- Fitch: Pandemic ‘II Push Economy Into Recession With GDP Contracting By 1%
By Hamilton Nwosa (Head, The New Diplomat Business and data tracking desk)
Following President Muhammadu Buhari’s yesterday’s extension of the lock-down order in Lagos, Ogun and the Federal Capital Territory (FCT) over the COVID-19 pandemic for another two weeks, economic analysts have projected that the two States and the Federal Capital Territory (FCT) would be losing a whopping N46.6bn collectively.
Economists who examined the projected financial impact on the two States and the FCT respectively say this would have huge financial and economic implications for Nigeria especially at a time when Fitch recently downgraded Nigeria from B+ to’B” with a negative outlook.
Recall that Fitch in its analysis of Nigeria had established that the lock-down of Lagos, FCT and Ogun would have dire economic consequences on Nigeria “ with disruptions to economic activity from measures taken to contain the spread of coronavirus as regions accounting for nearly half of the national economy were put under a two-week lock-down in March.”
The New Diplomat’s economic intelligence desk using data from the National Bureau of Statistics (NBS) as well as those sourced from the affected State governments and the FCT projects that Lagos State government whose monthly average Internally Generated Revenue(IGR )is N34bn would be lossing about N34bn in four weeks of economic inactivity. This is followed by Ogun State that is estimated to likely loss about N7bn for its lock-down.
This is premised on the fact that Ogun State’s monthly average Internally Generated Revenue (IGR) is put at N7 billion while FCT would be experiencing a revenue loss of about N5.6bn in four weeks. According to data obtained from the NBS, the yearly IGR of FCT stands at N65.51bn. Similarly, according to the data obtained from Lagos State government, the State generates roughly N34bn monthly in IGR while Ogun State government puts its IGR estimates at N7bn monthly.
Experts projects that should the COVID-19 continues, Nigeria would be witnessing severe economic challenges. This is because the above projected financial losses are limited to the revenue estimates of the affected States and the FCT as they don’t’ include projected financial losses that would arise from private sector inactivity in four weeks. These include effects of shut down on financial institutions especially banks, various private sector commercial organizations ,and even inability to secure requisite Oil and gas related approvals that might impact on Oil production in the Niger Delta.
This is expected to also have spiral effects in Abuja and Lagos because the corporate headquarters of multi-national oil companies are in Lagos while some institutional approvals that must be obtained are domiciled in Abuja .
Recall that President Buhari had yesterday extended the initial shutdown of Lagos, FCT and Ogun State for another two weeks, bringing it to a total of four weeks.Recall also that Fitch had in its analysis further ascertained: “We expect the pandemic shock to push the Nigerian economy into recession with GDP contracting by 1% in 2020. Non-oil GDP will fall, weighed down by spillovers from the oil sector, tighter FC supply and disruptions to economic activity from measures taken to contain the spread of the coronavirus as regions accounting for nearly half of the national economy were put under a two-week lock-down in March…”
