Nigeria awaits tsunami of jobless as coronavirus hits businesses
With economic activities in the country almost grinding to a halt due to the coronavirus pandemic, Nigeria could see a host of its population becoming jobless, worsening it already heightened unemployment figure.
The odds of Africa’s biggest economy slipping into a recession are increasingly becoming likely as companies suffer declining revenue due to the deadly global coronavirus outbreak which the Nigerian Centre for Disease Control (NCDC) said has so far infected 46 persons in the country with one death recorded.
In order to control the increasing number of cases of the outbreak, companies operating in the country have enacted a partial closure of some of their operations, forcing staff to work from home.
Non-food markets in Lagos and Abuja will come under lock and key today as both the federal and state governments sweep into action to keep the virus at bay.
Analysts say the move, though commendable to contain the outbreak, could put more stress on sales activities of companies, already struggling with tumbling revenue.
That could also be bad news for Nigerian workers, who may lose their jobs as firms take on all means in cutting down cost in order not to worsen the hit already felt from the slowdown of economic activities.
And for those workers who do not receive severance pay, the financial impact could be highly devastating, except otherwise a fiscal stimulus by the government to cushion the effect, according to analysts who spoke to Businessday.
“While we expect fiscal and monetary authorities to provide some stimulus and aid package to affected businesses, we still expect the impact of the COVID-19 pandemic to be severe,” said Ayorinde Akinloye, equity research analyst at CSL Stockbrokers.
“Unemployment would definitely see a significant climb particularly in vulnerable industries like airlines, leisure and industries with discretionary products because revenue will suffer significantly,” Akinloye said.
He explained that while similar developments have been seen in advanced economies like Canada reporting jobless claims of over 2 million people and the Fed expecting unemployment to reach 30 percent, Nigeria might be worse, reaching 40-50 percent levels.
Already as of 2018, some 20.9 million people were reported to be unemployed. That’s almost the entire population of the country’s West African neighbour, Ghana. Analysts tip the rate to have almost doubled to 40 percent from its previous 23 percent levels.
Data released by the International Air Transport Association, the umbrella body for 290 airlines globally, show that no fewer than 22,ooo people would be laid off from the aviation sector alone, as disruptions to air travel are forecast to shave off N160.58 billion from the industry as a result of a loss of approximately a million passengers, a move that would further pressure the country’s already ballooning jobless figure.
But the economic effect from the coronavirus pandemic is not just peculiar to Nigeria, as the entire globe is reeling from the outbreak which has infected over 170,000 people worldwide and has so far killed more than 6,500.
Both industrial activities as well as financial markets have cratered, as schools and cultural institutions have closed, sports leagues have suspended, flights have been restricted, while sates have banned large gatherings, prompting the International Monetary Fund ( IMF) to forecast a contraction of global growth.
To cushion the effect of a downturn which might spark massive lay-off of workers, major countries have announced fiscal stimulus for employees of labour. For instance, aside from cutting down the tax of companies, the United State has passed a third legislative package aimed at increasing the unemployment benefits for all of workers to $600 perweek across the board from $385 per week to enable its citizens sort through the period.
But that might not be the case for Africa’s biggest nation, which is suffering from both the health implication of the coronavirus pandemic and the fall in oil prices which has further cast a spell on its finances, said Oluwapelumi Joseph, head of investors relations at Lagos-based advisory firm, Africapractice.
“While we might not have been able to ascertain what Nigeria’s unemployment number would look like due to the virus, given that the last time we saw an official number was Q3 2018, drawing from the numbers from advanced countries like America, it is safe to assume that we would see the same or even more in Nigeria. As businesses suffer, it would have a direct impact on the unemployment figure,” Joseph said.
He explained that even the fiscal bill introduced by the House of Reps, which calls for various measures including a 50 percent tax credit to companies that have paid their PAYE, might not be able to cushion the huge effect on the workforce.
“In other countries, we have seen a ‘ helicopter money approach’ given to citizens directly; Nigeria does not have the central repository of identity management to make that possible and this becomes a challenge since the marginal utility of money is constant, hence, those who already have will want to receive more,” Joseph added.