The Impact of COVID19 on Nigeria’s Economy
The COVID-19 pandemic has posed a serious challenge to the world, necessitating countries around the world to adopt stringent measures such as complete or partial lockdowns in order to contain the spread of the disease and this has had adverse implications on national economies and rural livelihoods. The Federal Government of Nigeria (FGN) had to close its land, sea and air borders and implemented a total lockdown in states and cities with very high infection rates across the country.
Consequently, state governments have followed suit. These measures have had its toll on individuals, households, micro, small and medium scale enterprises (MSMEs) and large corporations. In order to cushion the effect of the pandemic on the citizens, the federal government had announced a number of responses: N500 billion COVID-19 Crisis Intervention Fund, 50 billion Naira CBN intervention fund for households and MSMEs, 20,000 Naira four months conditional cash transfer to the country’s poorest, reduction in price of fertilizers as subsidy to farmers etc.
Approvals have been granted by the National Assembly and the International Monetary Fund for Nigerian government to borrow 850 billion naira domestically and $3.4 billion respectively to help finance the 2020 budget and reduce the impact of the severe economic shock the COVID-19 pandemic is having on the Nigerian economy. Experts believe the palliative measures introduced so far by the government are not enough considering Nigeria’s estimated 200 million population. The continuous decline in oil prices which is Nigeria’s major foreign exchange earner and the subsequent dwindling of the country’s foreign exchange reserve has put the country in a very difficult economic position at this time.
It is important for the government to diversify its MSME sector to develop in all areas of agriculture, manufacturing, entertainment, technology and services as each of these sectors will continue to be very relevant to the overall GDP growth as well as employment generation in the country post COVID-19.
The budget should be revised downwards basing the revenue benchmarks and assumptions on realizable thresholds and estimates to ensure optimum budget performance. Government must at this time cut the cost of governance, reduce unnecessary expenditures and channel available resources into empowering MSMEs and stimulating the economy. Efforts should be made to limit importation and to encourage local manufacturing of most of the medical supplies such as facemasks, hand sanitizers, ventilators etc as to conserve our forex. The cash transfer palliative to the country’s poorest should be inclusive and there should be transparent, comprehensive and universal social protection systems to mitigate against the prevalence of poverty.
This report analyses the implication of Nigeria’s level of preparedness to combat COVID19 on its economy; the impact of the extremely decline in oil prices, and the influence on Medium and Small Enterprises in the coming months.
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