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COVID-19 pandemic and economic crisis: the Nigerian experience and structural causes

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  • Peterson K. Ozili

Abstract

Purpose - This paper analyses the COVID-19 situation in Nigeria, its effect on the economy and the structural causes that worsened the coronavirus (COVID-19) crisis. Design/methodology/approach - This paper uses simple descriptive analysis to examine the COVID-19 situation in Nigeria. Findings - The findings reveal that the economic downturn in Nigeria was triggered by a combination of declining oil price and spillovers from the COVID-19 outbreak, which not only led to a fall in the demand for oil products but also stopped economic activities from taking place when social distancing policies were enforced. The government responded to the crisis by providing financial assistance to businesses and a small number of households that were affected by the coronavirus (COVID-19) outbreak. The monetary authority adopted accommodative monetary policies and offered a targeted 3.5 trillion loan support to some sectors. These efforts should have prevented the economic crisis from occurring but it did not. Economic agents could not freely engage in economic activities for fear of contracting the COVID-19 disease that was spreading very fast at the time. Practical implications - The implication of the study is that policymakers should pay attention to three areas of the economy for economic and structural reform. One, policymakers should introduce economic reforms to diversify the economy and reduce Nigeria's dependence on revenue from crude oil export. Two, policymakers in Nigeria should invest in healthcare infrastructure to improve the ability of the national health system to withstand the outbreak of contagious diseases. Three, there is also a need to build appropriate digital infrastructure to facilitate the transition from “face-to-face” business activities to a “digital or online” business activities, which can help to grow the digital economy. Also, policymakers should use legislation to create a robust social welfare safety net for all citizens particularly for unemployed citizens and poor households. Originality/value - This is the first paper that looks at the economic implication of COVID-19 in a West African country.

Suggested Citation

  • Peterson K. Ozili, 2020. "COVID-19 pandemic and economic crisis: the Nigerian experience and structural causes," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 37(4), pages 401-418, October.
    • Handle: RePEc:eme:jeaspp:jeas-05-2020-0074
    DOI: 10.1108/JEAS-05-2020-0074
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    More about this item

    Keywords

    Nigeria; COVID-19; Coronavirus; SARS-CoV-2; Outbreak; Pandemic; Financial crisis; Global recession; Public health; Spillovers; Monetary policy; Fiscal policy; Liquidity provision; Central banks; Economy; G21; G28; I11; I18;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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