Since the debut of COVID-19 in Nigeria on 27th February 2020, the Nigerian economy appeared to have entered turbulence. Thirteen days after its importation from Italy, precisely March 11, the World Health Organisation (WHO) declared COVID-19 a global pandemic. As the spread of the virus continues internationally and locally at an unimaginable scale, the official responses appear to focus mainly on limiting the spread within the country through social isolation policies, which include shutting educational institutions, limiting work and restricting movement of people, providing palliatives to the “vulnerable and poorest of the poor”, imposition of night time curfews, and so on. Many observers believe that as much as the virus keeps spreading, assessment of the depth and the breadth of the impact of the pandemic on the social and economic life of the nation is difficult, if not impossible, until the situation returns to normal. But, how will the pandemic end? What will be the aftermath effect? This uncertainty is pervasive and have created a strong sense of foreboding among the general public, researchers and policy makers.
The uncertainty surrounding the emergence of the disease notwithstanding, even as the outbreak persists, several strands of studies have emerged to examine the macroeconomic impact of it at global, continental and country level. The study by McKibbin and Fernando (2020), which is an extension of McKibbin and Sidorenko (2006), explores seven different scenarios of how COVID-19 might evolve in the coming year. The paper alluded to the fact that the evolution of the disease and its economic impact is highly uncertain thereby making it difficult for policy makers to formulate appropriate macroeconomic policy response. The scenarios investigated in the study demonstrate that containment of the outbreak notwithstanding, its impact on the global economy in the short run would still be significant. Other recent studies with global concern include Barua (2020), OECD (2020), Orlik et al (2020), Maliszewska et al (2020) and Fernandes (2020). In Fernandes (2020), the economic impact of COVID-19 crisis across industries, and countries is investigated. The study shows that in the sample of 30 countries covered, a median decline of -2.8% in GDP in 2020 is observed. In other scenarios, the study shows that GDP is expected to fall more than 10%, and in some countries, more than 15%. Orlik et al (2020) even predicted that coronavirus could cost the global economy US$2.7 trillion. “A baseline global pandemic scenario sees gross domestic product fall by 2 percent below the benchmark for the world, 2.5 percent for developing countries, and 1.8 percent for industrial countries” (Maliszewska et al (2020).
In what looks like a subtle criticism of the public media and academic writings for focusing mainly on global macroeconomic impact of COVID-19, Ataguba (2020) argues that it “is only one part of the bigger picture of economic impact”. Citing Africa in particular, with its high disease burden, poorly developed infrastructure and safety nets and weak health systems, the impact of the pandemic is expected to be severe in the continent. Using the same argument, a country level impact analysis is not only desirable but inevitable to guide the policy authorities. The likely exacerbating impact of the pandemic on the Nigerian economy is inevitable for several reasons. Firstly, the economy is yet to fully recover from the aftermath of the recession experienced in 2016. Secondly, the economy depends largely on crude oil whose price has plummeted in the international market. Thirdly, the foreign exchange reserves have been drawn down from US$45.1bn at the end of 2019 to US$35.3bn at the end of March 2020. Fourthly, the country’s debt burden has been mounting since 2015. Fifthly, inflation is still firmly in double digits and the naira is under pressure. Finally, the health system capacity is abysmal. These and other factors have led to the growing concerns and uncertainties that COVID-19 will bring on the Nigerian economy. According to Ozoli (2020), “the economic downturn in Nigeria was triggered by a combination of declining oil price and spillovers from the COVID-19 outbreak”.
Sequel to the above, the plan of this paper is to analyse the impact of the emergence of COVID-19 on the macroeconomic fundamentals in Nigeria and make projections for economic growth.