Surging Third Wave of COVID: Nigeria’s Economic Recovery Hanging in the Balance?

Surging Third Wave of COVID: Nigeria’s Economic Recovery Hanging in the Balance?

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This week, we picked interest in a report published by the International Monetary Fund (IMF) on Monday (28th June 2021) titled “Sub-Saharan Africa: We Need to Act Now”, as the issue raised may significantly affect the pace of Nigeria’s economic recovery if necessary measures are not taken.

According to the report, the level of increase in the third wave of the COVID-19 infection cases in Sub-Saharan Africa (SSA) is faster than anywhere else in the world. This is not surprising to us given that vaccine rollout in SSA is estimated to be less than 5.0% of the total population according to data from the World Bank. Precisely, less than 1 adult in every 100 is fully vaccinated in SSA compared to an average of over 30 in every 100 in more advanced economies. Interestingly, Nigeria has the largest population in SSA (c.208m) and its vaccination story is not in any way better than other SSA countries whose vaccination data were analysed by the IMF.

For instance, data obtained from Thomas Reuters global COVID-19 vaccination tracking portal as of 29th June 2021 shows that the total number of vaccine administered so far in Nigeria stood at 3.4m doses. Given that each person requires two doses of the vaccine to be fully immunized against the pandemic, it is safe to estimate that only 1.7m Nigerians have received the two doses that is required for full vaccination as of end of June 2021. This number represents a paltry 0.8% of Nigeria’s estimated current population of 208m. This is worrisome given the quick spread of the new Delta variant (now in 96 countries) which was first discovered in India earlier in May 2021. Even though Nigeria’s total confirmed cases during the first and second wave of the pandemic in 2020 settled below 140,000, yet, the minimum estimated economic loss arising from the disruption stood at ₦3.0trn, given GDP contraction of 1.9% in 2020.

Although the FG has already announced some strict measures that will see passengers from India, Turkey, Brazil, and South Africa either barred from entering the country (non-Nigerians) or subjected to a compulsory 14-days quarantine (Nigerians), yet, we are of the view that these measures may not be sufficient to prevent the entry of the Delta variant into Nigeria, given the porous borders and reported cases of compromise from some Nigerian officials at the airports. Sadly, the World Bank excluded Nigeria from the list of 51 low income countries (LIC) it will be assisting with fresh $4.4bn for the purchase and deployment of vaccines in the coming weeks, and the FG’s balance sheet remains weak to support state-funded mass vaccination.

Despite the IMF making a case for other multilateral organization and Advanced Economies (AEs) to support SSA countries in vaccinating about 30.0% of its populace (either by supporting with funds or giving out vaccine from their stockpile) in 2021, we suspect that Nigeria may not benefit significantly from this arrangement given that the new Delta variant has peaked in South Africa (83.0%), Zambia (92.0%), Tunisia (98.0%) and Namibia (100.0%). Besides, the IMF also reported that much of the global supply of vaccine for 2021 has already been bought up by AEs. Hence, this leaves Nigeria with no other option than to be aggressive in preventing the Delta variant from entering the country. Although we estimate that adopting strict measure such as banning flight from red zones and limiting social activities may cause Nigeria’s economic recovery in H2:2021 to drag by about 0.5%. The cost of allowing a third wave of the pandemic may take the country back into a recession in the coming quarters if taken for granted.

 

Afrinvest


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