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Published On: Fri, May 1st, 2020

Economic effect of Covid-19 on Nigeria economy

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By Daniel Binigbolo

Every breaking news now talks about the pandemic disease COVID19 and it’s general effect on different sectors of life!
The disease has affected every sector of economy, schools are closed, market are locked up, only few personnel are allowed to move around! Countries are closing all boarders, it seems the world is on break!
When the novel coronaviruses started in China in December 2019!. The world saw it as a local Chinese virus! Not even about 11million residents of Wuhan in the central hubei province thought the town will be lockdown even the world health organization neither thought it would be a pandemic disease… Who will ever thought a country like China with it’s fantastic technological and robust health care system won’t be able to contain it by finding it’s cure or vaccine quickly!
But just three months later the virus has spread across the world leaving only 18 countries left with no single confirm case of covid-19! Thousands of lifes has been lost, we pray and hope the viral disease will soon disappear!
COVIEE-20 (CORONAVIRUS EFFECT ON ECONOMY 2020)
EFFECTS OF THE PANDEMIC DISEASE ON NIGERIA ECONOMY
Illiteracy might be worse than covid-19! As citizen of the country we need to know the effect of this on the nations economy, this won’t only assist us in managing our personal daily finance at this critical time but also help us to understand what our government are into and how to understand and give them necessary support!
This is why we as member of national peer educator on financial inclusion (volunteer) has decided to explain our nation present economical situation to the masses in the simplest language we can!
OIL PRICE CRASH
Our country (Nigeria) 2020 budget(defecit) was base on oil benchmark of $57 per barrel with oil production volume of 2.18million barrel per day (at N305 exchange rate to U.S dollar) GDP growth rate of 2.93 percent now are out of reach!
The covid-19 has surly affected the oil price with China which consume almost 14% of the global crude oil daily now lockdown aside this the oil war between Saudi Arabia and Russia has contributed to the factors affecting the crash of oil price! Today oil price is around $22 per barrel which is even less than half of the benchmark we budgeted for! Are we not moving close to another recession?
SALARIES AT RISK
In 2016 the country experience recession when 27states were owed workers salaries and pensioners entitlement, the situation was so bad that some state owned up to 36months but then the oil price has $29 per barrel as it lowest price and didn’t take much time to climb to $35 per barrel and it keep climbing! Expert has projected that the present crash in price may slump further to $10 per barrel! And with this present increase in minimum wage from 18,000 to 30,000! And crash in oil price We are looking up to God to prevent our nation from economic mess!
With oil price crash a country like Nigeria which depends basically only on crude oil can’t afford not to be affected from such problem like this since we haven’t learn enough from the past crisis due to oil price crash! Even if the oil price goes back to $58 per barrel we need to prepare for trouble for few months! The situation will definitely won’t be that easy with a backlog of production hanging that has to be resolved!
According to Mr Mele Kyari, Group managing director of NNPC while explaining the effect of backlog production hanging, he said ” What that means is that we are going to have the impact of this low crude oil price for some time . The oil market is highly unpredictable!” We generally appeal to our government not to put all the eggs in one basket because if the oil market should sink today! we are going down as a country! Other sectors should also be developed and take the economy out of total dependence on oil.
POVERTY AND HUNGER
For a country like ours with a very Low Per Capital Income and about half of the country’s population thought to be living on less than $1.90 a day. Most of those who earn their living by daily hustle! With the new federal Government policy to curb the pandemic disease! The lockdown might spike the rate of poverty!
The lockdown has affected many daily earner who typically depends on their daily income! The slogan “Save wise spend wise” as use by corp member volunteer on financial inclusion in sensitizing will now play it’s row, as whomever doesn’t have a savings at all may suffer the consequences at this time.
Just last week the minister for interior Ogbeni Aregbeshola said the lockdown doesn’t stop the farmers from going to farm, he futher advice them that this is the time we need them more! The popular Yoruba adage says “if hunger is removed from poverty the problem has been simplified”
However the global supply chain has been deeply disrupted as china, which is the second largest in world economy,is a major supplier of inputs for production in most manufacturing company across the globe. With the restriction on international flight most business has been affected from the manufacturer to the small business entrepreneur who rely on foreign imports to augment their value chain!
A good example is the claim by phones and allied dealers products association (PAPDAN) Ifeanyi Akubue that over $100million worth of goods are currently stuck in china!.
IT’S THE WORLD PROBLEM NOT ONLY NIGERIA
The current problem isn’t just restricted to Nigeria!, Other countries across the globe too are set to suffer including the European nations. The global equities has lost 9 trillions of dollars within nine days of the pandemic.
Apart from death and other bad human consequences the world entirely might suffer after the pandemic might be over!
We hope our government learn from this and save us from mono economy- petrol! Naira is a having much problem due to its typical petrolcurrency and the force of demand and supply in the oil market won’t seize to affect it.
Daniel Binigbolo is a Public Affairs Analyst.

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