Nov-Dec 2020 COVID-19 Impact Monitoring Report: More Employment, Lower Real Incomes

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Friday, March 12, 2021 / 11:17 AM / by FBNQuest Research / Header Image Credit: Premium Times


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The National Bureau of Statistics has published the seventh and eighth instalments of its COVID-19 impact monitoring, a survey of 1,960 Nigerian households that it runs with backing from the World Bank. These latest surveys were held in November and December at a time of much reduced restrictions on movement whereas the first instalment in April/May coincided with the initial lockdown. Controls on large gatherings were reintroduced at the end of December. From the seventh survey in November, we find some strong clues as to why the FGN moved the following month: the proportion of respondents who had attended at least three religious or social events in the previous week had risen to 42% from 29% in July. Our focus in this note will be the surveys' findings on employment, household finances and agriculture, which was largely responsible for the modest positive GDP growth in Q4 '20.

 

More respondents are in work than directly before the emergence of COVID-19 in March. There has been a small increase from 87% of the total to 91% in December. At the same time, we see widespread "churning" in non-farm businesses. Only 23% of households with such firms have been continuously active since March.

 

The NBS series also tracks coping mechanisms for shocks. In July-December households appeared in a less precarious position than in April/May-June: a smaller share resorted to mechanisms such as reducing food consumption, drawing on savings, selling assets, and borrowing from friends and family. This highlights the reality that in Nigeria, as in many countries, the low point of the year economically was the second quarter (due to lockdowns).

 

We have to note one caveat, however. The seventh instalment of the series found that the average size of surveyed households had risen to 6.6 people in November from 5.5 in January/February. The reason cited in the commentary is that individuals moved in with their families to pool resources and share costs. If this was the prevalent explanation, the snapshot shows a rise in jobs along with a squeezing of incomes. There would have been other secondary reasons for the larger households such as childbirth.

 

The eighth survey again points to the increase in farm activity as a result of the virus. The share of households involved in crop-related farming in December stood at 80%, compared with 70% two years previously for the 2018/19 agricultural season. In urban areas, the increase over the same period was more than 20 percentage points to 56%. We are talking small-scale farming often by households looking to supplement their incomes (or reduce their food costs). This impression is confirmed when we see in the commentary that these trends were most marked in the poorest consumption quintiles.

 

More than 75% of farming households in December anticipated higher or much higher revenue than in recent seasons. In a sense, this confirms what we know from a regular monthly series from the NBS: that food price inflation has now accelerated for 17 months in succession and exceeded 20% y/y in January. Again, the responses of households were the most positive among the poorest. 

 

Agricultural growth of 3.4% y/y in Q4 '20 was the highest for three years. It could be that the substantial credit flows to the sector from the CBN and development banks are finally bearing fruit (and that the cynics have been proved wrong).

 

These latest surveys are positive about farm employment and revenue and are proof of individual resourcefulness. Yet they are trends in small-scale farming, and we are not convinced that they underpin the sector's better performance in Q4. In conclusion, we should add that the national accounts are not seasonally adjusted.


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Proshare Nigeria Pvt. Ltd.

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