COVID-19: The Economics Of The Epidemic

By Bala Ibrahim

It may be too early to start counting the cost of the coronavirus casualties, but it would not be out of place to commence computing the economic consequences of such epidemic, that has global pervasive adversity.

Because WHO had declared COVID-19 a global pandemic with no known cure for now, there is no way sensation, anxiety and apprehension can be kept at bay. Fear, especially fear of the unknown, would occupy the better part of our emotions.

In looking at the impact and effects of the pandemic, beside the human casualties, particularly the mortality rate, which to the mercy of Allah, seems low in Nigeria, the economics of the epidemic is what occupies the minds of those concerned with the pandemic.

Because economics deals with the production, distribution, and consumption of goods and services, we are very grateful that Buhari is our president in Nigeria today.

The pandemic came at a time nature and the good economic policies of the regime, have combined to boost agricultural production in the last farming season, as well as change our taste and consumption pattern in the country.

The Government’s policies on border closure and the ban on rice importation, have helped to reduce the influx of the virus through the land borders, and gave Nigeria and Nigerians massive savings on foreign exchange.

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However, going by the figures coming from the NCDC, the number of confirmed persons infected by the Coronavirus in Nigeria is increasingly becoming frightening.

As of today, Thursday the 2nd of April, the figure of “reported” affected persons is approaching 200, and the country is still counting. This means there would be additional economic consequences to be suffered.

The Federal Government on Wednesday announced a slash in the 2020 budget by N1.5tn, saying N457bn would be spent on fuel importation under the name of “under-recovery”.  This means the N10.59tn budget that was signed by the government, with a deficit of over N1.8tn and provisions for statutory transfers, debt servicing, recurrent expenditure, and capital expenditure, would face additional slash, because of the effects of the coronavirus on the world economy, that saw crude oil price going down far below the $57 budget benchmark to $19 today.

The threat of danger to lives is graduating to the pain of economic trepidation.

In economic terms, cutting expenditures would surely endanger the vulnerable, who are going to bear the brunt of the economic contraction.

The economic growth recovery program of the country, which aims at increasing social inclusion through job creation and the provision of support for the poorest and most vulnerable, will surely suffer some setbacks.

The National Assembly’s 2020 budget of N128 billion, will also be reviewed downwards by N25.6 billion, due to the economic effects of the coronavirus pandemic. Senators have since agreed to donate half of their March salaries to the fight against the spread of the virus, just as the judiciary is expected to suffer similar fate in their budget.

It doesn’t stop there, the lockdown is also coming with a cost, to which the President has approved the release of 70, 000 Metric Tones of grains from the Strategic National Reserve, to be distributed to the poor and vulnerable and those whose livelihood will be affected by the lockdown.

The first tranche of about 6, 000 metric tonnes is to go to Lagos, Ogun and the FCT, while the remaining will go to other front line states in the fight against COVID-19. This would affect the food security programme of the country.

Also, the Federal Government on Tuesday, announced a further reduction in fuel pump price from N125 to N123.50 per litre, less than two weeks after a revised downward review from N145 to N125.

To cushion the effect of the lockdown, the Government has again decided to pay N20,000 to qualified beneficiaries, covering a period of four months, in its effort to relieve the economic pressure on them.

Accordingly, the exercise will take place in all the states across the federation, starting with FCT, Lagos and Ogun, the three states that are currently under lockdown.

The biggest misery to the country is the misfortune of PMB, who was put into unforeseen and unplanned adversities, immediately he stepped into office. Shortly after he was sworn in as president in 2015, Nigeria’s economy fell into recession in 2016, due mainly to low crude prices and attacks on energy facilities in the Niger Delta by the militants.

He was further challenged by health for the best part of his first term.

Again, just when he planned to make up for the losses in his second term, Coronavirus is conniving to force the entire world economy into global recession. Oil prices are falling in a manner that is ridiculously absurd.

The recession would mean negative economic growth for Nigeria, the result of which would be, the inability to fulfil the bulk of the promises the president made to Nigerians, with the north, his base and biggest contributor, on the way to being the biggest loser.

Yes, the decisions to effect cuts on the budget and the introduction of palliatives are positive for the revival of the economy, but the consequences of the COVID-19 pandemic would be negative because it exposes the danger of relying on a one-tracked, monolithic source of revenue like oil.

With reduced revenue, the rail line to Kano may not be realized. The road expansion and rehabilitation from Abuja to Kano may not be realized. The anticipated agricultural revolution may not be realized. The textile reforms may not be realized.

And probably, and most importantly, the promise to salvage the multitude of northern youth, through gainful employment that would discourage the proliferation of violence, killing of innocent people, kidnapping and abduction, may not be realized also.

So the economics of the epidemic would have a negative effect on the economy of Nigeria, and a high opportunity cost, but a higher, and regrettably harsher consequences for northern Nigeria.

Bala Ibrahim, a Media Advisor writes from Kano