Nigeria Economy | |
Nigeria Economy | |
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Monday, June 08, 2020 / 05:43
PM / by FBNQuest Research / Header Image Credit: Al Jazeera
We
are indebted to the National Bureau of Statistics (NBS) for its recent poll to
assess the impact of COVID-19 on the population. The bureau's telephone
coverage of the same 1,950 households it contacted in 2018/19 within its
general household survey does not make pleasant reading. It held between 20
April and 11 May, and therefore covers the period of the FGN lockdown. A
follow-up after another three months may give an idea of the extent to which
the damage has been made good. The World Bank gave its support on the technical
side and will, we hope, back a repeat survey.
On
employment, the survey found that 42 per cent of respondents had been working
before the outbreak but had since lost their jobs. Interestingly, there were
not huge differences per income group, with the ratio 45 per cent for the
poorest quartile and 39 per cent for the richest quartile.
In
terms of sectors, the hit was greatest in commerce, services and agriculture.
Services and retail are particularly vulnerable to a lockdown: we need look no
further than the impact on restaurants, bars, family celebrations, cultural
events and shopping. When we read across to FBNQuest's manufacturing PMI for
May, we find that the reading for the workforce was below neutral in common
with all sub-indices - but did not crash.
The
hit from COVID -19, not forgetting the related collapse of the crude oil price
at the time, has highlighted the fragility of household finances and the very
modest safety net for the population. The most interesting chart in the
bureau's note in our view, covers coping mechanisms for shocks. It shows that
51 per cent of respondents reduced their consumption of food and 29 per cent
drew on savings. The next three mechanisms were cuts in non-food consumption,
support from friends and family, and additional income-generating activities
(We would have expected households to cut non-food before food consumption).
In
advanced economies, the mechanisms would include one-off support from the state
such as a furlough scheme and regular government benefits to cover unemployment
and housing. Common to developing and advanced economies are food banks or
their equivalent.
An
extended lockdown is an indulgence that only advanced economies can afford
because they can shield the majority with fiscal resources. The Japanese
package of measures to date has been estimated at close to 20 per cent of GDP.
Germany has now shown the way forward with a second set of policies to
stimulate the domestic economy post- COVID. Most advanced economies will be
unable to match the combination of tax cuts and spending increases, estimated
at 4 per cent of GDP. At this point, analysts can create sub-categories of
healthy and stretched public finances in advanced economies.
On
education, the bureau finds that 81 per cent of households had no contact with
their children's teachers during lockdown. The ratio is worst for the poorest
quartile, and so tallies with evidence from advanced economies that children in
poor families are the losers from lockdown because for whatever reason they benefit
the least from e-teaching.
Finally,
in terms of the shocks themselves we learn that the No 1 was increases in the
price of major food items. This was reported by 85 per cent of respondents. The
inflation data show food m/m price increases in March and April that were
steady but far from spectacular. Possibly the May report from the NBS will give
a different story.
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