Full Project – Impact of Covid-19 on macroeconomics in Nigeria
This study was carried out on the impact of Covid-19 on microeconomic in Nigeria. To attain the goals of the study, three (3) specific objective, three (3) research questions and were raised for the study. Related literature were reviewed for the study consist of Conceptual Framework which includes concept of Covid-19, concept of Macroeconomic, impact of Covid-19 and macroeconomics fundamental such as oil price, exchange rate, share index, and 2020 budget etc. This study adopted a quantitative research approach which entails systematic evaluation of individual’s behavior towards an unprecedented economic shock and their response to the manner in which the situation might unfolds by lifting the lockdown measure in Nigeria. This is achievable with a systematic random sample of 117 respondents and a well-structured survey questionnaire. The results indicated that most economic challenges including unemployment/job loss, increase social vices, rise in poverty level, fall in economic activities, as well as fall in the level of GDP faced by individuals was not a resultant of the Covid-19. Consequently, authority’s inefficiency was also challenged in spite of their efforts to mitigate and control the emerging economic consequences faced by households during the Covid-19 periods. The study recommends that lifting of lockdown would be the best action for the government to take for economic resilience. The study also revealed that both public and individuals need to establish democratic preferences, and trust on health professionals or experts. Further to this, government should decide on effective measures needed to contain the continuous spread of the virus especially through development of research based and healthcare institutions.
1.1 Background to the Study
The history of outbreaks of pandemics and contagious diseases is as old as the existence of mankind. The novel Corona Virus, otherwise referred to as COVID-19, was first identified in 2019 in the Chinese city of Wuhan after which the pandemic spread like wildfire through continents, generating global health problems with consequent effects on governments, economies, education and lifestyles worldwide. The pandemic’s devastating consequences in terms of the constant statistical rise in the number of reported diseases and deaths forced the World Health Organization (2020) and worldwide political leaders to take stringent steps. Other efforts at mitigating the spread of the virus globally have been in the areas of collating data daily, developing effective vaccines and preventive measures to contain the spread or surge in infected cases. The strict procedures introduced to protect lives and curb the spread of the novel Corona virus portend a major shift in peoples‟ lifestyles globally in terms of social relations, economy, politics and education to mention but a few. In Nigeria, the threats of the pandemic were not taken serious early enough and so, the response was weak. While other countries were seriously battling the pandemic, Nigerians were still going about their normal daily sociopolitical and economic routines.
Nigeria recorded the first case of Covid-19 on the 27th February, 2020. As at 20th June, the total confirmed cases in Nigeria stood at 19,606 with 6,718 discharged and 506 deaths, representing about 35 percent recovery rate and 2.6 percent fatality rate, respectively. What is evident in the trend of the Covid-19 pandemic in Nigeria is that there has been an increase in community transmission. Since the gradual relax of the lockdown in the country, cases of Covid-19 pandemic have increased by about 60 percent and the corresponding deaths recorded have also increased by about 33 percent; implying that the country has entered a second wave of infection based on community transmission. The corona virus pandemic represents both public health and economic crisis. While the public health crisis addresses disease containment measures, treatment and development of vaccines; economic crises are reflected in supply and demand shocks as well as oil price shock, consequent upon disruptions in economic activities caused by global lockdown. The outbreak of the corona virus has thus disrupted the conduct of major macroeconomic policies across the globe
Like many resource-dependent developing countries, Nigeria has faced the brunt of the
fluctuations in the price of crude oil -which accounts for about 70 percent of her gross
domestic product (GDP) and 65 percent of total government revenue. The rise in government
spending driven by the need to combat the effect of Covid-19 had increased the country’s
fiscal deficit and her susceptibility to high public debt vulnerabilities. Furthermore, the
depressing global capital flows which put serious pressure on Nigeria’s foreign exchange
reserve and exchange rates (KPMG, 2020), has also affected the conduct of sundry monetary
policies in the country. This situation is expected to result into macroeconomic consequences on outcomes such as economic growth, inflation, unemployment and exchange rates.
The COVID-19 pandemic has had severe impacts on the macro economy and the livelihoods of households globally. The restrictions to movement alongside the associated uncertainty stimulated a sudden decline in the demand for commodities and disrupted production, leading to the underutilization of capital and labour. More specifically, as governments sought to curb the spread of the virus by implementing workplace and school closures, and encouraging social distancing practices, these policies led to a significant impact on all economies. A recent study on the impact of COVID-19 on gross domestic product (GDP) and trade finds that the pandemic caused a 2% decline in global GDP, a 2.5% decline in the GDP for developing countries, and a 1.8% for industrialised countries. (Maryla et al, 2020).
For Nigeria, which saw its first case in February 2020, the economic contraction was severe and sustained leading to a recession in the third quarter of 2020. The economic contraction is the result of the adoption of lockdown measures – which had an impact on nearly all sectors of the economy – along with the pandemic’s impact on partner economies engaged in international trade and those providing foreign investment. Meanwhile, the income of the majority of citizens has been affected, because a large share of informal workers has no recourse to unemployment insurance or paid leave of absence. (Adesanya, 2020).
Consequently, the Nigerian government has increased its spending plans – delivering an
additional $ 1.4 billion, estimated to be 0.3% of GDP, through cash transfers, tax rebates, loans
and loan guarantees, among other mediums – to counteract the effect of the pandemic on
domestic and business income and spending. Furthermore, the Central Bank of Nigeria (CBN)
has adopted a more accommodating monetary policy stance and injected liquidity into the
banking system to increase available credit to the private sector.A fiscal year has elapsed since the pandemic started and the policies were put in place, andmacroeconomic policy responses have begun to gain traction (World Bank, 2021). This research and policy insightexamines the impact of Covid-19 on the macroeconomic landscape and policy interventions in Nigeria in order to developlessons to guide economic policymakers in developing countries to create sustained economicrecovery.
1.2 Statement of the Problems
The Covid-19 pandemic has disturbed the World’s political, social, economic, religious, and financial structures. The COVID-19 was declared by the World Health Organization (WHO) on 30th January 2020 as a Public Health Emergency of International Concern (PHEIC). On 27th February 2020, the Federal Ministry of Health announced the confirmation of the first case of Coronavirus disease in Lagos State, Nigeria. To prevent the spread of the virus the federal government issued a directive on lockdown of all official and unofficial programme.
In what looks like a subtle criticism of the public media and academic writings for
focusing mainly on global macroeconomic impact of COVID-19, Ataguba (2020) argues that it “is only one part of the bigger picture of economic impact”. Citing Africa in particular, with its high disease burden, poorly developed infrastructure and safety nets and weak health systems, the impact of the pandemic is expected to be severe in the continent. Using the same argument, a country level impact analysis is not only desirable but inevitable to guide the policy authorities. The likely exacerbating impact of the pandemic on the Nigerian economy is inevitable for
several reasons. Firstly, the economy is yet to fully recover from the aftermath of the recession experienced in 2016. Secondly, the economy depends largely on crude oil whose price has plummeted in the international market. Thirdly, the foreign exchange reserves have been drawn down from US$45.1bn at the end of 2019 to US$35.3bn at the end of March 2020. Fourthly, the country’s debt burden has been mounting since 2015. Fifthly, inflation is still firmly in double digits and the naira is under pressure. Finally, the health system capacity is abysmal. These and other factors have led to the growing concerns and uncertainties that COVID-19 will bring on the Nigerian economy. According to OzIli (2020), “the economic downturn in Nigeria was triggered by a combination of declining oil price and spillovers from the COVID-19 outbreak”.
Sequel to the above, the plan of this study is to analyse the impact of the emergence
of COVID-19 on the macroeconomic fundamentals in Nigeria and make projections for economic growth.
1.3 Objective of the Study
The aim of this study is to analyse the impact of COVID-19 on macroeconomic in Nigeria. Specifically, the paper is set to achieve the following:
- Analyse the behaviour of macroeconomics aggregates since the emergence of COVID-19.
- To find out government intervention during Covid-19 period influence macroeconomic activities in Nigeria
- To find out influence of government measures to revive and maintain the macroeconomic activities in Nigeria?
1.4 Research Questions
- Does a COVID-19 period affect macroeconomic activities in Nigeria?
- Does government intervention during Covid-19 periods influence macroeconomic
activities in Nigeria?
- What is the influence of government measures to revive and maintain the macroeconomic activities in Nigeria?
1.5 Research Hypothesis
The research hypotheses to be tested include:
- Covid-19 pandemic has a significant impact on macroeconomics aggregate in Nigeria
- Covid-19 pandemic has a significant impact on macroeconomic hardships in Nigeria
- Covid 19 pandemic government intervention response has a significant impact Periods on Macroeconomic in Nigeria
1.5 Significance of the Study:
This study will provide an insight into the impact of Covid-19 on macroeconomics activities in Nigeria. Furthermore, the study will again be helpful for researchers, students, government official, policy makers and small business will benefit from the recommendation of the study. It will provides information on the impact of Covid-19 on macroeconomic in Nigeria and how it influence the macroeconomic development. The results of this study will be helpful to the policy makers by giving them useful information on various explanatory variables that may be targeted in the evaluation of policy changes and the provisions of new policies in order to enhance the desired level of macroeconomic growth.
1.6 Scope and Limitations of the Study
This research work is aim to investigate the impact of Covid-19 on macroeconomics in Nigeria. The study was limited to Kano State, Nigeria.
1.7 Operational Definition of Terms
- Covid-19: Coronaviruses are a large family of viruses that are known to cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS).
- Pandemic: A pandemic is defined as “an epidemic occurring worldwide, or over a very wide area, crossing international boundaries and usually affecting a large number of people”. The classical definition includes nothing about population immunity, virology or disease severity.
- Macroeconomics: Macroeconomics is a branch of economicsdealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and government spending to regulate an economy’s growth and stability.
- Impact: The force with which one thing hits another or with which two things hit each other
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Full Project – Impact of Covid-19 on macroeconomics in Nigeria