The Economic Implication of the Coronavirus Epidemic on Nigeria Economy
CHAPTER ONE
Objectives of the study
The main aim of the research work is to determine the economic implication of the coronavirus epidemic on Nigeria economy. The specific objectives of the study are:
- to determine the relationship between corona virus disease (COVID-19) and the Nigeria economy
- to determine the causes of corona virus disease (COVID-19)
- to determine the mode of transmission of the corona virus disease (COVID-19)
- to determine the effect of corona virus disease (COVID-19) import and export rates in Nigeria
- to determine effect of corona virus disease (COVID-19) on the education sector in Nigeria
- to determine the effect of corona virus disease (COVID-19) on the health and well being of the Nigeria citizens
- to recommends preventive measure to be adopted by the Nigeria government in fight against the corona virus disease (COVID-19)
CHAPTER TWO
LITERATURE REVIEW
Conceptual review
Overview of Coronavirus
Coronavirus disease 2019 (abbreviated “COVID-19”) is an emerging respiratory disease that is caused by a novel coronavirus and was first detected in December 2019 in Wuhan, China. The disease is highly infectious, and its main clinical symptoms include fever, dry cough, fatigue, myalgia, and dyspnea. In China, 18.5% of the patients with COVID-19 develop to the severe stage, which is characterized by acute respiratory distress syndrome, septic shock, difficult-to-tackle metabolic acidosis, and bleeding and coagulation dysfunction (Utibe, 2019).
The first infected patient who had clinical manifestations such as fever, cough, and dyspnea was reported on 12 December 2019 in Wuhan, China. Since then, 2019-nCoV has spread rapidly to other countries via different ways such as airline traveling and now, COVID-19 is the world’s pandemic problem (Felix, 2020).
Coronaviruses (CoV) infections are emerging respiratory viruses and known to cause illness ranging from the common cold to severe acute respiratory syndrome (SARS) (Yin et al., 2019). CoV is zoonotic pathogens that can be transmitted via animal-to-human and human-to-human. Multiple epidemic outbreaks occurred during 2002 (SARS) with ~800 deaths and 2012 (Middle East Respiratory Syndrome: MERS-CoV) with 860 deaths (Lee, 2020). Approximately eight years after the MERS-CoV epidemic, the current outbreak of novel coronavirus (COVID-19) in Wuhan City, Hubei Province of China, has emerged as a global outbreak and significant public health issue. On 30 January 2020, the World Health Organization (WHO) declared COVID-19 as a public health emergency of international concern (PHEIC). Astonishingly, in the first week of March, a devastating number of new cases have been reported globally, emerging as a pandemic. As of 9 March 2020, more than 110,000 confirmed cases across 105 countries and more than 3800 deaths have been reported (Philemon et al., 2020).
The COVID-19 is spread by human-to-human through droplets, feco-oral, and direct contact, with an incubation period of 2-14 days. So far, no antiviral treatment or vaccine has been recommended explicitly for COVID-19. Therefore, applying the preventive measure to control COVID-19 infection is the utmost critical intervention. Healthcare workers (HCWs) are the primary section in contact with patients and are an important source of exposure to the infected cases in the healthcare settings, thus, expected to be at a high risk of infections. By the end of January, the WHO and CDC (Centers for Disease Control and Prevention) have published recommendations for the prevention and control of COVID-19 for HCWs. Indeed, the WHO also initiated several online training sessions and materials on COVID-19 in various languages to strengthen the preventive strategies, including raising awareness, and training HCWs preparedness activities (Wan, 2019). In several instances, misunderstandings of HCWs delayed controlling efforts to provide necessary treatment, implicate rapid spread of infection in hospitals, and also may put the patients’ lives at risk. In this regard, the COVID-19 epidemic offers a unique opportunity to investigate the level of knowledge, and perceptions of HCWs during this global health crisis. Besides, we also explored the role of different information sources in shaping HCWs knowledge and perceptions on COVID-19 during this peak period.
It seems that the current widespread outbreak has been partly associated with a delay in diagnosis and poor infection control procedures. As transmission within hospitals and protection of healthcare workers are important steps in the epidemic, the understanding or having enough information regarding sources, clinical manifestations, transmission routes, and prevention ways among healthcare workers can play roles for this gal assessment.
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
The aggregate demand and aggregate supply (AD-AS) model, consistent with Blanchard and Quah (1989) and Cover et al. (2006); provides the theoretical motivation for the empirical analysis of the macroeconomic effect of Covid-19 in Nigeria. The AD-AS model presents the framework that explains economic fluctuations based on the interaction of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS). Undoubtedly, the Covid-19 pandemic has caused both supply and demand shocks among others. In a bivariate framework, aggregate demand and supply shocks cause significant fluctuations in economic activities. While the AD shock is assumed to have no long-run effect on output, a supply shock causes changes in basic macroeconomic variables; such as output and prices, in line with changes in SRAS and LRAS, respectively.
CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION
Analyzing the Macroeconomic Impact of Covid-19 in Nigeria
Trend Analysis
We first present the trend analysis of the impact of the Covid-19 pandemic on macroeconomic variables in Nigeria. Starting with trend analysis of crude oil prices presented in Figure 4.3.1, the corona virus, though public heath crises, has significant implications for the global economy due to its plausibility to generate various oil price shocks. Nigeria, as a resource-dependent nation, was therefore hit by different shocks at the global marketplace. The first effect of the pandemic on the Nigerian economy was its vulnerability due to oil price shock. The fall in the prices of crude oil at the international market had serious implications for Nigeria’s fiscal fragility.
Nigeria lacks the structural capacity to handle the epidemic given an unfavourable public debt-to-GDP ratio since her debt is subject to exchange rate volatility. With a shallow tax base and less efficient tax administration, a countercyclical fiscal policy is hard to implement. With this scenario, the government is unable to meet its fiscal responsibility and hence, the decision to cut the 2020 budget appropriation, which affected critical sectors of the economy such as health and education. Government also issued a Sukuk bond from the capital market in order to augment government expenditure on the critical project. However, it is not clear whether such domestic debt would yield appropriate benefits for the economy amidst structural deficiencies, weak institutions and fiscal fragility.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATONS
Conclusion
This study examined the economic implication of the coronavirus epidemic on Nigeria economy. The outbreak of the Covid-19 pandemic is entering the second wave as most nations of the world have begun the gradual relaxation of the lockdown measures earlier imposed. This has however, increased the number of confirmed cases of the pandemic as well as fatality rates due to increased community transmissions. The proclivity of the Covid-19 pandemic to generate shocks, which cause economic fluctuations, calls for an understanding of the behaviour of macroeconomic variables; as we await to defeat the virus with the development of vaccines and the embrace of the new normal in the social arena.
This study has examined the macroeconomic impacts of the Covid-19 pandemic in Nigeria. In estimating the effect of Covid-19 related shocks, the aggregate demand and aggregate supply model has provided the theoretical anchor with which to explain the performance of macroeconomic variables, as induced by exogenous factors. After an exploratory or trend analysis, dynamic ordinary last squares (DOLS) have been used to assess whether the established correlations can be translated to causality. This methodology is basically motivated by its desirable characteristics which increase the chances of generating reliable estimates.
Findings from the trend analysis have shown that the Covid-19 pandemic has insignificantly caused a decline in basic macroeconomic variables in Nigeria. This was consequent upon the sundry measures taken to contain the spread of the virus. The number of infected cases have therefore had significant correlations with economic activity from the perspective of a trend analysis. However, the estimates of the DOLS show that nexuses between the number of confirmed cases and attendant macroeconomic outcomes are largely insignificant with the expected signs. Moreover, the insignificant positive sign for exchange rate is plausible because the devaluation of the naira was a deliberate policy action which was not motivated by market forces. The findings of this study are consistent with the literature as the Bretton Wood institutions have projected that the GDP growth in Nigeria would fall by as high as 5.4% in the year 2020 which would most likely cause economic recession in the country during the same year (IMF, 2020; World Bank, 2020). Ultimately, the differences in significance between findings of the trend analysis and corresponding DOLS estimates imply, time is required before the established correlations withstand empirical scrutiny in terms of causality.
Recommendations
The study recommends a deliberate policy action that would stabilize the fluctuations in the economy and enhance the performance of basic macroeconomic variables. This would involve taking account of the country-specific characteristics to facilitate the process. As the country launches her Economic Sustainable Plan (ESP, 2020), it is hoped that the policy would accelerate Nigeria’s economic recovery, restore and insulate critical sectors of the economy from the effects of the Covid-19 pandemic.
Suggestion for future research
The findings of this study obviously leave space for further research especially as it pertains to engaging more updated data to assess if the established correlations can be translated to causality for better informed policy decisions. Moreover, departing from the macroeconomic realm and examining microeconomic consequences of the Covid-19 pandemic would improve scholarship on the understanding of domestic economic development externalities of the global pandemic.
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