If the current lockdowns across most parts of the world persist for another two months, Nigeria risks losing about N2.23 trillion worth of trade from its top five import countries, leading to domestic scarcity, a report by Verakki Business Solutions has suggested.
According to the report, four of Nigeria’s top trading partners and import sources – China, USA, Spain, and the Netherlands which account for 45% of Nigeria’s imports, are currently implementing lockdown measures as a result of the Coronavirus pandemic.
Meanwhile, Nigeria’s access to raw materials, industrial components, and manufactured goods from these regions could become greatly hampered in the coming weeks. China, which used to be the epicenter of the pandemic, is still mostly under lockdown with limited economic activities.
If this persists, the country may be unable to meet up with the demand for raw materials and other commodities from countries like Nigeria. And the attendant bottlenecks would give a significant dent to manufacturing operations, consumer goods, and retail operations in Nigeria.
According to the report, the mentioned challenges, coupled with the issue of border closures, could also ultimately result in a spike in production costs across Africa.
“It would also take longer to restock raw materials, a situation that has been projected could cause panic buying, hoarding, and irregular price fluctuations. Companies would either be forced to cut production due to the lack of raw materials or offer their goods and services at high prices due to envisaged replacement costs.
In the meantime, Nigeria could be losing an estimated N2.27 trillion worth of exports due to closed borders.
Recall that the Coronavirus pandemic had come with its social, economic and financial challenges which will ultimately lead to a global economic recession, according to experts.
The International Monetary Fund (IMF) has predicted that the global economy is expected to go into recession this year, just as the World Bank Group disclosed that Sub-Saharan Africa is about to witness its first recession in 25 years.
In addition, Nigeria’s Minister for Finance, Budget and National Planning, Zainab Ahmed, recently stated in an interview that the country would go into recession if the Coronavirus pandemic persists for the next 6 months.
The pandemic has also partly caused a slump in global oil prices, shutdowns of businesses, huge drops in revenue and foreign exchange earnings, increased deficit spending, and so many other negative impacts.
A sharp drop in global economic activities drastically reduced the demand for oil, thereby causing crude oil prices to hit a multi-year low. This situation is negatively impacting on Nigeria’s 2020 National budget, as well as revenue allocation to the three tiers of government.