In the wake of 2020, what started as a local health concern quickly erupted into a global pandemic that affected the health and economy of developed and developing countries alike. While the healthcare system faced huge pressure, the deepening effect of COVID-19 plunged many countries into activating unprepared economic measures – the shutdown of economic activities.
Although procedures were put in place to arrest further health crises, the impact pulled an unprecedented strain on economies with developing countries across the globe getting the worse hit. The global economy shrank by 4.4% in 2020, according to International Monetary Fund (IMF) estimates. Most nations around the world entered recessions having experienced negative GDP growth. Although the recorded death toll from the pandemic defied prediction in Nigeria, the economic strain was put on the already palpating economy with a visible impact on sectors like oil and gas, agriculture, transportation, etc.
The International Food Policy Research Institute reported that cause of the lockdown measures necessitated by the pandemic, Nigeria’s GDP plunged to 34.1 percent which translates to USD 16 billion with two-thirds of this loss coming in from the services sector. The agriculture sector, which serves as the primary means of livelihood for most Nigerians, suffered a 13.1 percent loss. Estimated households lost an average of 33 percent of their income with the heaviest losses occurring for rural non-farm and urban households. The economic impacts of COVID-19 included a 14-percentage point increase in the poverty headcount rate for Nigeria which implied that 27 million additional people fell below the poverty line during the lockdown.
As with the economy, many businesses were badly hit. In a detailed assessment of the pandemic’s impact on businesses and business owners, a collaborative report from the United Nations Development Program and the National Bureau of Statistics, (UNDP/NBS report) showed disruption across enterprises with the closure of at least two-thirds of businesses operating in the country. Many organizations were unable to withstand the shock of the pandemic and as many as one in three businesses permanently closed due to operational challenges brought about by COVID-19.
Although the Nigerian government set out palliative measures to ease the pandemic’s effect on households, only a few received with little, or no measures put in place to support businesses. While the country is curating new ways to gradually ease into new norms in the advent of the pandemic, economic recovery is still a struggle. With inflation rates hitting double digits, there is negative investor sentiment largely due to economic uncertainties. This has caused hampered investments resulting in turbulent capital markets not just in Nigeria but around the world.
Several lessons can be drawn from the impact of COVID-19 to serve as a guide in developing measures and regulations that will cushion the effect of a possible pandemic. Whilst global synergy is key, the World Bank has advised that pandemic preparedness should begin at the country level. It requires a strong and resilient health system, particularly, at the primary healthcare level. This will support in facilitating the detection of disease outbreaks, providing essential care, and strengthening the deployment of vaccines and other medical countermeasures.
A local Public Health professional, Dr. Ifeanyi Nsofor, recently called for federal, state, and local government funding and the involvement of private sector organizations to support preparedness during a stakeholder forum.
And as the health sector begins to firm up strategies to stay prepared for possible future pandemics, the Nigerian government must also be equipped, economically.
Economic recovery and preparedness are still possible and imminent if Nigeria diversifies its economy from being “oil-based” to revitalizing other sectors to achieve sustainable economic development and growth across the board. As an important step in stimulating the economy, policies should be intentionally implemented rather than simply formulated. If the right structures are put in place, the right actions will be taken.
In addition, tax authorities at different levels of government must take steps within its policy framework to increase tax revenues and implement tax reforms. This would improve compliance, discourage evasion, and widen the country’s tax base. It will also provide the required capital to rehabilitate and invest in other sectors of the economy which will bring the needed diversification to life.
Finally, as the world is becoming a more global village, it is vital for Nigeria to learn its lessons from the impact of the COVID-19 pandemic while taking a cue from what other countries are doing. This will serve as a useful tool in assisting economic growth and development and set in measures to cushion the effect if there is a future pandemic.