COVID-19: Analysts say Nigeria lost N11.6 Trillion to pandemic

Tony Edeh, the Chief Executive Office of Norrenberger, a financial investment organisation estimated that the coronavirus pandemic has cost Nigeria N11.6 trillion.

Speaking in a chat with Vanguard on Monday, Edeh analysed how the pandemic and the lingering inflation has triggered adverse effect on the country’s economy.

He said: “Due to COVID-19, the Nigerian economy slipped into a recession in the third quarter of 2020 following a Gross Domestic Product, GDP contraction of -3.62 per cent. The impact of the 2020 recession on individuals and businesses has been more severe due to the nature of the pandemic. With COVID-19, businesses were forced to shut due to lockdown and social distancing. This had a toll on individuals’ income, corporate and government finances. Real losses in real output and other disruptions were estimated at N5.8 trillion in 2020.

“In nominal terms, this loss is estimated at N11.6 trillion. In addition to direct output loss, there have also been significant job losses, income losses, erosion of monetary value, among others. COVID-19 and other disruptions have reversed the gains achieved prior to 2020. Due to the perceived impact, the Nigerian government projected revenue flow from oil to decline from N5.5 trillion in 2020 to N1.1 trillion, in a sudden fiscal crisis presenting some pretty immense economic challenges.”

“FDIs and foreign portfolio investments in Nigeria had declined even before the pandemic, and continue to remain weighted towards the oil and gas sector. Nigeria attracted the third-largest foreign direct investment (FDI) inflows of any African country in 2019.

“In 2020, the most visible and immediate spillover of COVID-19 was the drop in the price of crude oil, which dropped from nearly US$60 per barrel to as low as US$30 per barrel in March. During the pandemic, people were no longer travelling, and this led to a sustained fall in the demand for aviation fuel and automobile fuel which affected Nigeria’s net oil revenue, and eventually affected Nigeria’s foreign reserve. As the oil sector accounts for the bulk of Nigerian government revenue, this collapse in prices had profound implications for the economy,” he added.

Edeh also advised that for the country to get out of the effects of the pandemic, the team in charge of the economy must ensure that “our policies are well-aligned with unfolding global realities by repositioning to get a good share of the post pandemic financial opportunities. We must push for large foreign direct investments & remittance inflows as our main source of external liquidity, and deploying those into transport and energy infrastructure to boost stability, growth, and trade.”