Coronanomics (12) - The Nigerian Economy in Relief

Thursday, June 18, 2020 /  06:00 AM / by Proshare Content/ Header Image Credit:  EcoGraphics

Introduction

The emergence of the novel coronavirus (COVID-19) has worsened Nigeria's fiscal sustainability. The economy has been plagued by high unemployment, rising inflation rates and low real GDP growth.

Table 17: NCDC Disease Outbreak figures- A Cache of Distress

The virus revealed the dire need for restructuring and revitalizing of Nigeria's health care infrastructure, as well as the need for unconventional economic policies to properly position the Nigerian economy for the aftermath of the COVID-19 virus. 

Illustration 8: Coronavirus, Into the Abyss - A Helicopter View

The spread of the pandemic coronavirus has affected the global oil market, commodity market, stock market and the global economy. The Nigerian economy is primarily hinged on oil export revenue making it susceptible to global shocks. Since it's recovery from the recession in 2017, the Nigerian economy has been experiencing slow growth with the population growth rate outmatching the growth of the economy. If the outbreak of the pandemic coronavirus persist, it will further worsen Nigeria's fragile economy and might eventually cause the economy to go into a recession.

Illustration 9: Coronavirus and the Nigeria Economy

Like other developed and developing economies, the coronavirus will most likely impact the Nigerian GDP negatively.  In the first quarter of 2020, the Nigerian economy recorded a slow growth of +1.87%, (year-on-year) in real terms, the performance was recorded against the backdrop of significant global disruptions resulting from health crisis, a sharp fall in oil prices and restricted international trade.  The performance recorded in Q1 2020 represents a drop of -0.23% points compared to Q1 2019 and -0.68% points compared to Q4 2019, reflecting the earliest effects of the disruption in economic activities caused by the pandemic coronavirus (see Chart 31).

Chart 31: GDP Growth Rate (%)

Source: NBS, Proshare Research

The Nigerian government has embarked on various policies such as the restrictions in interstate and foreign travels, restrictions in the movement of people in major cities such as Lagos state, Ogun state and the Federal Capital Territory. The temporary lockdown of the Nigerian economy designed to mitigate the spread of the virus has its benefits as well as its cost. Some of the costs of lockdown include the increase in crime rate, hunger and starvation, loss in revenue for companies and the government while the major benefit of the lockdown is that it helps to curtail the further spread of the virus (see illustrations 10 and 11 below).

Illustration 10: Scenario Analysis of Effects Easing and Lockdown on Businesses

Illustration 11: Scenario Analysis of Effects Easing and Lockdown on Businesses

Illustration 12: Scenarios for the Economic Impact of the COVID-19 Crisis

Illustration 13: Post COVID-19 Scenarios

Illustration 14: Post Covid-19 Scenarios

Related Reports (PDF)

1.     Download the Full PDF Report - Coronanomics and the Nigerian Economy, June 06, 2020

2.     Executive Summary PDF - Proshare, June 06, 2020

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Related Links and References

Related News - Opinions & Analysis

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Related News - Reviews and Outlooks

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4. Fitch Downgrades Lagos State to 'B' on Sovereign Rating Action; Outlook Negative
5. Further Multi-Notch Sovereign Downgrades Are Probable in 2020
6. Various Rating Actions On Nigerian Banks By S and P Following Sovereign Downgrade; Outlooks Stable
7. Three Ratings Agencies, Now One Message
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9. Nigerian Banks at Severe Risk from Oil Price Slump, Coronavirus
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11. Macroeconomic Review Q1 2020: Steering a Fragile Economy in the Face of Uncertainties
12. Fitch Downgrades 3 Nigerian Banks to 'B', Places All 10 Banks on Negative Watch
13. Nigeria Long-Term Rating Lowered To ''B-'' On Weakening External Position
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Related News - Nigeria Economy    

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4.     Nigerian Economic Update: A Throw of the Dice

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16.  The Disruptive Impact of COVID-19

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Related Reports/Articles

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10.  COVID-19: Nigeria Economic Impact and Implications for CPG - McKinsey and Company

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Coronanomics Discourse-WebTV Videos

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5.     Economy & Politics: Nigeria Needs a Post COVID 19 Long-Term Plan - Boason Omofaye

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18.  Market Review: Nigeria Must Deploy Data to Effectively Mitigate COVID 19 Risks - Babajide Ogunsanwo

19.  Market Review: Investments in Storage Facilities and Packaging Key for Nigeria's Agro Sector - Ade Adefeko

20. Market Review: Deregulation of Downstream Sector, Way Forward for Nigeria - Olugbenga Odusanya

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22. Economy and Politics: Insurance Should be Integrated into Nigeria's COVID 19 Fiscal Measures - Ekerette Ola Gam-Ikon

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25. Market Review: Governance in Nigeria Should Consider Process, Accountability and Transparency Post COVID 19 - Soji Apampa

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