Beyond the tragic health hazards and human consequences of the COVID-19 pandemic, the economic uncertainties, and disruptions that have resulted come at a big cost to the worldwide economy, Nigeria not being excluded. The tumultuous events that COVID-19 had spread across the world cut across every facet of human existence and therefore the consequences may linger beyond the last half of 2020.

The slowdown within the global economy and lockdown in some countries, like Italy, Spain and most Eurozone economies and beyond, as a result, COVID-19 has also taken its toll on the worldwide demand for oil. The decline in oil demand is estimated to surpass the loss of nearly 1 million barrels per day during the 2007-08 recession. this is often also coming at a time when two key players within the global refining industry – Russia and therefore the OPEC cartel – are hostile on the choice to cut output. The unequivocal oil price competition started between these two global oil market giants has more dire consequences on the oil price that has began to dive. Currently in Nigeria, the price of oil per litre goes for ₦125 as oppose the ₦145, previous price.

Sector-specific implications and impacts could vary. For instance , the impacts on the Nigerian aviation and tourism sectors are a results of the implications of the pandemic on global and interstate travel as travel cancellations continue. As discretionary spending by consumers continues to reduce, cruise companies, hotels, and hospitality face declining demand and patronage. The virus is additionally taking its toll on health facilities and infrastructures across the world. Most hospitals and health facilities that would not handle the hazards are resulting to operating below their capacity by taking a couple of regular health-related cases or shutting down. What might be more devastating is that the incontrovertible fact that the economic pains that accompanied the virus won't get away soon as envisaged.

There are limitations to the successes which will be recorded when demand shocks are combined with supply shocks. it's already apparent from the emergence of the present crisis that there are implications on the economy from both the demand and provide sides. a number of the demand factors include social distancing with consumers staying reception , limitations in spending and declining consumptions. On the availability side, factories are shutting down or lowering production and output, while in other instances, staff work from home to limit physical contact.
Given the dimensions and scope of the economic impact of the pandemic, there's the necessity to implement other recovery strategies to stimulate demand. Thus, we recommend the subsequent fiscal and monetary policy measures:

Although there's a cash transfer program in situ , the federal should improve efforts towards enhancing the efficiency and effectiveness of the distributive mechanisms to succeed in households that are worst-hit by the pandemic.
Federal Inland Revenue Service (FIRS) also as State Inland Revenue Services (SIRS) should waive payments on personal and company tax for the second quarter of 2020, considering that the shock has affected the income and profits of households and businesses.
The CBN’s decision to extend the cash reserve ratio (CRR) from 22.5 percent to 27.5 percent in January 2020 should be revisited to supply liquidity for banks in order that banks can, in turn, create credit to the private sector.
FIRS and SIRS should delay collection for the worse-hit sectors including tourism, the airline industry, and hoteliers so as to enable them get over the steep decline in demand.

To provide additional liquidity within the forex market, the CBN should establish a swap facility with the U.S. Federal Reserve System and/or the People’s Bank of China, as was wiped out 2018, to supply dollar and yen liquidity to financial institutions, investors, and exporters. This move would ease up forex shortage within the financial market and economy.
While the naira has been adjusted as a results of the forex shortage, it's important that the CBN maintains rate of exchange stability by deploying external reserves so as to avoid investors selling off naira-denominated assets.

The COVID-19 pandemic may be a warning call to policymakers because the unusual and unprecedented nature of the crisis has made it impossible for citizens to believe foreign health care services and harder to solicit for international support given the competing demand for medical supplies and equipment.

A more integrated response spanning several sectors—including the health, finance, and trade sectors—is required to deal with structural issues that make the country less resilient to shocks and limit its range of policy responses. within the future , tougher decisions got to be made, including but not limited to diversifying the country’s revenue base faraway from oil exports and improving investments within the health care sector in ensuring that the economy is in a position to recover quickly from difficult conditions within the future.

© Oladele Damilola.