COVID-19 and Nigeria’s economy
The 2019–2020 coronavirus pandemic has had far-reaching consequences beyond the spread of the COVID-19 disease itself and efforts to quarantine it. As the SARS-CoV-2 virus has spread around the globe, concerns have shifted from supply-side manufacturing issues to decreased business in the services sector.
The pandemic caused the largest global recession in history, with more than a third of the global population at the time being placed on lockdown. Supply shortages are expected to affect a number of sectors due to panic buying, increased usage of goods to fight the pandemic, and disruption to factories and logistics in mainland China, in addition, it also led to price gouging. There have been widespread reports of supply shortages of pharmaceuticals, with many areas seeing panic buying and consequent shortages of food and other essential grocery items.
The technology industry, in particular, has been warning about delays to shipments of electronic goods. In Nigeria, efforts were already being made to bolster aggregate demand through increased government spending and tax cuts for businesses.
The public budget increased from 8.83 trillion naira ($24.53 billion) in 2019 to 10.59 trillion naira ($29.42 billion) in 2020, representing 11 percent of the national GDP, while small businesses have been exempted from company income tax, and the tax rate for medium-sized businesses has been revised downwards from 30 to 20 percent. Unfortunately, the COVID-19 crisis is causing all components of aggregate demand, except for government purchases to fall.
Nigerian Analyst and Senior Legal Aide to the Chairman of Senate Committee on Finance, Dr. Kayode Odunaro predicts that there will be a high turnover of job loss in Nigeria as well a downsizing of the country’s economy spanning from the effects of the pandemic which will eventually lead to an increased level of hardship and a rise in the level of poverty as so many average Nigerians will fall back to poverty as a result of the striking effect.