PROJECT BODY:

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

A pandemic is a disease outbreak that spreads across countries or continents. It affects more people and takes more lives than an epidemic which according to the World Health Organization (WHO), declared COVID-19 to be a pandemic when it became clear that the illness was severe and that it was spreading quickly over a wide area.

The shocking and sudden outbreak of the Coronavirus pandemic (Covid-19) in late 2019 and early 2020 left countries of the world in a confused state. Nigeria joined most countries of the world to witness a health pandemic in 2020, . Economic pandemic are normal Nigeria situation but health pandemic was definitely not part of her experience. However, the Covid-19 was declared by the World Health Organization (WHO) on 30th January 2020 as a Public Health Emergency of International Concern (PHEIC). On 27th February 2020, the Federal Ministry of Health announced the confirmation of the first case of Coronavirus disease in Lagos State, Nigeria. In the same communication, the Minister of Health announced that the Multi-sectoral Coronavirus Preparedness Group led by the Nigeria Center for Disease Control (NCDC) has immediately activated its National Emergency operations Center.

Since then, in less than 2 months, Nigeria has reached more than 50 cases across the country. Tracing back to previous experiences in Nigeria, some of the economic pandemic Nigeria has witnessed include the 2016 recession, the monetary authority in Nigeria defended the local currency from forced devaluation against the dollar and adopted a managed float foreign exchange system, which worked well from 2016 to 2019. In the aftermath of the 2016 recession in Nigeria, it was almost widely believed that unexpected and sustained decline in oil price was the most important cause of recessions in Nigeria. Nigeria witnessed two economic crises within a decade. The economic crisis of 2009 was as a result of the global financial crisis while the economic crisis in 2016 was as a result of the sudden fall in oil price in the world market. The 2009 recession was caused by a combination of the after-effect of the 2007-8 global financial crisis, poor loan underwriting process in banks, bad risk management practices and poor corporate governance of banks (Sanusi, 2010). Banks were a major cause of the 2009 economic crisis. The 2016 economic crisis was caused by unexpected decline in oil price which led to a sharp drop in oil revenue which severely affected Nigeria’s foreign reserve (Adeniran and Sidiq, 2018). This led to massive balance of payment deficits combined with an already high debt burden which plunged Nigeria into its second recession in a decade.

The outbreak of pandemic Covid-19 all over the world has disturbed the educational, political, social, economic, religious, and financial structures of the whole world. The world’s topmost economies such as the US, China, UK, Germany, France, Italy, Japan, and many others are on the verge of collapse. Besides, Stock Markets around the world have been pounded and oil prices have fallen off a cliff. In just a week 3.3 million Americans applied for unemployment and a week later another 6.6 million people started searching for jobs. Also, many experts on economic and financial matters have warned about the worsening condition of global economic and financial structure.

What made the 2020 economic crisis different from other economic crises or recessions in Nigeria was that most economic agents, who should have helped to revive the economy, were unable to engage in economic activities due to fear of contracting the Covid-19 disease, while other economic agents did not engage in economic activities when the government imposed and enforced its social distancing policy and movement lockdown in Abuja, Lagos and Ogun states on the 30th March of 2020.

Ferguson et al.(2020) restated that pandemics are not new and have occurred at different stages in human history (Ferguson et al., 2020). While there have been many outbreaks and human catastrophes, there has been a notable rise in the frequency of pandemics from the year 2000 and thereafter. This is particularly due to increased emergence of viral disease amongst animals (Madhav et al., 2017). Given the rise in the frequency of pandemics, many researchers including Garrett (2007), Keogh-Brown et al. (2008) and most recently Madhav et al. (2017) and Fan et al. (2018) argue that a large-scale global pandemic was inevitable. Ferguson et al. (2020) from the Imperial College London COVID-19 Response Team claim that COVID-19 is the most serious episode since the 1918 Spanish Influenza pandemic. Despite the comparisons, Barro (2020) concludes that the non-pharmaceutical interventions implemented during 1918 Spanish Influenza pandemic were not successful in reducing overall deaths. This was because the interventions were not maintained for a sufficiently long period of enough time. He estimates that the mean duration of school closings and prohibitions of public gatherings including hotels was only 36 days, whereas the mean duration of quarantine/isolation was 18 days (0.05 years). Barro et al. (2020) estimate that, holding everything else constant, the 2.1 percent death rate during the Spanish Influenza pandemic in 1918-1920 would translate to roughly 150 million deaths worldwide (compared to the World’s population of 7.5 billion in 2020) during COVID-19 pandemic. Barro et al. (2020) also find that, on average, the 2.1 percent death rate corresponds to 6 percent decline in GDP and 8 percent fall in private consumption. According to Jonas(2013), the impact ranges from: avoidance reaction due to social distancing measures (e.g., individuals might forgo consumption and purchases and use of certain goods and services including hotel patronage); small direct costs (e.g., hospitalization and medical costs); larger indirect costs (loss of labor, production), and offsetting and cascading effects (disruption of services, travel and others).