A Feeble Post-Lockdown Bounce


Thursday, August 27, 2020 / 03:04 PM / By FBNQuest Research / Header Image Credit: Reuters


Proshare Nigeria Pvt. Ltd.

This week we are sharing the findings of the third round of COVID-19 Impact Monitoring, a telephone survey conducted by the National Bureau of Statistics (NBS) with support from the World Bank. The bureau contacted the same 1,950 Nigerian households in April/May, between 02 and 16 June, and now between 02 and 16 July. The first survey was held during the selective lockdown, the second once some restrictions had been eased and the third when the country was making further steps towards what passes for normality. At this stage, a total of twelve rounds are planned with the World Bank.


We can see from the latest survey that the Nigeria Centre for Disease Control (NCDC) has kept most Nigerians informed remotely through text messages. More than two thirds of respondents had received guidance and health tips from the centre, and of this number almost 90 per cent were happy to make use of the service. The use of mobile telephony to spread simple, practical messages has been a successful government tool across many developing countries.


Responses in the third round tell us that economic activity is picking up from the low point in March/April, and that we are seeing a slow recovery in Nigeria rather than a bounce. This week the national accounts for Q2 2020 were released by the NBS: the overall result (-6.1 per cent y/y) is the worst for about 15 years but likely to prove the weakest in 2020.


The share of respondents in employment in July (81 per cent) is close to the pre-COVID level of 85 per cent and way above the low of 43 per cent in lockdown. This picture must be qualified however, urban Nigeria lags rural. A good number of respondents have moved industries, typically from agriculture to commerce or services. Some have found their new posts precarious. Almost half the wage workers surveyed, who represent just 12 per cent of respondents, were working fewer hours than pre-COVID, and only 11 per cent more hours.


That the virus has brought more inflation is evident from the NBS inflation reports and from this third round. Access to staple foods has improved, above all for cassava, yet price and availability remain deterrents for many households. The same applies to public transport: more services but higher prices. Nigerians surveyed are struggling to pay their rents, with 23 per cent in urban areas termed 'rent insecure' as a result of declining income and higher food and non-food prices.


The responses on safety nets and coping mechanisms confirm what we have already learnt from the national accounts and the quarterly results of listed companies about the squeezing of household budgets. Relative to the first round in April/May, dependence on food assistance, and domestic and external remittances has sharply fallen while drawing on income from property, savings and investments has picked up nicely. (The NBS note suggests that the decline in food support may have been the consequence of the school holidays.)


As for the mechanisms to handle shocks, we note a rise in the share of households that have reduced their food consumption from 54 per cent between mid-March to April/May to 69 per cent between April/May and July. There was a sharper increase, from 11 per cent to 33 per cent, for those engaged in additional income generation. Many of these new posts, as indicated earlier, are expected to prove insecure.


The main positive is the rising share of respondents in employment. It is outweighed, however, by the findings on prices, household finances and safety. Economic recovery is expected to be slow.


Related Link

  1. NBS Publishes COVID-19 Impact Monitoring Survey Report for July 2020


Proshare Nigeria Pvt. Ltd.

Related News

  1. Nigeria Faces Severe Stagflation as GDP Declines, Unemployment and Inflation Rise
  2. Nigeria Nears Recession with 6.1% Contraction in Q2-2020 - PFI Capital
  3. Nigeria's GDP Drops by -6.10% in Q2 2020, Confirming Analysts Nightmares
  4. Nigeria's GDP Contracts by -6.10% YoY in Real Terms in Q2 2020 - NBS
  5. Food Price Pressure Stokes Inflation to 28-month High in July - PFI Capital
  6. It is Time to Invest in the People of Nigeria
  7. Cracks In The Bond Market?
  8. Headline Rate Will Remain Unchanged at 12.8% YoY in August 2020 - FBNQuest
  9. Unemployment Heads for New-High - PFI Capital Limited
  10. Nigeria's Economy Heats Up As Inflation Rises to 12.82%
  11. Headline Inflation Increases By 12.82% YoY In July 2020; 0.26% Higher Than June 2020 Rate
  12. From Households to Corporations, Economic Effects of COVID-19 Continue to Ripple Across Nigeria
  13. Nigeria's Unemployment Rate Grows By 27.1% As Economy Stutters
  14. Nigeria's Unemployment Rate Moves Up to 27.1% in Q2 2020 from 23.1% in Q3 2018 - NBS
  15. Headline Inflation Fast Approaching the 13.0% Threshold Due to Cost Push Factors
  16. No Big Change in FX Policy
  17. August 2020 Economic Insight: Social Distancing Persists at the IEW and BDC Segments - Nova
  18. Nigeria's Average Oil Production Declined by 13.9% to 1.52 mbpd QoQ
  19. NESG Board Reviews State of Nigeria's Economy

Proshare Nigeria Pvt. Ltd.
Related News