COVID-19 PANDEMIC AND ITS EFFECT ON NIGERIA.

Precedented Times

     

     The problems caused by this current pandemic present in Nigeria is not something 'new' the problem has always been there, just that the pandemic magnified it and it could no longer be managed. Because we cannot tackle every possible effect, we are going to try and look at some effect especially when it comes to loans, because the rate at which the country is amassing piles of debt burdens on itself is alarming and then the sharp decline in demand for desired goods and services for the citizens but not the government.

 

Introduction

 

a.)     The world was taken by surprise when it was publicly announced by WHO that the obvious dangerous fast spreading virus is a pandemic. You see, if the covid-19 was treated as a fast spreading deadly disease, it might not have taken that much toll on the world but the fact that the word 'pandemic' was introduced made it more deadly. The last and the previous pandemics the world has witnessed was not favorable to the nations of the world involved so that we have to deal with another pandemic is problematic. Covid-19, a respiratory disease kind of corona-virus that was first detected in Wuhan, China. Nigeria detecting her first case on the 27^th of Feb, 2020 has gained global recognition out performing the likes of cancer, a disease making cancer look like a trivial disease isn't something to be overlooked, the world has been hit with supposedly more deadly pandemics like the black death that claimed lives in millions. But nations of the world together has never been stunned by a disease as much as covid-19, one of the reasons being that after the series of pandemics, you'd think governments around the world must have learnt their lessons. Covid-19 came in during the time of our supposed technological advancements and you'd think that the human specie is in control. Covid-19 made the so called scientists reach their end, nations were clamoring for help, no one has seen such.

 

b.)     Often times problems do come along with such pandemic. Because of its rarity, governments tend to only set up health structures handling the day to day diseases so when a pandemic such as covid-19 hit the world scene, the number of countries that was prepared for it was zero, including the ones you think were prepared. Even if you don’t agree with that, at least you’d agree with me that Nigeria definitely was not prepared. In fact Nigeria was not even prepared for the day to day diseases giving the fact that our politicians plus Nigerian citizens spend almost $1.5b yearly on medical tourism oversees, that is a solid proof that our health sector is unhealthy.

 

c.)     Prior to this present time, you don't need an economist to tell you that due to past events in our country, notably when the oil sector took a quick downturn in 2014, that Nigeria has been in a state of coma and if nothing was done swiftly, it'd have to be sustained on life support. But dear covid-19 came and accelerated that process and currently it's seeming as though the life support isn't working. Individuals have donated to the nation, co-operations too, with the indications that the citizens will get a certain amount of money which I don’t think is happening soon. All these and the country still went on a borrowing spree, the two most obvious happened on Feb 18th, 2020 the World bank approves our $2.2b loan and just 70 days later another alert, IMF board approves a $3.4b emergency loan to address the pandemic and none of the proposed sector is being handled properly, even the reoccurring messages NCDC sends isn’t completely being funded by the government so where exactly are these billions of dollars. These heavy debt burdens has a way of milking the country of its resources and though to some extent these loans could be justified because the pandemic just like in most countries amplified our already existing vulnerabilities which drove us into a historic depletion in our GDP growth which the government doesn’t like. Fine, as a government what do you do, if you don’t have money you borrow but the problem now is where all the borrowed money is because unless these politicians are handling a project in mars, we are yet to see where the money is being invested in since we cannot even fund our own SMS packages completely (if you happen to know, do tell thank you) 

P:S “This loan cannot be further allocated to any state government because it is a federal loan, hence all expenditure will remain at the federal level.” Meaning that if your state by any means wants any form of aid and the FG cannot help, your state would need to meet maybe world bank or other bodies, hence increasing the debt burden on the country. Who pays back these loans, and how does the repayment system get funded?

 

The Side Effect Of The Side Effect Of A Crisis - Covid-19 Pandemic.

 

     Obviously there are many side effects like policies that were introduced during a crisis not being abolished after the crisis, there is the fear of recession and all that but we are going to consider one; reduction in purchasing power. Normally a nation such as Nigeria can decide to rig its own citizens off purchasing power by printing new cash without providing or having a productivity chain that can contain those cash. But the government can’t just do that, I mean they can but they will start getting unnecessary  questions and probes from almost anybody that knows the implication of what happened and they don’t want that so they wait for an opportunity like a crisis and they labor intensely not to miss it whenever it comes. I am not sure they all know the implications of their actions, and to be fair on their side, it could be deemed as necessary when a government who doesn't produce much hence has little falls into a crisis and decides to use tons of loans to offset it and when that doesn’t work, it can start introducing a stimulus plan which is a fancy way of telling its citizens that ‘we are in dire moments and the economy is tumbling, so what we will do is to print all this cash to temporarily offset this crisis and leave you to deal with inflation later, thank you.’ This is what happens, right under the umbrella of a crisis like the current pandemic the purchasing power of those most affected by the crisis falls, why? You would ask because we all seem to be spending less, so how is it that our money is reducing even when we are not touching it. Well one of the reason is that the government is spending more during the pandemic that has forced its citizens to spend less and save more, and since it can afford to run a budget deficit (spending more than it makes) they would do it without blinking. Currently many measures has been taken by the same government to cushion the pandemic as to not have need to print more such as exempting small businesses from taxes and having medium scale businesses see their own tax rate fall from 30%-20% and also under the national housing fund allowing individuals holding residential mortgages to pay after 6 months starting from March 1^st. All these were not enough per say because aggregate demand fell while government expenditure rose.

 

Conclusion.

 

     While all the problems listed above doesn’t entail the whole effect or handle some issues sufficiently, it doesn’t hurt to be aware of some present issues, prepare for the future through investments and acquisition of rare knowledge. A law maker doesn’t scrap out a law that favors the law maker, they can decide to amend it but not to abolish it. Savings hurt in the long run primarily because of the way the system was designed, it was designed not to welcome any form of frugality meaning you cannot save yourself into prosperity, appropriately invest both for yourself and the ones coming after you to avoid the almost unavoidable calamities that is lurking around.

 

 I decided to keep it short and have you take a glimpse into this issue. What are your opinions and solutions?