See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/344876394

THE EFFECT OF PANDEMIC ON THE NIGERIA ECONOMY

Research · October 2020

CITATIONS READS
0 10,321

2 authors:

Adeyemi Michael Anagun Oluwafisayomi Esther Oni

Lagos State University Lagos State University
3 PUBLICATIONS   0 CITATIONS    2 PUBLICATIONS   0 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

ADWA BATTLE View project

The Effect of COVID-19 on the Nigeria Economy View project

All content following this page was uploaded by Oluwafisayomi Esther Oni on 25 October 2020.

The user has requested enhancement of the downloaded file.

THE EFFECT OF PANDEMIC ON THE NIGERIA
ECONOMY

1 Anagun, Adeyemi Michael

Department of Language, Arts and Social Science Education,
Faculty of Education,
Lagos State University, Ojo.

&

2Oni,
Oluwafisayo Esther
Department of History and International Relations,
Faculty of Arts,
Lagos State University, Ojo.
1.0 INTRODUCTION

In the message of Hafez Ghanem, the World Bank Vice President to Africa, he said,

“COVID-19 pandemic is testing the limits of societies and economies across the

World and African countries are likely to be hit particularly hard”.

The possibility of the world’s economic recession is a growing concern for many

nations. There have been predictions from economic and social change analyst based

on the effect of the novel deadly virus; 2019 Coronavirus (COVID-19) pandemic.

According to World Bank Group (April, 2020), the economic growth in the Sub-

Saharan Africa as projected to decline from 2.4 percent in 2019 by a decreasing rate

of -2.1 to -5.1 percent in 2020, causing the first recession in the region in 25 years,

while hitting hard on 3 largest economies of Nigeria, South Africa and Angola. The

economy of most developing nations encounter a shift in Gross Domestic Product

(GDP), as such any outbreak affects the economic strength of the nation. When there

is epidemic disease outbreak in a nation; economic policies are adopted by the

government of the nation. The adverse implication of the global pandemic births

macroeconomic policies and general equilibrium on citizens and government of any

nation.

According to Madhav, et al (2018), pandemic is a large-scale outbreaks of infectious

disease that can greatly increase morbidity and mortality over a wide geographical

area, and causes significant economic, social, and political disruption. They also

2
asserted that the livelihood of pandemics has increased over the past century due to

persistent increase in global travel and integration, urbanization, changes in land use,

and greater exploitation of the natural environment. Over the years, pandemic

outbreak has plotted great fear in the minds of Nigerians socially, religiously and

economically. This has made citizens to barely feed as compared to the pre-

pandemic outbreak. Nigeria has faced several outbreaks of deadly diseases which

have claimed lives and concurrently posed fear, and untimely affected the economy.

Part of the most common diseases in Nigeria are the Smallpox which affected the

people of Epe in Lagos State between 1897 to 1917, Leprosy which affected

numbers of lives between 1857 to 1859; this led to the establishment of the first

hospital in Nigeria by Reverend Father Coquard of the Catholic Church in Abeokuta;

the Influenza pandemic which took place between 1918 and 1919 which was caused

by an H1N1 virus with avian origin who claimed a total of at least 50 million lives

worldwide.

Another epidemic outbreak is the LASSA Fever which was caused and spread

through the feces and urine of the multimammate rats Mastomysnatalensis the fever

records had occurred in 1950s and later occurred in 2018 which claimed about 3

deaths (Sandra, G and Charles, 2020). In 1976, another outbreak named Ebola virus

occurred. The virus is believed to have no exact cause but scientists believed it is

animal-borne and most likely from bats; this disease later occurred between 2014

3
and 2016 claiming about 8 lives (World Health Organization, 2020). Amongst other

pandemics in Nigeria are Cancer and HIV/AIDS. It is no more news that these

epidemic and pandemic outbreak has an effect on the Nigerian economy.

According to David and David (2006) who asserted that the GDP per capital does

not provide a full picture of the economic impacts of an improved health. They

further asserted that since health improvements reduces mortality, boost population

size as well as productivity, and on reverse case reduces population size of any

nation. When the value of the extra lives result from health improvements is taken

into account, the effect of health improvements on economies will be much greater

than the effect on per capita GDP alone (Bloom, et al, 2006). In a report of the

African Union (2020) which declared a pandemic by the World Health Organization

(WHO) on 11th March 2020, the novel deadly disease; Corona Virus 2019 (COVID-

19) has become a global emergency, given its impact on the entire world population

and the economy. In the report amounted for a scenario simulation of the

International Monetary Fund (IMF), global growth which could result to a fall by

0.5 for the year 2020. The report further revealed several other sources predicting a

fall in global growth due to the direct effects of the COVID-19 outbreak. The global

economy may result to economic recession at least in the first half of the year 2020,

when adding the direct and indirect effects of the crisis (e.g. supply and demand

shocks, commodity slump, fall in tourism arrivals, etc.).

4
Agreeing to the fact that this emergent pandemic progresses slowly on the African

continent, studies by international organizations have less addressed the economic

impact on individual African countries. Indeed, Africa is not immunized from

COVID-19 (African Union Report, 2020).

This paper focuses on the effects of the novel Coronavirus (COVID-19) on the

Nigerian economy. The specific purpose of this paper is to:

1. Know the effects of the pandemic (COVID-19) on different sectors of the

Nigerian economy.

2. Determine the measure adopted by the Nigerian government to deal with the

outbreak, and the strong measures to curb future pandemic in Nigeria.

The discussion paper posed its recommendations and further suggestions useful to

the firms, governments, and Central Bank of Nigeria, Economists, and research

analyst. In advent of posing these recommendations and suggestions adopts the

following research questions in order to achieve the objectives of the study.

Q01: Has the pandemic (COVID-19) affected different sectors of the Nigerian

economy?

Q02: Is Nigeria prepared to receive pandemic, and how can Nigeria build a strong

economy against future pandemic?

5
2.0 LITERATURE REVIEW

To avoid confusion due to the similarities that exist between the concept of endemic,

pandemic and epidemic, there is a need to review their meanings for a clear

understanding.

Dianjun (2019) sees endemic as a generic term for the disease with regional features

which is closely related to natural environment, human life and production. It can

occur in any country but are mainly distributed in under-developed countries and

regions where there are no centralized administrative organization for its prevention

and control. Unlike Dianjun, John (2001) sees endemic as constant presence of a

particular disease or infectious agent within a geographic area or population. Yang

(1998) considered endemic disease as one confined to a certain region. In other

words, it is associated with and frequently occurs within certain region. These all

means that endemic diseases are region restricted or population restricted but can

occur in any country, either developed or under-developed. To Mazyck (1920)

endemic diseases comes with low death rate but high sick rate, a large proportion of

the community more or less incapacitated for mental and physical work day after

day gradually slowing down business and production to a point where economic

progress is halted.

Christian (2016) considers epidemic to be an unexpected widespread rise in disease

incidence at a given time. According to Mazyck (1920), epidemic break upon

6
community often with little warnings, strike terror into the community, demoralize

businesses, reaps the harvests of victims, leaving physicians, nurses and the general

public exhausted as well as dumb founded by what just happened. To him, epidemic

disease range for a while upon particular group or restricted population and

disappears.

According to Hays (2005), pandemic is simply an epidemic on a very wide

geographical scale, a large area of the world. However, no quantitative measure

exists to establish that an epidemic becomes pandemic. Christian (2016) also agrees

with the views of Hays (2005); he however noted that pandemic cannot occur

without a dense or mobile population.

3.0 EFFECTS OF COVID-19 ON NIGERIA ECONOMY

There is a popular saying that “health is wealth”. In the same vein, David and David

(2006) asserted that the Gross Domestic Product per capital affects and also ignores

the potentials for duplicating the longer term but very significant changes in

education, productivity, export and import, exchange rates, price of oil per barrel,

fertility rate, consumption and savings rates that may have resulted from the

influenza epidemic. He further stressed that a country’s wealth (and/or health) can

often be enhanced by traditional measures such as opening up to trade, promoting

exports, restructuring inefficient state-owned enterprises, improving infrastructure,

7
unemployment, inflation, decrease in labor forces, investment in health, and

investing in education. In no time, outbreaks have caused economic stagnation to the

Nigeria economy. According to the International Labor Organization (ILO), they

revealed that global unemployment rate has reduced by 25 million since the

beginning of the COVID-19 outbreak in November, 2019.

Outbreak disease in Nigeria accounts for a complex effects. This shows that

epidemic and pandemic can affect the economic prosperity of any nation especially

in a developing nation like Nigeria, of which several diseases in recent years has

accounted for clear negative economic effects. Following from the HIV/AIDS

pandemic, it was then recorded to have significantly affected per capita GDP which

in turn has effects on household and their standard of living (Bloom et al, 2004) in

David and David (2006). The effect of this pandemic (HIV/AIDS), has reduced the

savings and then brought about a drastic increase in the consumption of individuals.

According to them, the long-term costs of HIV/AIDS, and in particular has a vast

scale on which the social and economic effects is likely to be felt due to decrease in

the investment on human capital (Bell et al, 2003). According to the World

Economic Forum (2004), it was asserted that AIDS also affected businesses of about

8,719 firms from a global survey conducted by the World Economic Forum.

Developing nations revealed a rise by 35 percent, and in Sub-Saharan Africa by 45

percent. However, as the novel pandemic (COVID-19) is affecting the economies of

8
many nations globally. It also has an unhidden effect of the price of crude oil,

education, health, tourism, and other facets or sectors that makes the economy, it has

also posed an unavoidable effect on citizens.

3.1 COVID-19 and the World GDP

2.08
2.12
2.28

0.35 2.35 2.55

Fig. Ia: Distribution of World GDP by Continents

Source: IMF

The figure above revealed the distribution of world GDP by continents. The

pandemic outbreak has a significant effect on the economy of every nation. The

Gross Domestic Product of the world by 2019. According to the European Union

(EU) in the African Union (AU) Report (2020), the United States and Japan account

for half of the world’s GDP. These economies are based on trade, services and

industries, these economies resulted a drastic reduction of economic activities;

which may lead to recession in some of these developed economies. According to

the publication by African Union, the Chinese economy accounts for about 16

percent of global GDP, and the largest trading partner of most African nations and

9
the rest of the world. Furthermore, this publication revealed a decline in economic

growth rates for these major economies: China 4.9% instead of 5.7%, Europe 0.8%

instead of 1.1%, the rest of the world 2.4% instead 2.9%, with world GDP falling by

0.412 from the first quarter of 2020 (African Union, 2020). Even before the outbreak,

the outlook for the world economy (especially developing nations like Nigeria) is

very fragile as the global GDP growth was estimated to be 2.5 percent in 2020

(Chukwuka and Amara, 2020).

Despite the shock, and having examined the case of the virus and the world GDP,

there is need to pinpoint the case of the virus on the Nigeria GDP. The figure IIb

below shows the trend of the GDP and cases of the virus before and after the

outbreak of the pandemic since the debut of COVID-19 in Nigeria on 27th February

2020, the Nigerian economy appeared to have entered turbulence. Thirteen days

after its importation from Italy, precisely March 11. With much emphasis, the

simulation analysis of the potential impact of COVID-19 on the Gross Domestic

Product (GDP) and its growth rates.

The data generated were adapted from Olusanya and Ahamuefula (2020) with an

underlying motive which is to forecast the plausible trajectory of the economic

growth for the four quarters of 2020. The table shows the actual 2019 and projected

2020 aggregates real GDP/growth rates.

10
Table I: The actual 2019 and projected 2020 aggregates real GDP/growth rates.
ACTUAL 2019 REAL GDP PROJECTED 2020 REAL GDP
Value Growth Value Growth
(N Million) Rate (N Million) Rate
Quarter 1 16,384,063.26 2.08 16,769,469.09 2.35
Quarter 2 16,892,756.91 2.12 16,951,139.99 0.35
Quarter 3 18,459,494.59 2.28 16,760,748.54 -9.20
Quarter 4 19,488,576.88 2.55 18,260,026.88 -6.30
Annualized 71,224,891.64 2.27 68,741,384.50 -3.49
Adapted from Olusanya and Ahamuefula (2020)

4 2.28 2.55 2.35

2.08 2.12
2 0.35
Growth Rate

-2

-4
-6.3
-6

-8 -9.2

-10
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Growth Rate 2.08 2.12 2.28 2.55 2.35 0.35 -9.2 -6.3
Yearly quaters

Fig. Ib: Trend on the Nigeria GDP from Q1, 2019 to Q4, 2020

We notice from the trend above that the virus has greatly affected the Nigeria GDP.

The first quarter of the year 2020 as a result of the outbreak of the virus is said to

birth the drastic decrease from 2.35 to 0.35 in the second quarter and unanimously

from 0.35 to -9.20 in the third quarter and to fourth quarter in -6.3.

11
Mathematically, the real GDP (rgdp) is computed by gross output (go) minus

intermediate consumption (intercom).

Real GDP (rgdpq) = goq – intercomq --------- (1)

3.2 COVID-19 on Oil Price

The world oil price has been drastically affected by the pandemic outbreak by about

45.87 percent resulting from US $65.87 a barrel in November, 2019 to US $17.00 a

barrel in April, 2020. Nigeria could lose up to $19b as the country could reduce its

total exports of crude oil in 2020 by between US $14 billion and US$ 19billion

(compared to predicted exports without COVID19). The trend below shows a drastic

fall is responsible for a fall in the price of crude oil in Nigeria.

80
65.87 67.91
70 61.07
60 53.76
Oil Price (US$)

50
Oil Price
40
30 Linear (Oil Price)
17
20
10
0
NOV., 2019 DEC., 2019 JAN., 2020 FEB., 2020 MAR., 2020

Months & Year

Fig. II: Trend on the price of crude oil from Nov., 2019 to Mar., 2020
Source: CBN

The figure above revealed that there has been a drastic fall in the price of oil since

the outbreak of COVID-19 globally. Having these figures, it not more a news that

12
the price of crude oil has fallen by 44.07 percent in the last three months since the

start of the year, with current prices falling below $30 per barrel. Non-oil commodity

prices have also declined since January, with natural gas and metal prices dropping

by 30 percent and 4 percent respectively (Brookings Institution, 2020). Also, it

should be noted that the pandemic amounts for a fall in aluminum by 0.49 percent;

copper by 0.47 percent, and lead by 1.64 percent, Cocoa by 21 percent of its value

(African Union, 2020).

In the case of Nigeria, revenue from oil production is 31 percent of the 2020 budget

revenue and oil account for 90 percent of foreign exchange, this effect of the sharp

and persistent fall in oil price will lead to cuts in government spending and net

export, which is the two critical component of economic output (Amara, 2020). She

further revealed a statement from the Nigeria’s Minister of Finance who already

announced that there will be cuts to non-critical capital expenditure. This shows that

there is an effect of pandemic outbreak on the Nigeria economy.

13
Adapted from Olusanya and Ahamuefula (2020)

Significantly, the relationship between the new case of the virus and the trend of the

world’s oil price should be reviewed with an effortful analysis. It should be noted

that there is a relationship between the records of new cases and the price of oil in

Nigeria and other nation’s around the world. Precisely, Olusanya and Ahamuefula

(2020) posits that the higher volatility in the regulation of oil price is however

expected during a pandemic, and that since crude oil accounts for a significant

proportion of the nation’s foreign earnings as well as federal government revenue,

economic productivity may be undermined by the oil price shock especially in this

case of announcements during COVID-19 as a pandemic which led to the crash in

global oil prices.

However, it is not more a news that the price of oil (po) in Nigeria greatly affects the

general price level (gpl), level of consumption (loc), foreign exchange earnings

(fexe), and the gross domestic product (gdp). Mathematically, we can then say:

Price of Oil (po) = gplq + locq + fexeq + gdpq ------------- (2)

3.3 COVID-19 on Tourism

Tourism is one of the diversifying sectors of few developing and developed nation.

According to Eneji, et al (2016), they asserted that Nigeria’s tourism landscape is

14
beautiful for global tourist attraction; the weather (w), climate (c), vegetation (veg.),

quality air-scape (qa), sunshine (ss), pleasant scenery (ps), the rocks (r), water falls

(wf), captivating beach (cb), historical species (hs), rich cultural diversity (rcd),

friendly people (fp), wild life animals (wla), and some of the famous festivals and

carnivals (fc) are all Nigeria’s tourism assets.

The World Trade Organization (WTO, 2014) in Eneji et al (2016) revealed that

tourism and hospitality industry is one of the Africa’s greatest but due to the invested

assets, it then worth $50 billion but has $205.7 billion of the untapped potential

which represents four times its current level in the market. World Trade

Organization, 2014 also asserted that they will be 77.3 million visitors in 2020,

which will account for about 5.5 percent growth rate over the 10 years of 4.1 percent.

The Nigeria GDP on tourism accounts for 5 percent which is then lower than

Africa’s average. In Africa, Ethiopia accounts as the fastest travelling country which

accounts to 48.6 percent in 2018 (Ciku, 2019). In spite the remarkable contributions

figured by the World Trade Organization, it is saddened that the novel deadly serves

as a shrink at attaining these huge percent to Africa tourist and specially the Nigeria

tourism. Moreover, figure III below shows the trend of the contribution of tourism

to the GDP of Nigeria economy.

15
 6 5.5 5.4
5.1 5
5 4.5 4.6
4.4
3.9 3.9
4 3.5
% of GDP

3 GDP (%)

0
2008 2010 2012 2014 2016 2018 2020
Years

Fig. III: Trend on the GDP of Tourism from 2009 to 2018

Source: Knoema, 2018

The figure above revealed the decrease in the GDP on tourism due to the outbreak

of the Ebola and LASSA fever in 2015 and 2018. This shows that disease has effects

on the tourism sector of the economy. As a preventive measure of governments to

reduce the spread of pandemic (COVID-19) is the quarantine and nationwide

lockdown. Governments often place a restriction in the coming in of foreigners into

the country and also outside the nation. This decision is often embarked upon to curb

the spread of the COVID-19 and any other outbreak disease that tends to claim the

lives of their citizens.

Theoretically, we can say;

Tourism landscape (tourland) = w + c + veg. + qa + ss

+ ps + r + wf + cb + hs
+ rcd + fp + wla + fc ------------ (3)

16
3.4 COVID-19 on Agriculture

Agriculture is said to form the major part of the Nigerian economy, which is also the

aggregate output of crop production (cp), livestock (lstk), forestry (frty) and fishing

(fishy). Asides oil, agriculture is one of the largest income generation from the non-

oil sectors to the Nigerian economy. According to the National Bureau of Statistics

Report (NBS, 2019), agriculture has contributed 28.25 percent to the overall GDP

during the third quarter of 2019. This was a significant contribution, and however,

this contribution set to reduce with the outbreak of the deadly disease during the

lockdown period, also border closure leading to disruption in transportation and

internal supply food chain. Remarkably, according to World Economic Forum

Report (2020), domestic restrictions and import delays are hindrance to farmers,

while farmers are warned against predictive failure in production if government does

not act. Also, Nigeria fertilizer stocks during this report is currently 20 percent below

its normal levels; there are only enough seeds to plant. The result of this is low

production of food consumption, which is a gradual movement towards malnutrition

in Nigeria. In addition to this, COVID-19 threatens to profoundly affect the

livelihood of poor rural farmers who depends on agriculture.

17
 30

25

% GDP 20

15

10

0
2008 2010 2012 2014 2016 2018 2020
Year

Fig. IV: Trend on the GDP of Agriculture from 2009 to 2018

Source: CBN

The figure above shows the trend on the GDP of Agriculture from 2019 to 2018.

This shows a decrease in the GDP of Agriculture from 26.75 percent to 19.99 percent

from 2009 to 2014; it then experiences an increase from 19.99 percent in 2014 to

21.2 percent in 2018. This could be as a result of high consumption of food in the

country due the outbreak of the deadly disease. It was observed that during their stay

at home, there was a drastic increase in food consumption.

The theoretical equation for agriculture sectors shown below:

Agricq = cpq + lstkq + frtyq + fishyq ---------------- (4)

3.5 COVID-19 on Education

Education is seen as the first and important yardstick for any nation that sets to

experience development. In Nigeria, the output of education is aggregated to be

18
primary (pri), secondary (sec), and tertiary (ter) education. According to UNESCO

monitoring report on COVID-19 educational disruption and response (2020), the

impact of school closures in over 100 countries that have implemented the decisions

around the world has impacted over 90 percent of the global student’s population.

In taking this decision, Nigeria is not excluded from this impact. According to

Nigeria Education in Emergencies Working Group (2020) accounts that close to

about 46 million students throughout the country will be affected, not only that but

about 40,000 Internally Displaced Persons (IDPs) children will be giving some form

of learning in camps and host communities will be affected by stoppage of learning

in schools.

This shows that educational sector is also greatly affected by the deadly virus, and

will have to adapt to the change. Presently, in the mode of teaching; many schools

in Nigeria and around the globe, have adopted the online teaching method while for

the younger ones, their parents have become their teachers or merely get teachers to

teach their kids at home. While many European countries have successfully

implemented their school setting using online digital tools like zoom or google meet,

the question remains; can Nigerian education survive the online teaching methods,

coupled with the unavailable network and high rate of purchasing data? In essence,

the virus; COVID-19 would be seen in education as a result of the changes in modes

of teaching and how students relate in schools, the ability to adapt to this remains a

19
question to be answered. However, this pulse a fear in the minds of parents and

guardian as regards the students ability to recall and regain all what they’ve been

taught.

Unarguably, having recorded low rate of infection among students, school closures

are a critical pillar of the social distancing tools to mitigate the spread of the disease

and avoid an acceleration of cases that will put a strain on health services.

Conclusively, the outbreak has pursed a fear into the minds of parents due to the

West African Examination Council 2020 expected results.

1.5
1.19
0.96
1

0.45
% Real GDP

0.5 0.35
0.18

0
-0.43
-0.5 -0.67

-1
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Year based on Quarterly

Fig. V: Trend on the GDP of Education from Q1 2018 to Q3 2019

Source: NBS

The figure above shows the trend of the Real GDP percent on education ranging

from first quarter of 2018 to the third quarter of 2019. The equation can be shown

below:

Education (edu) = priq + secq + terq ------------- (5)

20
3.6 COVID-19 on Health

Corona Virus is also taking its toll on health facilities and infrastructure in Nigeria,

in fact, one of the worst hit sectors by COVID-19 is the health sector. The health

sector can be regarded as been aggregate output of human health (h.h) and social

services (sos). With limited number of health practitioners and facilities, the health

sector is overburdened thus the need for government to increase its spending on

health sector. A further effect on health is that access to care for simple illness

becomes harder than usual due to the fear of the virus spreading. Many health care

centers have placed restrictions on how patients get treatment or admitted to prevent

overcrowding in hospitals. Also, the needs to provide equipment’s and medicine for

health services have led to a reduction in the production of vaccines for other

diseases especially vaccines for immunization for new born babies, therefore leading

to increase in infant death rate. As such, the African Union Report (2020) reveals

that if there still exist a persistent increase in pandemic (COVID-19), it will be

difficult for most African countries to treat their patients.

21
 1.4
1.13
1.2
1 0.86
0.8
0.6 0.41
% Real GDP

0.4
0.2
0 -0.16
-0.2 -0.37
-0.4
-0.68 -0.64
-0.6
-0.8
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Mar., 2020

Year based on Quarterly

Fig. VI: Trend on the GDP of Health from 2009 to 2019

Source: NBS

The figure above reveals the GDP trend on health from the first quarter of 2018 to

the third quarter of 2019. However, we can categorically say, as that the number of

new cases increase, the need for more health practitioner keeps increasing.

Moreover, the trend above has shown that there is a positive trend from the third

quarter of 2018 to the second quarter of 2019 due to the outbreak of COVID-19. We

can then say that, the virus has be curbed with the unhidden efforts of the health

workers which is as a result of increase in the health practitioner and volunteers,

despite its calming the lives of some health workers and they being at the war front

of being infected.

The equation is shown below:

Health = h.h + sos ---------------- (6)

22
3.7 COVID-19 on Security

With the closure of schools, increase in unemployment and disruption of food chain

due to closure of borders and interstate travels, there is definitely a downturn of this

on security in Nigeria. Noting that the living conditions of Nigerians is already

affected and not up to standard even before the corona case, there is a high risk of

insecurity manufacturing in form of robbery out of hunger and anger. Nigeria

already ranked as one of the countries with highest poverty rate with individual

living below 3 dollar per day, how much more a disruption in normal economic

activity without provision for sustenance, COVID-19 would definitely have negative

effect on security in Nigeria.

However, according to the African Union Report (2020), they revealed that the novel

coronavirus (COVID-19) came at the very time when the African regions are already

faced by the daunting challenges of fragility, conflict and violence due to either

terrorism, mix of jihadists, community-based militias, bandits, political instability

and/or climate change.

3.8 COVID-19 and the Manufacturing and Trade

Manufacturing and trading activities is largely be affected by the pandemic. The

manufacturing and trade sector of the Nigeria economy is an aggregated output of

23
oil refining (oilref), cement (cem), food (food), beverage and tobacco (bevetab),

textile (text), apparel and footwear (appfoot), wood and wood products (wwp), pulp

(plp), paper and paper products (ppp), chemical and pharmaceutical products (cpp),

non-metallic products (nmp), plastic and rubber products (prp), electrical and

electronics (eae), basic metal (bml), iron and steel (ias), motor vehicles & assembly

(mva), and other manufacturing (om).

Succintly, the lockdowns and ban on interstate transportation within the country has

a large impact on manufacturing and trade of both internal and external exchange of

goods and services; which both serves as source of income to the Nigerian economy.

According to the National Bureau of Statistics (November, 2019) which accounts

that trade contributes to GDP in the third quarter of 2019 with 14.69 percent lower

than its contribution in 2018. This contribution is set to further reduce the lockdown

and closure of borders, import and export trade duties which were source of income

to the economy has been affected which will definitely further drag down the

economy of Nigeria.

24
 30

25

% GDP 20

15

10

0
2008 2010 2012 2014 2016 2018 2020
Year

Fig. VII: Trend on the GDP of Trade from 2009 to 2019

Source: CBN

Olusanya and Ahamuefula (2020) asserted that trade has been adversely affected as

there is an excess supply of global crude oil without a commensurate demand for it

as a result of the pandemic, as well as lack of storage capacity. It can therefore be

equated as follows:

Manufacturing and trade = oilrefq + cemq + foodq + bevetabq

+ textq + appfootq + wwpq + plpq
+ pppq + cppq + nmpq + prpq
+ eaeq + bmlq + iasq + mvaq + omq ------------ (7)

3.9 COVID-19 and Exchange rates

The virus has not just affected the economy rather with great influence has affected

the exchange of currencies with nation’s around the world. According to Olusanya

and Ahamuefula (2020), they asserted that exchange rate regime in Nigeria has over

the years been managed by a float in the official rates determined by the apex

25
monetary authority rather being allowed to be determined by market forces of

demand and supply. They further highlighted one of the main characteristics is the

prominent existence of the parallel market which is however dominated by the

official rates thereby reducing the control of the apex monetary authority in the

determination of market rates. However, it should be noted that the exchange rate in

Nigeria is not just as a result of the pandemic outbreak. Though, in Nigeria, dollar

and other major currencies with major exchange rates is seen to affect the common

pepper seller at the street and even the fuel price.

3.10 COVID-19 on Other Nigeria Sectors

COVID-19 has effect on other sectors such as sports while globally the pandemic

affected Olympics games which is the largest sport gathering in the world causing it

to be postponed, the postponement came with a high cost but was a necessary step,

Nigeria is not excluded from this effect. In Nigeria, the biggest sporting event have

been put on hold, the Professional Football League, National Sports Festival have

been placed on hold to curb the spread. Sport has an important contribution to make

to the Nigerian economy, aside from the fact that it serves as the purpose of

recreation and entertainment for Nigerians, it also contributes to Nigeria's GDP.

According to National Bureau of Statistics (November, 2019); arts, entertainment

and recreation had contributed greatly to Nigeria's GDP in the third quarter of 2019,

26
it grew by 2.89 percent in 2019 which was an increase from 0.81 in the second

quarter of 2019 and 2.83 in 2018. However this growth could reduce this year due

to the lock down and suspension of sporting activities and other recreational

activities that demands gathering.

Aside sports, the film and entertainment industry has been affected. Movie theatres

have been shot down, art exhibitions; movie premiers and musical concert have

either been cancelled or postponed leading the entertainment sector to lose millions

of Naira worth of deals (Chike, 2020). This closure has significantly affected the

income generation of the sector.

The Nigeria economy as highlighted in this paper can be equated as:

Nig. Econ. = f (rgdpq + po + tourland + edu + health + security + man.tra + exchange rate +
sports
+ … + entertainment) …………….. (i)

= f ((goq – intercomq) + (gplq + locq + fexeq + gdpq) + (w + c + veg. + qa + ss +

ps + r + wf + cb + hs + rcd + fp + wla + fc) + (cpq + lstkq + frtyq + fishyq)
+ (priq + secq + terq) + (h.h + sos) + (security) + (man.tra) + (exchange rate)
+ (sports) + … + (entertainment)) ……………… (ii)

= f (goq – intercomq + gplq + locq + fexeq + gdpq + w + c + veg. + qa + ss + ps

+ r + wf + cb + hs + rcd + fp + wla + fc + cpq + lstkq + frtyq + fishyq + priq
+ secq + terq + h.h + sos + security + man.tra + exchange rate + sports + …
+ entertainment) ……………… (iii)

27
In teeming these effect as a result of the pandemic on the Nigeria economy; is

through policies (monetary or fiscal policy). Adversely, for any policy to be made

on the economy; every nation uses either the monetary policy or the fiscal policy.

The monetary policy are policies adopted and regulated by the Central Bank while

the fiscal policy are policies adopted and regulated by the government of any nation.

In other to curb the effect of the pandemic on the economy against recession births

policies on COVID-19. Unarguably, the effect of the pandemic on the Nigerian

economy is responsible for a shift in the consumption level of consumers, increase

in poverty rate, and other negative effects on the economy; the Nigeria government

has outlined policies (monetary and fiscal) so as to stabilize the unanimous effect on

its economy. According to a report of the Nigerian Economic Summit Group

(NESG, 2020) on the key instruments on the economic policies, the key fiscal

interventions and stimulus as a result of the pandemic in Nigeria are:

1. Establishment of N500 billion COVID-19 Crisis Intervention Fund to upgrade

federal/state healthcare facilities and finance the creation of a Special Public

Works Programme.

2. Enhanced financial support to the states critical healthcare expenditure:

US$190 million World Bank Regional Disease Surveillance System

(‘RADISSE’) facility, to be accessed by the Nigeria Centre for Disease

28
 Control (NCDC). In addition, the Federal Government has provided N102

billion for direct interventions in the healthcare sector.

3. Augmentation of federal allocations to states and moratorium on States’ debts:

US$150 million from the Nigeria Sovereign Investment Authority (NSIA)

stabilization Fund to support the June 2020 Federal Accounts Allocation

Committee (FAAC) disbursement.

4. Strategic Sectorial Investment: Small/Micro Enterprises are now completely

exempted from cooperate taxation; corporate tax rates for Medium-sized

Enterprises reviewed downward from 0% to 20%; and the Finance Act, 2019

VAT Exemption List include essential food, medical supplies and other basic

items that are critical in Nigeria’s efforts to address the COVID-19 Pandemic.

5. Amendment of 2020 Appropriation Act: Revision of benchmark oil price and

production for 2020 to US$20/barrel and 1.7mbpd, respectively.

Also, from the basis of monetary policy, the overview key monetary policy

interventions inn Nigeria are:

1. Maintained all policy rates at the current levels,

2. Reduction of interest rates on all CBN interventions from 9% to 5%,

3. One year moratorium on CBN intervention facilities,

4. N50 billion ($139 million) targeted credit facility,

29
 5. Liquidity interjection N36 trillion (2.4 percent of GDP) into the banking

system,

6. Regulatory restriction was also introduced to restructure loans in impacted

sectors,

7. Adjusted official exchange rate by 15%,

8. Ongoing plans to unify the various exchange rates,

9. Foreign exchange funding to pharmaceutical companies (NESG, 2020).

However, the effects of the novel coronavirus (COVID-19) on the Nigeria economy

as shown with an empirical data above are further highlighted below:

1. Drastic fall in the price of oil,

2. Decrease and lay-off of jobs in different sectors of the economy,

3. Decrease in investment, savings and increase in consumption,

4. Decrease in export and import rate,

5. Decrease in the religiosity belief of the citizens,

6. Increase in social vices,

7. Closure of firms and industries,

8. Increase in inflation and unemployment rate,

9. Decrease in standard of living,

10. Fear of food insecurity,

11. Drastic increase in exchange rate,

30
 12. Low expectation of income,

13. Erosion of wealth due to a fall in the value of assets,

14. Increase in health sector expenditure,

15. Expansionary fiscal policy,

16. Devaluation of Naira, and amongst others.

4.0 RECOMMENDATIONS AND FURTHER SUGGESTION

The novel pandemic, coronavirus (COVID-19) affects every facets of individual’s

life, the economy and the society at large. The Nigeria government adopts her

policies as against the virus on her economy. The policies are both monetary and

fiscal policy. Moreover, the adverse effect of this pandemic is much felt by the

government and her citizens, though necessary measures have been taken the

government and also adequately supported by NGO’s to ease the burden of the

government. Despite response recommendation by the National Centre for Disease

Control (NCDC) to curtail the spread of the disease; to avoid close contacts with

people who are sick, always wash and sanitize their hands at least every 20 seconds,

avoid putting their hands into their eyes, mouth and nose, while sneezing, sneeze to

their elbows and should make use of tissue and properly disposed after use, avoid

social and religious gatherings, clean and disinfect frequently touched objects and

surfaces, also stay home when you are sick and prompt visit to the medical centres.

31
Despite these, monetary and fiscal policies are taken to curb the nation against facing

another recession. Due to the economic effect of the novel coronavirus on the

economy, Nigeria is strongly encouraged to adhere to the following further

recommendations:

1. Nigeria being the giant and major player to Africa economy, it should then

diversify and transform their economies by strengthening the productive capacity of

African private sector to transform raw materials locally. According to them, this

will help to improve domestic resources mobilization and reduce the continent

dependence on external financial flows, which stands at 11.6% of Africa’s GDP

compared to 6.6% of developing economies’ GDP as strongly recommended by the

report of African Union (AU, 2020).

2. Their further suggestion is also applicable to the Nigeria economy,

recommending that there should be an increase in agricultural production thereby

enhancing the food value chains to meet domestic and dependable exporting

consumption by other nations.

3. Set up and implement strategic job opportunity programs to reduce the alarming

rate of unemployment within Nigeria.

4. After the novel pandemic (COVID-19), more expenditure should be channeled to

the educational sector so as to increase the nation’s investment in human capital in

the long run.

32
REFERENCE

African Union (AU) Report (2020), Impact of the Coronavirus (COVID-19) on the African
Economy. Available on
https://www.google.com/url?sa=t&soure=web&rct=j&url=https://au.int/sites/default/files
/documents/38326-doc-covid-
19_impact_on_african_economy.pdf&ved=2ahUKEwjnvoaPloHpAhU55uAKHW_ACv
AQFjAAegQIBhAC&usg=AOvVaw368oy6ESUTjKFYUJci8r1f
Amara, M.E. (2020). The Impact of COVID-19 on Nigeria’s Economy. StearsBusiness, Stears
News Limited 2020. Retrieved from www.strearsng.com/article/the-imapct-of-covid-19-
on-nigerias-economy on 23rd April, 2020.
Bell, C., S. Devarajan, and H. Gersbach. (2003). “Thinking about the Long-run Economic Costs
of AIDS”. World Bank. (October) (Draft). Available on
http://emlab.berkeley.edu/users/webfac/bardhan/e271_f03/thinking.pdf
Bloom, David E., David Canning and Dean T Jamison (2004). “Health, Wealth, and Wel-fare”,
Finance and Development, March 2004, Vol. 41, No. 1, pp. 10-15.
Bloom, David E., Ajay Mahal, Larry Rosenberg, Jaypee Sevilla, David Steven, and Mark Weston
(2004). Asia’s Economies and the Challenge of AIDS. Asian Development Bank.
Chike Olisah (2020). Businesses most affected by COVID-19 outbreak,
https://nairametrics.com/2020/04/20/businesses-most-affected-by-covid-19-outbreak/
Christian McMillen, (2016). Pandemics, A very Short Introduction, Oxford University Press, New
York
Chukwuka Onyekwena and Amara Ekererucha (2020). Understanding the impact of the COVID-
19 outbreak on the Nigerian econom, Brookings, Africa in Focus. Retrieved from
www.google.com/amp/s/www.brookings.edu/blog/africa-in-
focus/2020/04/08/understanding-the-impact-of-the-covid-19-outbreak-on-the-nigerian-
economy/amp/ on 23rd April, 2020
Ciku Kimeria (2019). Africa’s tourism industry is now the second fastest growing in the world.
Quartz Africa. Retrieved from
https://www.google.com/amp/s/qz.com/africa/1717902/africas-tourism-industry-is-
second-fastest-growing-in-world/amp/ on 24th April, 2020
David, E. B., and David, Canning (2006). Epidemics and Economics. Working Paper Series on
Program on the Global Demography of Aging. Harvard School of Public Health. PGDA
Working Paper No. 9: http://www.hsph.harvard.edu/pgda/working.htm
Eneji, M.A., Odey, F.A., and Bullus, M.L. (2016). Diversification of Nigeria’s Economy; Impact
of Tourism on Sustainable Development in Nigeria. International Journal of Research in
Humanities and Social Studies. Volume 3, Issues 5, May 2016. ISSN: 2394-6296. Pp: 36-
44
Hays J.N, (2005). Epidemic and Pandemics, their impacts on Human History, Oxford University
Press, England
John M. Last, a dictionary of epidemiology, 4th edition, Oxford University Press, New York,
2001.
Libby George, COVID-19 is exacerbating food shortages in Africa, Available on
https://www.weforum.org/agenda/2020/04/africa-coronavirus-covid19-imports-exports-
food-supply-chains on 27 April 2020.

33
 Madhav N, Oppenheim B, Gallivan M, et. al., (2018). Pandemics: Risks, Impacts, and Mitigation.
In: Jamison DT, Gelband H, Horton S, et. al., (eds). Disease Control Priorities: Improving
Health and Reducing Poverty. 3rd edition, Washington (DC): The International Bank for
Reconstruction and Development / The World Bank; 2017 Nov, 27. Chapter 17.
doi:10.1596/978-1-4648-0527-1/pt5.ch17
Mazyck P. Ravanel, (1920). Endemic disease versus Acute Epidemics, American Journal of Public
Health, Vol. X
National Bureau of Statistics, National Gross Domestic Product Report, November (2019).
Available on
https://www.google.com/url?sa=t&source=web&rct=j&url=http://nigerianstat.gov.ng/do
wnload/1025&ved=2ahUKEwi7nevg0IvpAhWox4UKHU1wC4EQFjACegQIAxAB&us
g=AOvVaw3BrpRZy2bWpFTZirJXiveF
Nigerian Economic Summit Group (2020). Macroeconomic Outlook Update: COVID-19, Global
Oil Price and the Nigerian Economy. May, 2020. Retrieved from
https://www.google.com/url?sa+t&source=web&rct=j&url=https://www.proshareng.com
/admin/upload/report/13476-May
Nigeria Education in Emergencies Working Group, Nigeria Education Sector COVID Response
Strategy in North East, (2020),
https://www.google.com/url?sa=t&source=web&rct=j&url=https://reliefweb.int/sites/reli
efweb.int/files/resources/nigeria_education_sector_covid-
19_response_strategy_north_east_.pdf&ved=2ahUKEwjO07LmzovpAhUSx4UKHU1w
BYQQFjAAegQIARAB&usg=AOvVaw1QCfe_mJGpEDb4c7VavaXE
Olusanya, E. O and Ahamuefula, E. O (2020). COVID-19 and the Nigeria Economy: Analyses of
Impacts and Growth Projections. Nigeria, June 2020. Retrieved from
https://www.researchgate.net/publication/342439011_COVID-
19_and_the_Nigeria_Economy_Analyses_of_Impacts_and_Growth_Projection
Sandra, G., and Charles, P.D. (2020). LASSA Fever Facts. Medicine Net. Retrieved from
https://www.medicinenet.com/lassa_fever/article.htm#what_are_causes_and_risk_factors
_for_lassa_fever on 24th February, 2020.
World Health Organization (2020). Ebola Virus Disease. Retrieved from
https://www.who.int/news-room/facts-sheets/detail/ebola-virus-disease on 24th February,
2020.
UNESCO COVID-19 educational disruption and response, (2020),
https://en.unesco.org/news/covid-19-educational-disruption-and-response
Yang Jiambi, the Study on the Etiology of Kashin Beck Disease in Dianjun Sun (ed), 2019,
Endemic Disease in China, People's Medical Publishing House and Springing Nature
Singapore Plc Ltd, Harbin, China.

Photos
APA-Abuja (2020). http://apanews.net/mobile/unelnterieure_EN.php/id=4937523
Op-Ed Contributor (2020). https://nairametrics.com/2020/04/21/a-post-covid-economy/

34

View publication stats