The year 2020 was no doubt a remarkable one in Nigeria’s economic landscape, with the rampaging coronavirus playing a vital role. In this report, Francis Ogwo takes an inventory of the major economic stories that made headlines throughout the year.
Nigeria confirmed its first COVID-19 case in late February and lockdowns were imposed from late March until early May in the main economic cities of Lagos and the capital, Abuja.
There were also lockdowns imposed in some other states while a ban was placed on interstate travel.
Reports revealed that the performance of the economy in Q3 2020 reflected the residual effects of the movement restrictions and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic.
Meanwhile, let’s go on a journey on some of the major happenings of 2020 in the business sector of Nigeria.
Border closures boosted local production
Firstly, the country began the year with the closure of Nigeria’s borders with neighbouring West African countries. This move, according to the Federal Government, was to forestall cross-border smuggling of arms and commodities which were banned. They include rice, poultry products among other goods. This was a blessing in disguise for small scale industrialists as they cashed in on the opportunity to grow their domestic businesses.
Several campaigns from agencies helped in creating awareness on valuing local products against the imported ones. Farmers also smiled to the banks with rice farmers churning out series of branded local rice. This was the case with poultry farmers who made brisk sales from eggs and poultry.
COVID-19 broke out, aviation, tourism sectors hit hard
While the dust on the border closure was yet to settle, the COVID-19 pandemic broke out in China leading to global containment measures to forestall the spread which had moved from China to other parts of the world. The aviation sector was the first gateway to get the hard share of the policy. The Federal Government shut down the airports from international flights from Europe and other parts of the world.
This had its toll on tourism and travels as hotels and allied businesses as they went under lock and key. Global destinations went deserted as tourists were shut away as containment measures.
Airlines embarked on mass sacking of workers to stay afloat. Revenues from airlines depleted gradually with the airlines making outcries for Government’s support.
Global oil prices slump heavily
Nigeria’s economy suffered also from drop in global oil prices, as crude reserves were difficult to be sold.
As the Covid-19 pandemic and oil price crash squeezed its hydrocarbon industry, Nigeria’s crude oil production shrunk by 3.6% in the third quarter of 2020, after declining 6.1% in the second quarter.
In September, oil prices dropped by 18 cents at 39.88 per barrel. The plunge in oil prices were influenced by a number of factors including several years of upward surprises in the production of unconventional oil; weakening global demand; a significant shift in OPEC policy; unwinding of some geopolitical risks; and an appreciation of the U.S. dollar.
Artificial Intelligence creeped into businesses
Another milestone in Nigeria’s business space in 2020 was the growth of Artificial Intelligence (AI) in delivery of services. For example, banks adopted this innovation, which helped them save costs from salaries as they laid of personnel and replaced their services with AI.
Note that Artificial intelligence is the creation of intelligent machines that work and react like humans. These machines can perform human actions.
Bank transactions were no longer difficult as imaginary customer care attendants created by software developers replaced the services of customer care attendants in banks.
This was a boost to online business growth which had also gained wide appeal as individuals and brands worked from home due to the pandemic scare.
The year 2020 also saw the growth of dispatch riders which helped business owners make timely deliveries, saving them from further depletion of revenues from the lockdown and economic implications.
Recall that transport fares were hiked in the wake of the lockdown imposition making it difficult to move goods and services.
Nigeria slips into recession
As a cumulative impact of the harsh economic effects of the COVID-19 pandemic on the economy, Nigeria slipped into recession.
This was after its gross domestic product contracted for the second consecutive quarter.
Nigeria which is ranked Africa’s biggest economy went into recession for the first time since 2016.
According to reports, the recession four years ago was its first in a generation, and the country emerged from it the following year. However, growth went fragile with COVID-19 hitting the economy hard amid low oil prices.
The continent’s top oil producer and exporter has always relied on crude sales for 90 percent of foreign exchange earnings.
Nigeria normally accounts for an average output of two million barrels per day. But the effects of the pandemic and low oil prices have cut production to approximately 1.4 million barrels.
The oil sector contracted by 13.89 percent in the third quarter against growth of 6.49 percent in the same period a year earlier while non-oil sectors shrank by 2.51 percent in the three months to September.
#EndSARS protests further cripple economy
The economy of Nigeria was further thrown into the red zone with the nationwide protests tagged #EndSARS.
The protest according to organisers was in revolt against police brutality.
Along the line, several businesses were torched by protesters. Several shops, buildings and other valuables suspected to be owned by public officials were not spared. The valuables lost were in billions across the country.
In the process also, two television stations in Lagos were burned and destroyed, video footage showed the remains of a raided mall in Lekki. BBC reports that the high court in Lagos island was set ablaze.
Curfews were imposed in Lagos State and across other parts of the country, including Delta state where protests began in early October. Lagos State Governor Babajide Sanwo-Olu had said the Nigerian military has offered to deploy forces if needed to protect businesses and government sites amid the unrest.
Borders reopened amidst fanfare as restrictions remain on importations
As the year drew to a close, Nigerians were thrown into excitement on the news of the reopening of the borders.
Nigeria had closed its border against its neighbours almost immediately after it signed the African Continental Free Trade Area agreement (AfCTA).
President Muhammadu Buhari ordered the closures of Nigeria’s borders to prevent smuggling of rice and other products, in attempts to ensure food self-sufficiency back in August 2019.
Since then, food prices have soared, reaching an all time high of 18.3%, while inflation in the country of the more than 200 million people rose to a three-year high of 14.9%
Many are of the view that the year 2020 would remain a historic year for Nigerians and the world at large.