Expert Says Nigeria Has Lost N11.6 trillion to COVID-19

Financial analyst Tony Edeh has put the cost of the coronavirus pandemic on the Nigerian economy at N11. 6 trillion while discussing triggering inflation and the economy.

While decrying poor Foreign Direct Investment, FDI inflows into the country in the past few years, Edeh told The Vanguard that the country was steadily slipping into recession since the beginning of the pandemic.

“Due to COVID-19, the Nigerian economy slipped into a recession in the third quarter of 2020 following a Gross Domestic Product, GDP contraction of -3.62 per cent. The impact of the 2020 recession on individuals and businesses has been more severe due to the nature of the pandemic. With COVID-19, businesses were forced to shut due to lockdown and social distancing. This had a toll on individuals’ income, corporate and government finances. Real losses in real output and other disruptions were estimated at N5.8 trillion in 2020.

“In nominal terms, this loss is estimated at N11.6 trillion. In addition to direct output loss, there have also been significant job losses, income losses, erosion of monetary value, among others. COVID-19 and other disruptions have reversed the gains achieved prior to 2020. Due to the perceived impact, the Nigerian government projected revenue flow from oil to decline from N5.5 trillion in 2020 to N1.1 trillion, in a sudden fiscal crisis presenting some pretty immense economic challenges.”

“FDIs and foreign portfolio investments in Nigeria had declined even before the pandemic, and continue to remain weighted towards the oil and gas sector. Nigeria attracted the third-largest foreign direct investment (FDI) inflows of any African country in 2019.

“In 2020, the most visible and immediate spillover of COVID-19 was the drop in the price of crude oil, which dropped from nearly US$60 per barrel to as low as US$30 per barrel in March. During the pandemic, people were no longer travelling and this led to a sustained fall in the demand for aviation fuel and automobile fuel which affected Nigeria’s net oil revenue and eventually affected Nigeria’s foreign reserve. As the oil sector accounts for the bulk of Nigerian government revenue, this collapse in prices had profound implications for the economy,” he added.

Patsy Nwogu

Reporting on data-driven featured stories and investigations.

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