At the onset of the COVID-19 pandemic, experts predicted that Nigeria, Africa’s largest economy and the most populous country, could suffer hundreds of thousands of deaths and possibly become the worst-hit country in Africa. After five months of living under the cloud of COVID-19, Nigeria appears to have dodged this fate.
With just 59,000 reported cases and 1,000 deaths, Nigeria’s public health success may be down to an experienced and world-class team of health professionals, who have successfully managed many infectious disease outbreaks over the years.
While Nigeria may have skirted a more dismal public health outcome, the economic impact has been more significant. With a simultaneous drop in oil prices, owing in part to a price war between Russia and Saudi Arabia, Nigeria, an oil-dependent economy, has seen its revenues from crude oil exports drop by about 60%, according to Nigeria’s Vice President Yemi Osinbanjo while speaking at a recent webinar hosted by The Africa Report.
To tackle the economic impacts, President Muhammadu Buhari appointed Vice President Osinbajo to chair the Economic Sustainability Committee tasked with developing a plan that would place the country on a more sustainable growth path.
The US$6 billion plan will be financed through budget resources and structured loans guaranteed by the Central Bank of Nigeria. A US$3.4 billion emergency financial assistance loan from the IMF will also help to plug gaps.
Experts point to the weighty reforms being undertaken by the government to indicate that opportunities may begin to emerge. Industry analysts such as Muyiwa Oni, the Head of Equity Research, West Africa, for Stanbic IBTC (Standard Bank Group) and Andrew S. Nevin, Partner and Chief Economist, West Africa, PwC both see a potential silver lining.
In an interview with the CDC, the UK’s development finance institution, Andrews notes “In many ways, I’m quite optimistic because what this crisis has done is accelerate decisions on a number of structural issues that have impeded Nigeria over the last few years. For example, the fuel subsidy policy – which has cost a lot of money and has not been very effective in helping people, those with lower incomes – has been reversed. Discussions about market-based tariffs for electricity in Nigeria are also coming to fruition. … The government is starting to make decisions which have the potential to lead to much more investment and much more rapid, inclusive, economic growth in Nigeria.”
Muyiwa also commented on the important focus on stimulating local business by using the Central Bank to drive credit to sectors with the capacity to enhance local production. He predicts that this initiative could fuel a broader-based recovery. “Beyond the crisis, there will be increased awareness of sectors like agriculture and increasing conversations around food security; and also driving credit to the healthcare sector to reduce medical tourism. These areas could lead Nigeria’s economic recovery.”
The Bouncing Back plan includes:
These reforms and the government’s commitment to building back better can also provide an opportunity to increase investments and private sector participation.
ATI is doing its part to support banks and to pave the way for additional private sector participation. As one of ATI’s newest member countries, Nigeria completed the membership process in August 2020, ATI has already supported bank transactions valued at US$400 million, which are featured in the project spotlight in this newsletter. ATI’s support is freeing up much-needed liquidity in the market and helping downstream SMEs, who could yet provide a lifeline to helping the country recover.
Sources:
CDC article: https://www.cdcgroup.com/en/news-insight/ insight/articles/what-is-the-economic-impact-of-covid- 19-in-nigeria/
Nigeria’s Bouncing Back plan with Yemi Osinbajo: https://www.theafricareport.com/41123/bouncing-backnigerias- post-pandemic-recovery-plan/
