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Published On: Wed, Mar 18th, 2020

COVID-19: A virus redefining global economy

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Good enough, Nigerian government and its people have shown tremendous and commendable acts by its timely and effective response to the global coronavirus pandemic.
For the second time in a row, the Nigerian system has proven its readiness and capacity to respond to dire health emergencies and to protect the Nigerian citizens
We are witnessing developed and seemingly sophisticated nations of the world struggling to curtail the spread of the virus as their populations are being ravished by the pandemic; yet, the report and the reality from the world most populated Africa nation, expected to experience a catastrophic hit by the epidemic has not only been positive but equally surprising.
The U.S. death toll has climbed to at least 60 as confirmed cases in the country approach 3,000; trades are drastically dropping in the country as retailers are cutting hours or totally closing shops in the face of the virus. A travel ban from euro-state into the country means a great deal of negativity not only to America but the global community; but one we cannot dispute or condemn.
When the government said it was ready for the virus attack, many of us, including myself, were not totally convinced, but the speed and accuracy of containment of the virus in Nigeria has boldly, once again, shown that the country is indeed great and capable of greater things, if only we would put our house in order.
I feel elated wth the current recognition and position of respect Nigeria enjoys among nations and international health organisations. Just few days ago, the World Health Organization used Nigeria as a case study on how to best handle the spread of coronavirus across hard hit zones. That is a positive and the kind of things we want to hear and continue hearing about our country.
Globally, what has now become more worrisome, even more than the physical, health attack by the virus and its continuous spread globally, is its impact across national and global economies.
If being contented with becoming zero infected with the virus is enough for us, without taking stock of the economic implications of the pandemic and be adequately prepared to insulate our systems to reduce the economic shock rampaging nations – connected to the global economy – as a result of the virus, we might end up being a greater victim despite overcoming physical affronts of the virus.
The world is currently discussing the coronavirus (Covid-19) shock; businesses are nose-diving. The virus is roaring and threatening to push the globe into recession. The globe is witnessing a disastrous plunge in oil prices; the devastating collapse of the hospitality industry, an industry responsible for almost 10 percent of global businesses, due to collapse and ban of air travels and global tourism, is hitting hard on global economic survival.
It is becoming clearer that major industries such as the energy, hospitality and auto would experience a major attack as companies are experiencing hard times repaying loans leading to a hell lot of rating downgrades that may eventually shut down the global financial market.
Altogether, we are looking at a compounded economic shock if an end does not come to the pandemic soonest. Also, sporting activities, another key global industry has been halted indefinitely; companies are laying off staffs at an alarming rate. The ban on flight from Europe to the U.S., already announced by the U.S. authority is taking its toll; some airlines like the Norwegian Air has already mule temporal laying off of up to half of its workforce. Likewise major football leagues and other notable events have been indefinitely suspended
The potential for a global systemic risk is on the high and staring the globe in the face. Oil price is plummeting, dropping by as much as 50 percent since January; yes, this is a fallout of the alliance between major producers, who had till now chose to prevent flooding of the global oil market. Right now, producers who depend on existing higher prices to manage their loans and continue drilling for oil are definitely under significant pressure because of the economic strain imposed by the coronavirus invasion of nations.
The Organisation for Economic Cooperation and Development (OECD) raised an alarm over the fear of nationals’ significant drop in growth rates. The Airline industry alone has been estimated to lose $29 billion according to the International Air Transportation Association (IATA), and the truth is that that figure is very conservative; we are actually been faced with a scenario more worrisome.
Looking at China, dubbed as the world factory, in its current state of near total lockdown, it has been estimated by Standard Chartered that close to 42 percent of the country’s economy could be affected. If and when China is attacked, what nation would literarily not share in the effect considering the trade interrelations of nations and most nations’ unhealthy dependence on China?
Another research work is not so gentle with its use of words; it states “Coronavirus is going global, and it could bring the world economy to a standstill.” With significant outbreak from South Korea to Iran and Italy; and then panicking and reports of casualties in the U.S. and several other high ranking nations, we are facing potential economy fallout.
The research by Tom Orlik, Jamie Rush and Jinshan Hong and published on Bloomberg feared the fallout could include recessions in the U.S., Euro-area and Japan; and forecast a total of $2.7trillion in lost output – a figure equivalent to the entire GDP of the U.K.
All these happening in the international scene, but then can we quickly debunk the theory of the world becoming a global village; if all these are happening and/or forecast to happen if the pandemic is not brought under total control, how safe is our economy?
Already, the symptoms of attacks on our economy is boldly staring us in the face. Already, the raging global fight against the virus coupled with oil price crash has triggered dollar shortage in the country and we are already paying more for dollar as the naira got weakened.
Nigeria businesses are losing rapidly because importation from China has been curtailed. It suddenly dawn on us that despite all government move toward import reduction, we are still extremely over dependent on China. For a fact, the country is responsible for about 25 percent of all our total exports. How then can we stay unaffected, when our sources are falling? By extension and direct implication, we cannot be economically untouched.
The last six years have been a very trying period for the nation’s economy; we had suffered a paralysing recession that we barely survived and are currently rebuilding; attacks on nations we do business with are indirectly attacks on us. It is high time we mapped out strategies to effectively deal with all expected and already existing economic fallouts from the pandemic.
Of equal important as the measures we have in place to fight the virus invasion in the country is the need to device and immediately deploys proactive measures to insulate Nigerian economy against shocks due to the present global meltdown.
Already, we have seen our economic growth projection for the year 2020 cut to 2% from 2.5% due to plunging oil prices and it is becoming very certain that even if the crude price recovers, we would still need in the range of three months to fully clear our production backlog. Currently, holding 50 unsold cargo of crude at our terminals, our only saving grace would be a recovery and at worst, we should wish that the price seize falling.
There is already a strain on our nation’s budget; plan to adjust the budget is being mulled. Capital development plans may have to be altered along with the capacity of the government to execute its projected plans for the calendar year. We might end up facing a new regime of inflation and a greater strain on the purchasing power of the citizens.
But I still feel somehow at peace. If we were able to paddle safely through the recession of the 2015 and 2016; if we were able to handle the Ebola virus despite naysayers predictions of doom; if compare to greater nations of the world, currently, we have our head above the waters in the fight against the coronavirus pandemic, then, we are more than able to surmount whatever challenges we may face in the aftermath of the pandemic.
Talking about proactive measures to stave off imminent economic crisis, the U.S. and China have reportedly administered short-term policies into their respective economies in the sector that matter most: the financial market. The U.S. Federal Reserve has not only injected $700 billion into the market by purchasing target securities but also cutting its benchmark interest rate to around zero percent. China, on the other hand, through its central bank has also injected 100 billion yuan (about $14 billion) into the Chinese financial market apparently to maintain short-term liquidity. After these interventions, it however gladdens my heart to learn of the CBN’s 5-point policy measures which include directing deposit money banks to restructure loan terms for businesses and sectors vulnerable to the pandemic.
It should also be considered that it is most likely for more businesses to be affected directly or indirectly in the next 12 months; necessitating a special funding mechanism as well as a new loan term structure altogether – distinct from all existing transactions that are billed for restructuring. The brewing oil war between Russia and Saudi Arabia (both with combined foreign reserves of over $400 billion) to crash oil prices further requires CBN and the newly constituted superb economic team of Mr President brace up the the challenge that is beyond restructuring existing transactions.
Since CBN has assured the business community of a special consideration in this pandemic times, our policy drivers should also consider suspending flights from coronavirus-hit countries. Other African countries have already taking this cautious step.
It is not my wish in any way that the infection rate should increase above the single index case recorded so far in the country which has been satisfactorily managed. However, a further healthy propositional consideration should be that if we were to record 5 more cases – I will even suggest 3 cases – extreme containment plan should be designed right now and widely publicised beforehand, which in itself, will help to promote awareness and needed precautions among citizens. The measures should include a 6-month ban on all public gathering (religious and public schooling activities not exempted); a definitive all-border closure including suspension of all flight operations with an exception for critical services; government-sanctioned social distancing; and a commitment (government) to fund mass production/supply of hand sanitisers and face masks to be distributed for free or at a subsidised amount to the public.
This suggest complements existing formidable national health preparedness which includes its commendable testing facilities. The cost of executing this simple measure, a mere plan, is far less compared to that of a possible 5 case situation. Countries badly hit, at the onset, discounted the above precautionary measures; and today, they are all frantic at curbing the pandemic.
Finally, I would offer this piece of advice to all Nigerians; regardless of our differing affiliations and persuasions, let us rally round the government to survive the scar together. For the sworn enemies of the current Administration, if it remains an aberration to repent, you can desist from operation for a season. We would gain nothing by speaking different languages now; rather we would be destroying the nation. A reminder here is that Covid-19 has no known cure for now and some health authorities have noted the mutant nature of the virus whereby some patients earlier treated tested positive again therefore there is need to procure sophisticated air purifier with technologies with 99.99% success of killing not only the corona virus but also a number of less deadly viruses and airborne bacteria with over 360,000 units installed in locations in South Korea alone( so as curtail the spread of corona vvirus and other deadly airborne bacteria).
May God Bless the Federal Republic of Nigeria and infinitely aid us to survive this current global attack on all fronts.

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