The Impact Of COVID-19 On The Economy

A new report by the National Bureau of Statistics (NBS) and the United Nations Development Programme (UNDP) has revealed that over 20 per cent of Nigerians in full-time employment lost their jobs in 2020 as a result of the pandemic. The report titled, “The impact of COVID-19 on Business Enterprises in Nigeria,” was based on in-depth interviews with about 3,000 businesses from both the formal and informal sectors across major industries of the economy.

According to the report, “from disruptions in supply chains, to ongoing supply and demand shocks and a drop in consumer confidence, these challenges are expected to leave lasting impact on business enterprises that make up the backbone of the economy.” The report further revealed that about 81 per cent of enterprises interviewed experienced hefty losses in revenue, while 73 per cent faced acute liquidity challenges due to secondary impact of the virus in 2020. While the median loss in revenue in the report was 44 per cent, in comparison to 2019 revenues earned, about 60 per cent of the companies surveyed, experienced an increase in operational costs.                            

The importance of the survey cannot be overemphasised, especially now that the economy is reportedly showing signs of gradual recovery since the outbreak of the pandemic. That is why the government must hasten its economic recovery agenda. Although we bemoan the effect of the pandemic on the economy, especially the loss of jobs and revenue, we also think that the report will serve as a useful guide to government in its interventions to mitigate further the impact of the pandemic. Since lack of access to credit, high expenditure on utilities, inadequate safety net contributed to the loss of jobs and revenue, let the government address these challenges.   

Nigeria entered its second recession under the present administration last year. Official figures by the National Bureau of Statistics (NBS) showed that the Gross Domestic Product (GDP) contracted by 3.62 per cent in the third Quarter 2020 with major sectors of the economy in deep slump.  Also, data from the World Bank, said it was the worst recession for Nigeria in 36 years, and that it would require a combination of fiscal and monetary measures for the economy to bounce back.  Based on the report, the government must use the country’s youths to revamp the economy and stimulate growth. Therefore, the level of youth unemployment must be squarely addressed. Though the 2020 recession was long predicted, the slump in GDP was made worse by the COVID -19 pandemic. The outbreak of COVID-19 invariably led to significant reduction in sales and profit margins. It also witnessed rising cost of production, national debt, inflation, unemployment as well as worsening poverty and sharp drop in government revenue. The agricultural sector  within the period under review  performed disappointingly at 1.39 per cent.              

For the economy to recover quickly, the government and policymakers should work round the clock and come up with pragmatic policies to reverse the trend and restore the economy on the path of growth. Apart from making conscious efforts to stimulate the economy, let government ensure liquidity; create more jobs by supporting labour-intensive sectors such as agriculture and direct labour interventions. Other measures include undertaking growth enhancing investments that will spur the growth of Medium and Small Enterprises (SMEs). In the same vein, the government’s effort to diversify the economy must be given fresh boost.

There is no way Nigerian economy can grow with the current emphasis on crude oil. Government should stop neglecting the exploitation of solid minerals across the country, especially gold, which is being illegally mined by unscrupulous elements.   

There is also need to restore normalcy in the fluctuating Foreign Exchange (FX) market and key institutions in the international trade processes, like the ports system that should be more investment-friendly. In all, government should expand the economy by aggressively developing the non-oil sectors.