COVID-19: Nigeria, others to lose $65b revenue

Nigeria and other oil producing countries in Africa will lose up to $65 billion in revenue because of the impact of Coronavirus on crude oil sales, the Economic Commission for Africa (ECA) said Tuesday.

For Nigeria in particular, the ECA said COVID-19, could reduce its total exports of crude oil in the year by between $14 billion and $19 billion.

The ECA also warned that the coronavirus crisis could  dent the continent’s already stagnant growth.

Its Executive Secretary, Vera Songwe, noted that having hit Africa’s major trading partner, China, COVID-19 would inevitably impact Africa’s trade.

According to her, “although a few COVID-19 cases have been reported in some African countries so far, the crisis is set to deal African economies a severe blow.”

Songwe stated: “Africa may lose half of its GDP with growth falling from 3.2per cent to about two per cent due to a number of reasons which include the disruption of global supply chains.”

Ms Songwe lamented that “thecontinent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects.”

She said the continent would need up to $10.6 billion in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand revenue losses could lead to unsustainable debt.

Other knocks the continent will suffer as a result of the COVID-19 scourge are that Africa’s export revenue from fuels would fall at around $101 billion.

Also, “remittances and tourism will be affected as the virus continues to spread worldwide, resulting in a decline in Foreign Direct Investment (FDI) flows; capital flight; domestic financial market tightening; and a slow-down in investments – hence job losses,” the ECA said.

Pharmaceuticals imported  from Europe and other COVID-19 affected partners from outside the continent, could see their prices increasing and availability reduced for Africans.

In this regard, the Central Bank of Nigeria (CBN) has initiated some interventions to make money available for pharmaceuticals firms.

With nearly two-thirds of African countries being net importers of basic food, shortages are feared to severely impact food availability and food security.

He added that diversifying economies away from being fuel-driven was vital beyond COVID-19.

He emphasised the need for the continent to urgently implement the AfCFTA as he urged African countries who export drugs to prioritise selling on the African market.

The ECA, in a presentation on the economic effects of the COVID-19 on Africa, urged African governments to review and revise their budgets to reprioritize spending towards mitigating expected negative impacts from COVID-19 on their economies.

As a safety net, the think tank is urging governments to provide incentives for food importers to quickly forward purchases to ensure sufficient food reserves in key basic foods items.

Mr. Karingi said fiscal stimulus packages are also crucial if the continent is to weather the COVID-19 storm which has now claimed over 17,000 lives globally and infected 392,300+ people.