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Published On: Wed, Apr 15th, 2020

Post COVID-19: Preparing for the forecast economic woes

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The 2019 coronavirus pandemic, as at today, spreads to a little above 180 countries and in less than two months increases in number of affected persons in more than twenty-fold, from just 100,000 in the early week of March to almost two millions as at this week.
Deaths from the pandemic are on daily increase and are currently nearing 60,000. No nation is spared. As the fatality figure mounts, so are the untold harms to national and global economies.
While we might be concentrating on the immediate health challenges posed by the ravage, the immediate consequences of the forced stay-at-home and the micro economic hardship on individuals and families, there is a much more long term consequence greater than whatever we are experiencing now.
It is clear already that there would be a great adjustment to the global economy and global trade pattern as a response to the aftermath of this pandemic. The magnitude of what we have to face in the immediate future will however depend on how much longer the virus stays with us; will the virus goes away very quickly or wreck more damages over a longer time period? Unfortunately, it is beyond us to know that for sure.
Someone says we are due for an economic earthquake and it is true; the hit is here already and severely hitting on an array of sectors. The tourism and hospitality industry, a major global industry is totally shutdown; the stock market is responding so negatively to the sharp rise in the pandemic fatality figures in almost all nations of the world.
Airports are more or less closed. The entire transportation grid is on lockdown; labour layoff in almost all sectors is now a rational decision; the populaces of nations are now looking up to the government for survival via palliatives and social aids.
Factories in all nations, developing or otherwise have gone quiet; as it is more important to survive for now. This is continuously leading to drastic disruptions in the retail sector supply chain. We are gradually heading to an uncontrollable demand-pull inflation phenomenon.
The G20 Finance Ministers and Central Bank Governors had a conference call on March 23 to discuss and address the emergency. At the end of the call, Kristalina Georgieva, the IMF managing Director, issued a statement outlining the outlook for global growth. She said “for 2020, it is a negative – a recession at least as bad as during the global financial crisis or worse.” The Organisation for Economic Co-operation and Development equally warned that the shock from the pandemic is already bigger than the 2007-2009 global financial crises. The OECD Secretary General, Angel Gurria said many countries would fall into recession and nations would be dealing with the economic fallout of the COVID-19 pandemic for years to come.
Currently, nations are spending money they are not making. Attentions and spending have been deviated from budgetary plans and allocations to the need of the moment – to contain the pandemic and sustain the people. In the last 40 days, the USA has expended over $4 trillion in this direction. In similar way, the UK has come up with an out of budget, much radical spending measures to combat the economic impact of the ongoing crisis by proposing to offset as much as 80 percent of the wage bills of employees across the country affected by the shutdown.
The Danish government has taken the same decision; to help private companies affected by the pandemic to offset 75 percent of their employees’ salaries if they would agree not to lay off staff.
Ghana and Senegal have reportedly secure $1 billion and $442 million respectively as emergency aid funds to waddle through the pandemic as well.
Nigeria is not an exemption to the trend; and I intend to visit that much later. But here in Nigeria, shops are on lock; retail trades completely shut down; the transport industry, the hospitality industry and the aid-to –trade sector of our economy are under lock. The education sector is off; the under-employed populations are currently laid-off with zero hope of incomes.
It is now becoming a reality that the COVID-19, on its trail, is pushing nations and people hugely into poverty. The nation, Nigeria, like most others, is going into COVID-19 induced post-pandemic recession. A research conducted by the Oxfam group at the King’s College London and the Australian National University concluded that COVID-19 could push an extra half a billion people into poverty; that is a significant fraction of the world population, except urgent mitigating actions are taken.
As it is already unfolding; production level is falling; income level is falling across the globe; inflation is rising; people are becoming poorer by the day. The government must more than ever, create an economy rescue package and mobilise all available resources to avert the imminent national economic collapse.
I would take us back a little; whatever is happening to us now, or forecast to happen to us, is not unique to us. In the last four weeks, more than 6.6 million American have filed for unemployment claims and the US Federal Reserves has unveiled plans to provide loans to the tune of $2.3 billion to small businesses, post COVID-19.
In Spain, since mid-March, about a million people have lost their jobs with the official unemployment figure raised to 3.5million. On our continent, a report credited to Bloomberg claimed that around half of jobs are at risk.
So Nigeria, like most other nations is being hit hard; we should expect major economic consequences; but how large these consequences are is ours to decide. We may not be as strong as the developed nations, but we must have ready-made fiscal stimulus packages within our capacity to respond appropriately as a serious nation.
Yes, we are a nation greatly impacted by the crisis. This is not a measure of how many casualties we are having compared to others. Despite the low rate of penetration of the virus into our nation, we must recognise that we are still navigating a turbulent time.
Our economy is 75 percent oil-dependent and the world oil price fall is a major blow on our survival even without the coronavirus pandemic shock. We have had to unwillingly cut down budgetary capital allocation not just because of the pandemic but more because of the lost income projection due to the international oil price drop.
Not only that, our economy is also import bias. From China only, we have 25 percent of all our imports worth almost N4.3trillion. More worrisome is the fact that this sector of our import is predominantly manufactured goods. There is no way this would not impact on us negatively; we should be expecting an upward move of inflation figure.
Outside the facts of the multifaceted storms ranging from oil price drop, COVID-19 pandemic, stalled world economy and an underfunded budget for the current year, we also have a series of more pressing challenges arising. Our already low funded economy has no alternative but to incur more unplanned, escalating expenses by the day. We now have to divert more resources to social services and aids to vulnerable citizens, homes and infrastructures. We have no choice but to expend unchecked resources on the fight against the pandemic. We have no option but to maintain interest payments on our debt.
All these happening when the nation is low in income generation; oil price is as low as it can get; export is paralyzed; offices are shut down. If all these are already taken their tolls on us, how do we respond?
We must, firstly and most importantly, recognise and accept that we are in perilous times. We must roll out our best brains and resources to strategise and proffer the best of responses.
We must then recognise that no matter how bad the current situation might look, if we handle it well, we may not only come out stronger but we can as well get a lifting in global economic recognition.
We must also recognise and agree that we have all it takes to cushion our economy like a bulletproof; all we need to do is to look more inward and act more proactively like at no other time.
This awakening should then spur us to a directed, concerted and wholehearted set of actions across all sectors of our national economy.
Firstly, as much as possible, we must organise our system to maintain internal peace by supplying the basic needs of the citizens; if the people could not keep their means of income; we wouldn’t just be talking of a paltry 3 million vulnerable citizens in need of help but of a much more population of middle-class citizens demoted to the level of vulnerability. If the lockdown persists; we must devise a more robust mechanism for reaching out to more citizens directly or indirectly.
There is population that would require help and those requiring market access. While the lockdown persists, the government must meet the need of all groups, else there would be chaos and there is nothing the country can achieve in a chaotic situation.
It is advised that the local government authorities should take over all markets; working in alliance with the security outfits to allow non-stop operation of only food markets in a well arranged manner that would guarantee safety for all. The summary is that for as long as this last, people must be able to access food items at un-inflated prices as at when needed
Now, for our post-COVID-19 preparation, after much consideration, I humbly post that all we have to do is to cohesively respond from three quarters simultaneously; and build proactive responses for the coming days of global woes.
We must begin with agriculture. The immediate, unchanged and of course the most pressing need after the end of the pandemic will be food on the table for all; the nation must strive to be able to continue to feed its people. But there is an opportunity in making a strong policy investment in agriculture at this period beyond feeding Nigeria. A cohesive and well-orchestrated agro-based plan would not only guarantee food surplus but open up the country to agro-based export and increased agro-based processing industrialisation – post pandemic. We could become the support base for nations around us, raise our foreign exchange, and generate more employment opportunities for Nigerians.
Then we should simultaneously open up further the nation’s manufacturing capacity. A concerted redesigning of the manufacturing sector will greatly place the nation on a ready pedestal to both survive the post pandemic forecasts as well as reposition itself economically in the committee of nations. The N50 billion CBN loan for small businesses affected by the crisis is a move in the right direction, but we must be very careful to distant the process from prevalent Nigerian factors. We must ensure that the facility gets to the right targets; evidence of businesses and how it serves to improve the nations lot should be a critical requirement.
We would be overwhelmed by our own capacity if the favourable environments were created. We have seen Nigerians producing medical gears including ventilators in response to the growing needs for the equipment currently. These and much more are what we are capable of. There is hardly any item we cannot locally produce if we want to; and this is the time we must want to. We can become the continent’s production hub for medical gears, technology and name it.
This is a time to redefine the structure of our trades; if we could design packages to entice more local production by giving incentives to large scale manufacturing, open our doors more easily to serious foreign investors and use, if possible presidential fiat to further mandate local productions.
While nations over the world are recuperating, we could redefine who we are; we can change the structure of our dependability on nations and give our nation a new recognition at the end of the period.
However, to achieve the above stated goals, we must definitely reposition our power sector. If we want manufacturing to grow; if we want investors and investment to troop in; if we want small businesses to prosper; if we want to liter Nigeria market with made in Nigeria goods, then we must be serious with revamping the nation’s power sector. We must make the necessary decisions about infrastructures in the sector; we must decide what becomes of the DISCOs. If the DISCOs are to stay, then there we must return to the table to draft a working pathway to awaken the sector. At this point, we must know the centric plan for generation and transmission of electricity. We must have deadlines and be able to track improvement real-time. The pathway for the total development of the gas structure must also be taken more seriously and robustly.
Like I pointed out earlier, how much we are affected post COVID-19 depends on the choice of decisions we make and the path of actions we take from now.
How much longer can we shut down national productivity without killing the economy? I don’t think we can do that much long. The government needs to return back to the table and make serious economy saving decisions. I would have perhaps imagined a situation where government offices are continuously running despite the lockdown. If we get all officers above level 12 in government offices tested for the virus, deploy Radic8 air purifier and virus killer devices in every office, provide facemasks, automated hand sanitizer dispensers, and non-contacts infra red thermometers, automated disinfectant Machines etc, we could continue running government businesses with them. They could get the work ongoing with absolute non-contact.
Finally, we have expectedly been given a two-week extension of the lockdown. Hopefully, if we get all things right, we should be able to relax our defense gradually thereafter. That is if we so chose to individually do our parts to protect ourselves, our loved ones and our communities. As much as we expect and implore the government at all levels to design the most workable and safe methods to reach the populations in needs with needed assistance, we must all know that the failure of government at this point must never be a reason good enough for us to jeopardise our personal and community safety.
God Bless The Federal Republic Of Nigeria!

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  1. With respect sir, seriously things are getting out of hand more also the insecurities which is cause due to the pendamic! Now alarming.

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