Covid-19: The Tradeoff (2)
Still about the Covid-19 pandemic, last week I published an opinion piece “the tradeoff between economics and public health”.
The relationship between healthcare and economy was explored. This was with a bid to understand the dicey nature of the decision political leaders are faced with at this time when we are battling the Covid’19 pandemic.
Around the world, the economic effects of the Corona virus pandemic have kicked in within the last dew months
I want to go deeper to explore the various ways the Nigerian economy will be impacted as well as some policy recommendations in between.
Beyond the economic jargon which I will try to explain as plainly as possible. My desire is to get you to understand the issues because of how important they are.
We can explore from these three perspectives;
Reduced Government Revenue
In a country like Nigeria where government is the biggest spender any event that reduces government revenue is surely going to have an impact on the economy.
In this case the crash of global oil prices due to the pandemic is a major issue. This is because the nation gets a huge percentage of revenue from oil exportation.
The spill over effect is that government is forced to only do the most important things which is usually payment of salaries and paying back debt. Sadly this leaves several infrastructure projects unattended.
This definitely affects cash flow in the economy and affects persons whose livelihoods are tied to such projects.
Businesses (Large, Medium and Small)
This slowing down of the economy goes on to affect businesses, from the large corporations to the one-man business in your neighborhood. When businesses have reduced inflow of cash their first move as seen in this case is to layoff some workers.
These workers have dependents who are affected by their loss of income. The income loss also hinders them from getting basic needs now affects the businesses they would have patronized, and so the cycle continues.
Travel, Tourism and Movement Of Goods
A huge part of the way the economy runs involves the movement of people and goods. Movement restrictions make it more difficult for movement of goods and people. That can lead to inflation (increase in price of goods).
In addition, businesses that rely on people moving away from their original locations suffer example airlines. If you have taken a road trip around Nigeria you will notice some women who sell food, snacks and other goods at various stops.
Imagine what happens when there is little inter-state travel. Naturally hotels and other fun spots will see low patronage. All this adds up to affect economic fortunes of everyday Nigerians.
Our Way Out
Government especially at the federal and state level will need to be very strategic in their response to the economic effects of the Covid-19 pandemic.
Government must eliminate all forms of waste so as to push resources to these critical parts of the economy. This is vital especially helping businesses stay afloat while still keeping up with vital infrastructure projects.
The end goal should be to minimize job losses in an economy that already had a worrying unemployment statistic before the pandemic.
Any loans accessed now needs to be used in the sectors that have the most significant impact on economic recovery.
Time will tell if the current government can rise to the occasion at this time. Have a splendid week