COVID-19: Nigeria, others to lose $65bn revenue oil money

TRACKING____Nigeria and other oil-producing countries in Africa will lose up to $65 billion in revenues because of the impact of Coronavirus on crude oil sales.

The Economic Commission for Africa (ECA) released this figure on the ravaging Coronavirus pandemic in Africa.

For Nigeria in particular, the ECA said COVID-19, could reduce Nigeria’s total exports of crude oil in 2020 by between US$14 billion and US$19 billion.

The ECA also warned that the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth.

ECA Executive Secretary, Vera Songwe, noted that having already strongly hit Africa’s major trading partner, China, COVID-19 would inevitably impacting Africa’s trade.

According to her, “although a few COVID-19 cases have been reported in some African countries so far, the crisis is set to deal African economies a severe blow.”

Songwe stated that “Africa may lose half of its GDP with growth falling from 3.2% to about 2 % due to a number of reasons which include the disruption of global supply chains.”

Ms, Songwe, lamented that “the Continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects.”

She said the continent would need up to US$10.6 billion in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand revenue losses could lead to unsustainable debt.

Other knocks the continent will suffer as a result of the COVID-19 scourge is that Africa’s export revenues from fuels will fall at around US$101 billion in 2020.

Also, “remittances and tourism will be affected as the virus continues to spread worldwide, resulting in a decline in Foreign Direct Investment (FDI) flows; capital flight; domestic financial market tightening; and a slow-down in investments – hence job losses” the ECA said.

Pharmaceuticals, imported largely from Europe and other COVID-19 affected partners from outside the continent, could see their prices increasing and availability reduced for Africans.

In this regard, the Central Bank of Nigeria (CBN) has initiated some interventions to make money available for pharmaceuticals companies.

With nearly two-thirds of African countries being net importers of basic food, shortages are feared to severely impact food availability and food security.

“Furthermore, negative consequences are expected to worsen, if COVID-19 develops into a major outbreak in Africa” the ECA warned.

In addition, a decline in commodity prices could lead to fiscal pressures for Africa’s economic powerhouses such as South Africa, Nigeria, Algeria, Egypt and Angola.

Stephen Karingi, Director of the ECA’s Regional Integration and Trade Division, said “there, however, is an opportunity the Continent could take advantage of as trading within the African Continental Free Trade Area (AfCFTA) is set to commence this July.”

According to him, “the intra-African market could help mitigate some of the negative effects of COVID-19 through limiting dependence on external partners, especially in pharmaceuticals and basic food.”

He said added that diversifying economies away from being fuel-driven was vital beyond COVID-19.

He emphasized the need for the continent to urgently implement the AfCFTA as he urged African countries who export drugs to prioritize selling on the African market.

The ECA, in a presentation on the economic effects of the COVID-19 on Africa, urged African governments to review and revise their budgets to reprioritize spending towards mitigating expected negative impacts from COVID-19 on their economies.

As a safety net, the think tank is urging governments to provide incentives for food importers to quickly forward purchases to ensure sufficient food reserves in key basic foods items.

Mr. Karingi said fiscal stimulus packages are also crucial if the continent is to weather the COVID-19 storm which has now claimed over 17,000 lives globally and infected 392,300+ people.