IMPACT OF CORONA VIRUS (COVID-19) ON THE NIGERIAN ECONOMY
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A cluster of pneumonia cases from an unknown virus surfaced in Wuhan, China in December 2019. Based on initial laboratory findings, the disease named Corona virus disease 2019 (abbreviated as COVID-19), was described as an infectious disease that is caused by severe acute respiratory syndrome corona virus 2.
The corona virus (COVID-19) outbreak has since spread to about 196 countries and territories in every continent and one international conveyance across the globe. While there are ongoing efforts to curtail the spread of infection which is almost entirely driven by human-to-human transmission, it has accounted for over 400,000 confirmed cases with over 18,000 deaths.
The corona virus (COVID-19) crisis is affecting the entire world economy and that of Nigeria. Some key sectors of the Nigerian economy are already experiencing a slowdown as a result of the pandemic. Air transport, tourism and the oil sector are visibly impacted. However, invisible impacts of Covid-19 are expected regardless of the duration of the pandemic.
Nigeria, like all the nations of the world, is navigating uncertain times. However, for Nigeria, as an oil-dependent economy, this is a Twin Shock: COVID-19 Pandemic Global & Domestic Shock, and Oil Price Shock.
Nigeria’s vulnerabilities to the impact of these external shocks can be adduced to increased dependencies on global economies for fiscal revenues, foreign exchange inflows; fiscal deficit funding and capital flows required to sustain the nation’s economic activities.
The Twin Shocks are expected to impact the economy through three channels: supply, demand and financial. Across all scenarios, Nigeria is facing a likely economic contraction. In the least worst-case scenario (contained outbreak), Nigeria’s GDP growth could decline from 2.5 percent to −3.4 percent in 2020—in other words, a decline of nearly six percentage points.
That would represent a reduction in GDP of approximately $20 billion, with more than two-thirds of the direct impact coming from oil-price effects, given Nigeria’s status as a major oil exporter. In scenarios in which the outbreak is not contained, Nigeria’s GDP growth rate could fall to −8.8 percent, representing a reduction in GDP of some $40 billion.
The biggest driver of this loss would be a reduction in consumer spending in food and beverages, clothing, and transport. The socio-economic impact of the Covid-19 crisis is real. It is therefore essential to inform the populations on the impact and advice policy-makers in order to better prepare and lessen the adverse impact of the pandemic. In this regard, the policy recommendations are structured into two types:
i) Those responding to the immediate situation; and
ii) Those corresponding to the aftermath of the pandemic.
A paradigm shift is needed in order to change the trade patterns of Nigeria within themselves and with the rest of world. Nigeria should turn the current Covid-19 pandemic into an opportunity. The virus is also taking its toll on health facilities and infrastructures across the globe.
Italy is currently the largest affected country with a number of deaths surpassing China, since the outbreak of corona virus. Across northern Italy, the virus has pushed the country’s National Health Service to a breaking point, emphasizing the test that other countries, especially developing and low-income countries, might face in their approach to contain the virus spread.
Most hospitals and health facilities that could not handle the hazards are resulting to operating below their capacity by taking a few regular health-related cases or shutting down. What could be more devastating is the fact that the economic pains that accompanied the virus might not go away soon as envisaged. The conventional policy measures currently being taken such as reducing interest rates and costs of borrowing, tax cuts and tax holidays are quite remarkable.
However, these conventional policy measures are quite potent when there are demand shocks. There are limitations to the successes that can be recorded when demand shocks are combined with supply shocks. It is already apparent from the emergence of the current crisis that there are implications on the economy from both the demand and supply sides.
Some of the demand factors include social distancing with consumers staying at home, limitations in spending and declining consumptions. On the supply side, factories are shutting down or cutting down production and output, while in other instances, staff work from home to limit physical contact.
The decision to close educational institutions and schools around the globe in an attempt to contain the pandemic has also led to a soaring number of children, youth and adults not attending schools. According to UNESCO
Monitoring report on COVID-19 educational disruption and response, the impact of school closures in the over 100 countries that have implemented the decisions around the world has impacted over half of the global students’ population.
These educational disruptions are being escalated particularly for the most vulnerable members of society. To assess, scenarios have been constructed on the basis of assumptions which takes account of economic, demographic and social constraints.
1.2 STATEMENT OF PROBLEM
Although the corona virus outbreak which started in the Wuhan province of China had spill over problems in Nigeria, the reason why the outbreak became uncontrollable in Nigeria and caused suffering to poor citizens was because of weak institutions that were ineffective in responding to the pandemic and the lack of social welfare programs that would have catered for poor citizens and vulnerable citizens who were affected by the crisis.
The fear of financial and economic collapse led to panic buying, hoarding of foreign currency by individuals and businesses for speculative reasons, flight to safety in consumption, households stocking up on essential food and commodity items, businesses asking workers to work from home to reduce operating costs.
The rapid outbreak of the COVID-19 presents an alarming health crisis that the world is grappling with. In addition to the human impact, there is also significant economic, business and commercial impact being felt globally. The
outbreak of corona virus disease (COVID-19) might have effect on the Nigeria economy through low imports and exports in the country, poor tourism remittance and commodity price rate in Nigeria. Lastly there have been studies on corona virus disease (COVID-19) but not even a single study is based on the effect of corona virus (COVID-19) on the Nigeria economy; hence a need for the study.
1.3 AIM AND OBJECTIVES OF THE STUDY
The major purpose of this study is to examine the impact of corona virus (COVID-19) on the Nigeria economy. Other general objectives of the study are:
1. To examine the causes of corona virus (COVID-19)
2. To examine the impact of corona virus (COVID-19) on import and export rates in Nigeria
3. To examine the impact of corona virus (COVID-19) on Nigerian educational sector
4. To examine the impact of corona virus (COVID-19) on the health and well being of the Nigeria citizens
5. To examine the economic impact of the pandemic in Nigeria
6. To examine the relationship between corona virus disease (COVID-19) and the Nigeria economy
7. To recommend preventive measures to be adopted by the Nigeria government in fight against the corona virus disease (COVID-19)
1.4 RESEARCH QUESTIONS
1. What are the causes of corona virus (COVID-19)?
2. What is the impact of corona virus (COVID-19) on import and export rates in Nigeria?
3. What is the impact of corona virus (COVID-19) on Nigerian educational sector?
4. What is the impact of corona virus (COVID-19) on the health and well being of the Nigeria citizens?
5. What is the economic impact of the corona virus pandemic in Nigeria?
6. What is the relationship between corona virus disease (COVID-19) and the Nigeria economy?
7. What are the preventive measures to be adopted by the Nigeria government in fighting against the corona virus (COVID-19)?
1.5 RESEARCH HYPOTHESES
Hypothesis 1
H0: Corona virus (COVID-19) has no significant effect on the Nigeria economy
H1: Corona virus (COVID-19) has a significant effect on the Nigeria economy
Hypothesis 2
H0: There is no significant relationship between corona virus disease (COVID-19) and the Nigeria economy
H1: There is a significant relationship between corona virus disease (COVID-19) and the Nigeria economy
1.6 SIGNIFICANCE OF THE STUDY
The study on the effect of corona virus disease (COVID-19) on the Nigeria economy will be of immense benefit to all the Nigeria citizens, the health sector, and the federal government of Nigeria. The study will explore the prevalence of corona virus disease (COVID-19), the causes, and the impact of the corona virus (COVID-19) on the Nigeria economy.
Due to the difficulty of quantifying the real impact as a result of the uncertainty, the rapidly evolving nature of the pandemic, and scarcity of the data, our work focuses on understanding the possible socio-economic repercussions in order to propose policy recommendations to respond to the crisis.
The lessons learnt from the study will give more enlightenment on the way forward, as the country is in a critical phase of the implementation of Nigeria Free Trade Zone.
The study will educate the Nigeria government on the policy implementation to curb the prevalence of the corona virus disease (COVID-19) and how to improve the Nigeria economy during this period.
The study will serve as a repository of information to other researchers that desire to carry out similar research on the above topic. Finally the study will contribute to the body of the existing literature on the effect of corona virus disease (COVID-19) on the Nigeria economy
1.7 SCOPE OF THE STUDY
The study is based on the impact of corona virus disease (COVID-19) on the Nigeria economy
1.8 LIMITATION OF THE STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
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1.9 DEFINITION OF TERMS
Corona Virus Pandemic (COVID-19): Corona virus disease (COVID-19) is an infectious disease caused by a new virus. The disease causes respiratory illness (like the flu) with symptoms such as a cough, fever, and in more severe cases, difficulty breathing. You can protect yourself by washing your hands frequently, avoiding touching your face, and avoiding close contact (1 meter or 3 feet) with people who are unwell.
Health: Health, as defined by the World Health Organization (WHO), is “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity. Health may be defined as the ability to adapt and manage physical, mental and social challenges throughout life.
Preventive Measures: Intended or used to prevent or hinder; acting as an obstacle. Something carried out to deter expected aggression by hostile forces. Preventing or slowing the course of an illness or disease; prophylactic: preventive medicine; preventive health care.
Environment: The sum total of all surroundings of a living organism, including natural forces and other living things, which provide conditions for development and growth as well as of danger and damage.
IMPACT OF CORONA VIRUS (COVID-19) ON THE NIGERIAN ECONOMY
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