The myriad of challenges in the year 2020 calls for a shift of perspectives. The outbreak of the COVID-19 pandemic with the reeling effects on the Nigerian economy has exposed the nation’s fragile economy. Policy structures that would help for consistent growth are yet to be established as the nation’s total dependence on oil has proved insufficient in the long run. The future is always shaped by present action. Unfortunately, the nation is yet to create a solid economic ground to stand on, and we always seem to vaguely hope for what we failed to prepare for.
Nigeria’s Bureau of Statistics has revealed that the economy has contracted by 6.1% year-on-year in the second quarter of the year. This is the highest decline in the last 10 years, largely resulting from the lockdown in April to curtail the pandemic. The resumption of economic activities however has not helped to recover the huge loss from the lockdown. Economic data has shown that Nigeria’s government is still far away from its projections in the Economic Recovery and Growth Plan developed after the 2016 recession. The recovery plan was to create aggressive growth targets from 2017 to 2020. There has been minimal transformation as the World Bank forecasts that the country is set for its worst recession in four decades.
Read Also: ‘Our Economy is in Coma’ says APC Senator
Bismarck Rewane, Nigerian economist and CEO of Financial Derivatives, disclosed that COVID-19 has exposed the core shortcomings of the Nigerian economy and its lack of resilience to economic shocks. The dual shock of COVID-19 and crashing oil prices to revenue has brought about prolonged disruptions in economic activity. In a nutshell, total revenue has been revised downward by 34%.
Apart from loss of lives, the COVID-19 shock alone is projected to push about 5 million more Nigerians into poverty in 2020. The poverty rate is to rise from 40.1% in 2019 to 42.5% in 2020. Nigeria’s labour force has recorded about 27% of unemployment.
Some food prices have risen by up to 50% in Lagos state. Nigeria in 2019 was included in one of the 10 countries experiencing the worst food crisis. ‘COVID-19 is potentially catastrophic for millions who are already hanging by a thread’, Arif Husain, an Economist disclosed. He added that it is a ‘hammer blow’ for millions more who can only eat if they earn a wage. ‘Lockdowns and global economic recession have already decimated their nest eggs. It only takes one more shock-like COVID-19 – to push them over the edge.’
Economists assert that regardless of the hardship brought by the pandemic, it offers Nigeria the opportunity to take the tough decisions that are required to make for sustainable growth and advance further specific COVID-19 interventions. Marco Hernandez, World Bank Lead Economist for Nigeria, stated that the unprecedented crisis calls for an equally unprecedented policy response from the whole Nigerian public sector in collaboration with the private sector. Rewane also stated that ‘any sustainable economic progress will require a new direction, driven by a cocktail of comprehensive and timely policy actions.’
In a bid to turn around the economic downturn, the FG has begun the exploration of other sectors with huge potential for the economy. These were sectors previously neglected. The gas sector for instance has experienced a massive turnaround with several investments by the government. The FG, in April 2020, had approved N200bn to boost the supply of gas to electricity-generating companies. This was followed by the installation of gas facilities in 9000 filling stations. The filling stations were to assist in the conversion of petrol cars to compressed natural gas (CNG). Nigeria’s gas reserves are the most extensive in Africa and the top ten globally. The International Energy Agency (IEA) in Paris stated that gas-based economies were largely shielded from the impact of the pandemic in the first quarter as prices held up. Ekpen Omonbude, a petroleum and mining economist disclosed that gas can be Nigeria’s saving grace.
The agricultural sector, on the other hand, is witnessing great investment from the government. There have been policy initiatives to empower farmers especially in the area of rice production. Kano State is rising to become the hub of rice in Nigeria and West Africa. This is as a result of the collaboration of the Nigerian government and rice farmers through various agricultural policies like the Anchor Borrowers Program (ABP), Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), amongst others. The government has also begun the exploration of solar energy with the launching of a $75m fund to provide electricity.
Opportunities abound in the Nigerian economy as sectors with rich potential such as mining, manufacturing, telecommunication, tourism, among others are yet to be fully explored. Looking at these sectors, government needs to create robust policies that will help the nation thrive in the year 2021. ‘While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery’, Shubham Chauhuri, World Bank Country Director for Nigeria disclosed. ‘Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation,’ he added.