (GDP) suffered a 34.1 per cent loss due to COVID-19, amounting to $16.4 billion.
Weak global economic conditions due to COVID-19 have hurt oil demand and price for most of 2020, coming at a huge cost to the Nigerian economy, which is dependent on the oil & gas sector for most of government revenues; and over 90 per cent of total export earnings.
The second wave of COVID-19 in Europe, being the second most affected region in the world, has prompted lockdowns and other restrictions in the largest economies of the region, including the United Kingdom, France and Germany. The United States, which remains the epicentre of COVID-19, never really survived the first wave and daily case counts have recently reached record levels, no thanks to the elections which seen people converging without adhering to social distancing and other measures at elections rallies of incumbent President Donald Trump.
Back in Nigeria, the first phase of the national shutdown had been due to the rapid rise in new Covid-19 cases which saw the county recording constrictions in her Q2 gross domestic product to -6.1 per cent year on year owing to closures of her borders; witnessed a fall in the total capital importation within the first and second quarters; rising inflation, which in turn, mounted pressures on the Nigerian naira and a below-average recording of the CBN PMI figure below the 50 points threshold in over 6 months.
Meanwhile, with the spike in new cases globally, some countries have already opted for a nationwide shutdown in a bid to curtain the pandemic. Similarly, in Nigeria, federal health minister, Osagie Ehanire, and Lagos State health commissioner, Akin Abayomi, have warned that they may impose a new lockdown and return other measures if there is a recurrence of high cases of coronavirus in the state due to the flagrant disregard for the ravaging Covid-19 pandemic protocols.
“A resurgence of cases in Lagos may lead to the reversal of the strategically calculated measures put in place by the government to open up the economy.
“The first wave of coronavirus started in December 2019 and swept through an unprepared world. The first case of COVID-19 in Nigeria was recorded in Lagos on the 27th of February 2020. Lagos has since become the epicentre of the outbreak in Nigeria with a record of over 21 thousand confirmed cases and 212 deaths from the virus.
“The containment measures put in place at the time included COVID-19 testing, isolation and treatment, surveillance, total shutdown of the State for about 12 weeks and a partial shutdown of social, economic and academic activities for over four months,” the commissioner said in a statement.
On account of the COVID-19 pandemic the world is having to live with uncertainties. The fear of the coming danger and what the country could lose now rend the air, and in view of any possible fresh lockdown, whether partial or total, analysts say they hope that the lessons from the previous lockdown would serve as a guide to minimize individual and corporate losses.
Ekerete Olawoye Gam-Ikom, a management strategy-insurance consultant and practitioner, told Business A.M. that there must be ways that the country can rely on to possibly win, adding that these should be considered now before the government even comes up with the lockdown option.
“Such proactive and positive attitude is how I think we should expect the next lockdown, rather than seek to count our losses before they are hatched,” he said in a note to Business A.M.
“I would say the government had been relatively proactive, though we expected more especially in the area of testing. Now, it will be saddening if the second wave or spike we are anticipating meets us unprepared to conduct more tests. Next and importantly, there should be a better plan for palliatives, having seen that they were not properly handled.
“Also, those enterprises that are involved in food, logistics, distribution and payments would need to be given more security to ensure we are not overrun by miscreants and hoodlums amongst us. Our lessons from the previous lockdown and protests should lead our actions,” Ekerete concluded.
On the other hand, with the festive season approaching, coupled with the fact that inflation has, overtime, found comfort in the economy, the policy to shut down Lagos State and some parts of the country would suggest a harsher festive season for Nigerians, who have come to resign to the mantra, “we will yet survive”.
Prices of food, transport and other essential services are already at unprecedented levels, and Nigerians resigning to this as they usually do, think of it as normal, hence their responses always being to adjust and live with it.
One analyst said, “We should rather seek to engage the points where the price increases occur and discourage people from trying to achieve the results they expected before COVID-19 and #EndSARS protests”.
Attempts to press on with meeting the country’s 2021 budget projections, despite these crises, can only cause the country and citizens more pains and more crises, with the falling oil prices and demand; looming recessions in countries, rising inflation and unemployment rates, unstable exchange rate despite the ongoing convergence by the central bank.
These cocktails of developments would see businesses experience more difficulties, servicing debts, rising cost of borrowing as a result of heightened risk aversion. Analysts say this calls for seizing the moment with government taking steps to reduce the its size and the number of offices, and not just the budget; saying people will take a queue behind the government.
The estimated poverty impacts due to COVID-19 are mainly due to reductions in employment income. Therefore, minimizing and reversing these estimated poverty impacts calls for policy approaches to protect small and medium-scale enterprises during the recovery period, said another analyst.
However, our weak healthcare system, which has not helped with the low and slow rate of testing across the federation remains alarming, multiple sources said, noting that it is pertinent to understand that the extreme uncertainty about the duration, magnitude and impact of the crisis could pose a ferocious cycle of waning of business and confidence, as well as the tightening financial conditions which by and large, may lead to more layoffs and culling of investment.