How the lock down hurt the economy but spared the virus

By Vincent Nwani

No doubt, the Covid19 pandemic has emerged as the single most dreaded threat to the socioeconomic fundamental of Nigeria since her independence. Five months after Nigeria recorded its first case, the Federal Government, media, and business community continue to grapple with the reality of rising cases of the infection across the country. The extent to which the total lockdown of the economy across the states for several weeks has impacted the reduction of infection rates is yet to be demonstrated. What is obvious, however, is the devastating economic consequence of Covid19 and the resulting lockdown in Nigeria and around the world. For instance, diverse international organizations and local analysts have predicted a GDP decline of between 5% and 6% in 2020. Over 0.5 million full-time jobs were lost between April and June 2020 and about 1.5 million more are at risk over the next few months.

As the number of infection continues to rise progressively from 14,000 in one month ago to near 40,000 as at 19th July 2020, medical experts, business leaders, politicians and pundits are wary of the possibility of another shutdown of state economies especially the ones currently experiencing the greatest growth in infections. Before taking this drastic action, one important question to be examined is; will the negative economic impact of shutdowns exceed the positive health outcomes from economic lockdowns?

It is noted that Nigeria is still neck-deep in the first wave of Covid19 infection and this phase is projected to linger until the end of September 2020. Again, due to testing drawbacks in Nigeria which currently stands at about 0.07% of the population, one of the lowest in Africa, it is difficult to ascertain how much the two months lockdown we had in the months of April and May arguably helped to slow down an exponential rate of infection. The latest data from Johns Hopkins University show that death to infection rate is slowing down from 3% in May to 2% in July 2020. Thus, while the death rate is currently rising at a declining rate, Covid19 infections are increasing at a fast rate in Nigeria. The lower death rate we are beginning to see is consistent with evidence from other countries which is largely due to two main factors. Primary, is the fact that older individuals with other health issues are now taking greater precautions in their daily living and next, an improved experience in the response and treatment of COVID-19 illnesses.

On the back-of-the-envelope calculations, we found strong evidence that the lockdown has significantly impacted on increasing unemployment rates, business failure and declining real economic activities. On the other hand, the model found no trace of the statistically significant positive impact of lockdown on COVID-19 infection rates or death rates. Also, there is every indication that the first wave of Covid19 in Nigeria will sustain throughout 2020 and early 2021. With lack of adequate testing and tracing competency, weak enforcement of the lockdown, sub-optimal palliative measures to the poorer population and a low number of hospital beds, it is suggested that Nigeria is only able to adopt a “managed herds model” of fighting the pandemic, pending when the treatment and vaccine are available and affordable. While the second wave of infections and the possibility of another total lockdown of the country is not envisaged, selected zone/clusters may be sheltered intermittently depending on prevailing infection realities in identified areas.

Due to the disproportionate gap between the fear of Covid19 death by the country’s elites and fear of hunger by the poor, the Nigerian authority will continue to moderate its policy measures to accommodate the two realities. Hence, crowd-pulling events and businesses such as merriments, sports, religious gatherings, large corporate forums, indoor rallies, clubs, on-campus school activities, cultural festivals, trade shows, exhibitions and the likes, will continue to take a hit over a foreseeable period in the country.

Dr. Vincent Nwani is the Lead Consultant at Kavind Ltd. Email: [email protected]