Early this month, the badinage fell. Nigerians’ worst fear that the impact of the Coronavirus disease that had disrupted global economies could whiff pass the Nigerian shores hit right at the doorstep. On February 20th 2020, the media was awash with the breaking news that Nigeria’s worst fear had been confirmed. A certain Italian, billed for a contract job with Lafarge Cement Company in Ewekoro, Ogun State, had tested positive to the pandemic. Though the pioneer victim in the homeland had since been fully treated and discharged to return to his country, the reverberations of Coronavirus, famed as COVID-19, have left all in quandary. No fewer than 600 people had been snatched by the cold hands of death, resulting from the disease, according to statistics from the National Commission for Disease Control (NCDC). Besides, about 3000 others had tested positive to the pandemic, with scores writing in pains at various isolation centres being managed by concerned local authorities.
The Italian, who was first diagnosed with the dreaded ailment, was treated at the Lagos Government Isolation Centre in Idi-Araba, Lagos; while the Ogun State Government also swiftly rose up to the occasion by providing a capital-intensive modular laboratory at the Olabisi Onabanjo University Teaching Hospital in Shagamu. The global epidemic, which spreads like the proverbial wildfire, particularly gains notoriety in the way it affects high-profile Nigerians, thus sending a clear signal that it is no respecter of socio-political cum-economic status, or opulence. It claimed a jaw-dropping personality in the person of Mallam Abba Kyari, the then Chief of Staff President Muhammadu Buhari. And not long ago, the senator representing Lagos East at the National Assembly, Adebayo Osinowo, who died, was also touted to have had complications arising from the disease. Barely a few days after Osinowo’s death, the immediate past governor of Oyo State, Senator Abiola Ajimobi, also died, reportedly from Coronavirus complications.
For utmost of three months now, key parts of the Nigerian life have been locked down, amid fears that spectres of mass deaths and mass burials in the western world, being beamed on prime TVs, could extend to Nigeria. However, as concerns reached a fever pitch, going by COVID-19 casualty rate, so have such fears become grave, thinking of a toterring Nigerian economy. Most companies, including the blue chip ones, as well as other concerns that oil entrepreneurship at the very low rung of the economic ladder, are also hard hit as many of them have been laying off workers, amid skeletal services. As a means of cushioning the effect of the lockdown and ensuing restriction orders on the citizenry, President Buhari’s federal government and various state governors rose up to the occasion by providing palliatives, which observers said, only went round a negligible fraction of a population of over 200 million people. Besides, all schools and tertiary institutions, as well as worship centres and many other socio-economic endeavours, are currently under lock and key. In all, the overall Nigerian economy, observers concur, is now terribly bruised. This, they say, is corroborated by an all-time drop in oil prices at the international market. Indubitably, Nigeria’s income is 80 percent oil receipts. The 2020 budget was benchmarked on the crude oil price of $57 per barrel. However, the on-going disruption precipitated by the COVID-19 pandemic has plunged crude oil prices to crash to an all-time low level of $29 per barrel. From reports, the oil-market-dip is further worsened by the oil production disagreement between Saudi Arabia and Russia, the two countries that have for some years, led efforts to balance global oil prices through arrangements between Organisation of Petroleum Exporting Countries (OPEC) members and non-OPEC oil producers. The production conundrum arose from Russia’s non-alignment with OPEC’s (Saudi Arabia-led) proposal to cut down on oil production, to cushion the effects of the plunging of oil prices below international benchmark of about $66 per barrel. By market forces, where there is surplus oil production, crude oil price per barrel crashes. As of the moment, the price of oil per barrel fluctuates between $20 and $29. Meanwhile, Nigeria’s 2020 budget was anchored on the presumption that oil would sell at $57 per barrel, thus pushing down the 2020 budget to a deficit valley.
Besides, the National Bureau of Statistics (NBS) reported that the Nigerian economy advanced by 2.55 percent in the last quarter of 2019. But it also warned that if the COVID-19 pandemic was not subdued, and oil price continued to plunge, the Nigerian economy might contract into a negative. Given overwhelming dependency on oil receipts, negative economic growths of more than two months will plunge the economy into a recession, the NBC further alarmed. The NBC’s foresee has however come to fruition, going by the sharp drop in national revenue allocations, for the month of May, which was shared by the Federal Ministry of Finance for the three tiers of government, in June, this year. With the three tiers of government and the Federal Capital Territory sharing N1.95 trillion from the Federation Account in the first quarter of 2020, the Nigeria Extractive Industries Transparency Initiative (NEITI) has, on its part, projected lower remittances in the remaining part of the year. The dipping allocations, as released by the Finance Minister, Hajia Zainab Ahmed, showed that out of the total disbursements, the Federal Government shared about N791.4 billion, as against N669 billion by the 36 states and N395 billion by the 774 local government areas. During the period under review, total Federation Accounts Allocation Committee (FAAC) allocations comprised gross disbursements to the Federal Government, States, Local Government Councils and the 13 per cent derivation to the oil-producing areas and the North East Development Commission (NEDC). Allocations were made for cost of collections by the revenue agencies, namely Nigerian Customs Service, the Federal Inland Revenue Service (FIRS), the Department of Petroleum Resources (DPR) and transfers to the Excess Crude Oil Savings Account. FAAC disbursements for the period under review also showed a consistent decline, which established a trend reflecting impacts of COVID-19 on government revenues.
“While total disbursements in Q1 2020 were slightly higher than Q1 2019 and Q1 2018, disbursements to the three tiers of government in Q1 2020 were slightly lower than Q1 2019 and Q1 2018. This is due to transfers to other accounts in Q1 2020, which were not done in either Q1 2019 or Q1 2018. “These include allocations to the North East Development Commission and transfer to Excess Crude Account,” a review report of the NEITI noted. On FAAC disbursements to states between January and March this year, the NEITI noted a wide disparity of 708 per cent between states, with Osun receiving the lowest allocation of N6.44 billion and Delta, the highest disbursement of about N52.03billion. Also, Delta State’s net FAAC receipts were higher than the combined total receipts of the six lowest receiving states by about N50.67 billion. The six states comprised Osun, Cross River, Plateau, Ogun, Ekiti and Gombe.
Further analysis revealed the combined disbursements to four states (Delta, Akwa Ibom, Rivers and Bayelsa) while the highest net FAAC receipts were higher than the combined net disbursements for the 17 states with the lowest disbursements. “The combined total net disbursement to the four states was N167.76 billion, which is higher than the combined total of N159.99 billion received by the 17 lowest receiving states (Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Bauchi, Abia, and Kogi)”, the review stated. In addition, 31 states received less than N20 billion as total net FAAC disbursements in the first quarter of this year, while only five states received more than N20 billion. The five States are Lagos (N26.23 billion), Bayelsa (N35.14 billion), Rivers (N39.99 billion), Akwa Ibom (N40.61 billion), and Delta (N52.03 billion). Commenting on the economic impact of COVID-19 on the nation, an expert. Mr. Tope Fasua, said the pandemic might go beyond a new recession era as projected by the finance minister. Fasua, CEO, Global Analytics Consulting Limited, averred, “The Minister is trying to be nice, maybe so as not to cause panic. She is talking about the economy going into recession in the next six months. “She is relying on the theory of recession being two consecutive of negative growth in the economy. Otherwise, the truth is that. we are already in recession.”
He added that people had not been productive because they had not been working. “Businesses have shut in for some time; therefore, there is likely to be a drop in Gross Domestic Product. With the global GDP predicted by the IMF to fall by 12 percent this year, Nigeria’s economy cannot come out of the current crisis with less than a 10 percent decline. “Nigeria’s GDP is about $450 billion. Imagine that the country is losing about $1.5 billion every day. If one is conservative to say half of that is shut in because people are doing nothing, sitting at home, that means we are losing about $400 million every day. “Multiply that with 30 days of the month, that translates to a loss of about $12 billion, to be deducted from the country’s GDP every month. So, it is clear, we cannot escape recession,” Fasua bemoaned. Speaking in the same vein, another expert, Mr. Paul Aladje, said if the current lockdown in the country lingers beyond three months into the third quarter of the year, many people and families would be completely devastated. Therefore, Aladje, who is Lead Economist/Enterprise Partner at SM Professionals, located in Abuja, expressed concern that the Nigerian economy is not just in recession, but in depression.
He stressed that long before the IMF said that the world economy was in recession, the Nigerian economy was already in recession, with mass unemployment, mass joblessness, high inflation, and millions of its citizenry in extreme poverty. “The majority of the population is with no basic necessities of life; such as food, water, and toilets, and there is no hope in view that development will come and greet in terms of income per head, as it is never guaranteed. Then, there is more than a recession. “Economic depression is a complete state of devastation of an economy but it is also a situation where the economy suffers from attacks from an invisible vampire that sucks out its vitality. “It is a situation where there is rising stagflation and there is no hope for development,” Aladje lamented. Already, labour leaders in various states of the federation who have been hankering for the implementation of the newly approved minimum wage, have become muted, having been faced with the stark reality of COVID-19’s negative impacts on their respective states’ economies. As the COVID- 19 socio-economic downturns continue to take their toll on the health of the Nigerian nation, a clear frustration is also palpably written on faces.