Will Covid-19 Lead To Recession In Nigeria?

OLUWATOBI EMMANUEL

     According to the the World Economic Outlook, the International Monetary Fund (IMF) during a recent meeting projected that Nigeria is heading to a recession, its worst recession in three decades, as it expects the nation’s economy to recede by 3.4% in 2020.

There is no doubt that Nigerian economy will witness a downturn amidst the ongoing novel Coronavirus pandemic which has affected all facets of the society and couple with the oil price which has gone down drastically all over the world; we should not forget that oil is the major foreign exchange earning of our economy.

The pandemic forced three major states in the country to go into a lockdown, Lagos, the commercial nerve centre of Nigeria, the neighbouring Ogun State and the Federal Capital Territory of Abuja. Other states of the federation also witnessed one form of lockdown to curtail the spread of the pandemic.

The lockdown grounded Nigerian economy to a standstill and it mostly affected the formal sector and more importantly the informal sector, which contributes about 65 percent of Nigeria’s economic output. The question then was how many people can stay at home and still be productive? A shutdown of movement will lead to a massive decline in economic output, income and consumer spending.

   While most recessions are caused either by demand, supply or financial crisis, there is no doubt that Covid-19 pandemic is most likely to deliver all the three mentioned above in a single envelope to Nigeria.

   The crisis to demand (restrictions to movement and uncertainty will cause consumers to reduce non essential spending), to supply (shutdown of factories and service providers will automatically cause a reduction in goods and services produced) and the financial system (disruption in the capital market) could be inevitable and very fatal for the Nigeria’s economy at large.

Nevertheless, If the Central Bank of Nigeria (CBN) and the federal government of President Muhammadu Buhari could make moves and come into the scenario quickly; they might manage to minimize the damage, but this pandemic will surely cause damage to the economy, this is a sure banker.  

   Coronavirus is first a public health emergency, and without the general public adhering to the World Health Organisation (WHO) guidelines and government adopting preventive measures and policies, the economy will or may fall.