The Regional Head of Equity Research, West Africa at Stanbic IBTC Bank Plc, Muyiwa Oni, in this interview speaks on the impact of the pandemic on the Nigerian economy and businesses. Dike Onwuamaeze provides the excerpts:
We have witnessed an unusual disruption as presented by COVID-19. What are the significant challenges posed by the pandemic on the Nigerian economy?
The impact of the pandemic on the Nigerian economy has been negative with the economy declining by 6.1 per cent year-on-year in the second quarter of 2020, as lockdown measures taken to stem the spread depressed economic activity across the country. To provide some context, the oil sector contracted by 6.6 per cent year-on-year and 10.1 per cent quarter-on-quarter, which is the largest contraction since the attack on the country’s Trans-forcados pipeline in 2016. With the exception of agriculture, other key non-oil sectors slumped into near record contractions during the second quarter, as the Covid-19 containment measures significantly disrupted economic activity. The manufacturing, trade and construction sectors contracted by 8.8 per cent year-on-year, 16.6 per cent year-on-year and 31.8 per cent year-on-year respectively, driven by supply chain disruption, and collapse in purchasing power due to job losses and pay cuts. Nevertheless, the agriculture sector (1.6% year on year), the ICT sector (15.1% year on year) and the financial services and insurance sector (18.5% year on year) recorded positive growth during the second quarter of 2020. Foreign exchange (FX) liquidity challenges have persisted since the second quarter, posing further challenges to the expected recovery in economic growth