THE EFFECT OF CORONA VIRUS (COVID-19) ON THE NIGERIA ECONOMY

THE EFFECT OF CORONA VIRUS (COVID-19) ON THE NIGERIA ECONOMY

 

ABSTRACT

This study examined the effect of COVID-19 on the Nigeria economy. The use of Survey instruments was adopted for the study. The sample population for this study comprised of two hundred (200) respondents in which four respondents. Purposive and Simple Random sampling was used to choose the sample size for this study. The research employed primary and secondary sources of data. Primary data were gathered through questionnaires distributed among the Among the selected two hundred (200) respondent. The data gathered from the questionnaire were analysed and presented in frequency and percentage tables. The result revealed that Coronavirus Pandemic has significantly affected economic growth in Nigeria. The study recommended that the government and financial institutions should support local industries by giving them grants and loans with low interest rate to assist in running of their business in order to minimize the economic effects of the pandemic on those businesses.

 

 

CHAPTER ONE

INTRODUCTION

1.1Background to the Study

Corona viruses are common viruses that most people get sometime in their life and may also infect animals. Human coronaviruses (hCoV) which has been globally trending for over a month now usually causes upper respiratory tract illnesses. Severe Acute Respiratory Syndrome (SARS-CoV) that occurred way back in 2003 served as a reminder to this newly emerging zoonotic coronaviruses which has the potential to transmit from person to person and to cause severe human illnesses. As Sars- Cov2  (Covid-19) which emerged in China is now on a global spread, actions are being taken to limit its spread by various government authorities both in economies that have recorded cases and economies which have no recorded cases.

Despite a recession from 2014 to 2016, The World Bank asserts that Nigeria’s economy may be headed toward the worst financial state the country has seen in four decades. Nigeria is extremely dependent on oil, which represents more than 80% of the country’s exports. With international travel halted due to COVID-19, the country has recorded an 18-year low on fuel prices, at $22 per barrel (Anan Hoban 2020)/. According to economics experts, the Nigerian revenue flow will decrease to 1.1 trillion Naira (about $3 billion). The National Bureau of Statistics states that 42% of almost 2,000 citizens interviewed were out of work as a result of the pandemic (ibid).

There are several ways through which a pandemic of infectious diseases impacts the economy (Ozili and Arun, 2020). The primary and indirect economic effects of the pandemics are more focussing on health policy analysis than the burden of disease (Barrot, Grassi, and Sauvagnat, 2020). The traditional approach uses details on death, mortality, and morbidity to predict potential profit loss related to death and injury (Del Rio-Chanona et al., 2020). Time and revenue expenses for patients and additional spending on patient treatment and social programs are impacted that oblivion caused the pandemics (Inoue and Todo, 2020). This conventional approach underestimates the true economic costs of epidemic diseases that are highly communicable and for which there is no vaccine such as HIV, AIDS, SARS and pandemic influenza (Alvarez, Argente, and Lippi, 2020). The pandemic pressure on economic aspects has significant impacts not only in developing countries such as those on the continents of Asia and Africa (Fernandes, 2020) but also in developed countries (Becker, 1990; Purnomo et al., 2019). It caused a shock as the impacts of the pandemic on global social and economic aspects in a country were judged faster and more severe than the global financial crisis and The Great Depression (Abodunrin and Oloye, 2020). It is certainly not surprising, considering the lockdown policy adopted by several infected countries that have made all educational institutions, commercial, sports, and religious institutions closed temporarily hence, it undoubtedly has a sustained effect on the cessation of the economic sector (Guerrieri et al., 2020). The COVID-19 case has indeed caused quite a severe paralysis in the economic sector of the infected country (Rincón-Aznar, Mao, and Tong, 2020; Grima et al., 2020).

The uncertainties surrounding the effect of COVID-19 has caused Foreign Direct Investment (FDI) flow to Nigeria to slow down. Due to restrictions imposed in their countries of origin coupled with the closure of Nigeria’s borders, foreign investors are unable to visit Nigeria to carry out feasibility studies and to perform some transactions. This also has reduced business activities that could take place in Nigeria to increase the GDP of the country and probably exports (Usman 2020).Jordà et al (2020)  found out that ensuing effects on pandemics are depression of investment and an increase in precautionary savings which further results in sustained low natural interest rates giving rise to excess capital per surviving worker. The IMF in March, 2020 pointed out that it is hard to predict the impact of the COVID-19 on global growth. However, it anticipates that growth in 2020 will decelerate considerably from the projected 3.3% to rates below 2.9% recorded in 2019. The United Nations Economic Commission for Africa (UNECA) predicts that the Africa 2020 projected GDP growth will drop from 3.2% to 1.8 % (that is by 1.4 percentage points) as a result of the COVID-19. An estimation made by the World Bank suggests that an additional 20 million people in developing countries are trapped in poverty by a 1% decline in economic growth rates.

The pandemic problems occurring in China can be a real example that the threat of a pandemic puts enormous pressure on the economic aspects. Therefore, the high financial pressure caused by the COVID-19 pandemic is not only felt by developing countries, but also by developed countries (Huang et al., 2020). The Chinese Government responded to the pandemic occurring in the country with various attempts to suppress the rapid spread of COVID-19, such as quarantine and widespread restrictions on mobility and work travel (Hien et al., 2020). The policy taken by China is indeed practised by almost all countries struggling to slow the transmission of COVID-19 disease (Ali and Alharbi, 2020).

 

As a result of the aforementioned problem, this study seeks to  examine The effect of COVID-19 on the Nigeria economy.

1.2 Statement of the Problem

COVID-19 has had a rapid global spread because of closer international integration and transmission through carriers without symptoms which is very different from dynamics of past epidemics. Most studies on the economic impact of past epidemics have revealed their impact solely on GDP growth.

To measure the health of an economy, economic indicators such as unemployment rate, quality of education, a nation’s debt stock, level of investment, balance of payment and exchange rate are key areas to assess with the growth of the economy’s GDP. Current studies have not broadened their assessment of the economic impact of COVID-19 to cover all these very important areas (Gourinchas, 2020; Saez and Zucman, 2020; McKibbin and Fernando (2020)). This has made necessary a study to divulge how all other economic indicators apart from GDP will be impacted by COVID-19, to inform government on what considerations to make as it works at adjusting its policies to alleviate the economics losses of the global pandemic.

The above problem has led this study to Examine the effects of covid19 on budget implementation of medium scale business in Tamale.

1.3 Research Question

The research questions to be addressed in this work include:

• To what extent has coronavirus pandemic affected economic growth in Nigeria?
• To what extent has Coronavirus Pandemic affected the profit making capacity of business organizations in Nigeria?

1.4 Objectives of the Study 

The general objective of this study is to examine The effect of COVID-19 on the Nigeria economy. The specific Objectives include:

• To determine the extent to which coronavirus Pandemic has  affected economic growth in Nigeria.
• To determine the impact of Coronavirus Pandemic on the profit making capacity of business organizations in Nigeria.

 

1.5 Significance of the Study

The outcome of the study will guide policy makers in government, financial institutions and relevant stakeholders to draft policies that will help ease the economic effects of coronavirus pandemic in Nigeria. The study will also come out with recommendations that can be taken to appraise the impact of coronavirus pandemic on the profitability of business organizations in Nigeria in order to enhance economic and national development. Furthermore, it would serve as reference documents to the academics and researchers and to all those interested in this area of study.

1.6 Scope and Limitations of the Study

The study will focus on The effect of COVID-19 on the Nigeria economy. Limitaions

Among the limitation of this study is the difficulty in gathering data and information, much of which is considered. The researcher was also limited by the reluctance of some respondents to complete them at all.

1.7 Organization of the Study

The study is organized into five chapters. Chapter one is the introduction of the study and it includes the background description, problem definition, objectives of the study, significance of the study, scope, limitations of the study and research methodology. Chapter two is the literature review of the study and the theoretical framework. This reviews relevant literatures of authors and other researchers relating to SMEs. Chapter three deals with the research methodology which looks at methods adopted in carrying out the study. Chapter four focuses on data presentation and analysis whiles chapter five presents a summary of the study, findings and conclusions drawn from the findings and recommendations of the study.

THE EFFECT OF CORONA VIRUS (COVID-19) ON THE NIGERIA ECONOMY

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