Global Trade in the Midst of COVID-19 Pandemic

 #Global Trade in the Midst of COVID-19 Pandemic

Preamble

The Coronavirus pandemic, which is threatening countries around the world, is spreading at a rate that is causing serious negative impact to global trading. The impact has continued to generate rapid trepidation among governments, corporate organisations and businesses across the world.

Nigeria is also having her own share of this experience, being an import-dependent economy. Following the outbreak, there has been a substantial production disruptions to trade and business as a result of border closures, travel bans, and other restrictions. 

The coronavirus spread is having far-reaching consequences beyond global economy. Available data has shown that there are 722,196 confirmed cases of COVID-19, of which 151,766 have recovered, while 33,976 have died. The recent outbreak reveals Nigeria’s underbelly – leadership, proper planning, adequate health facilities, inclusive society and insecurity. Given these concerns, this edition of ENGAGE NIGERIA critically analyses Nigeria's vulnerabilities in the midst of the COVID-19 pandemic.

Global Economic Situation

Available evidence indicates that the coronavirus outbreak is slowing down global economic activity and growth as the fight to contain the domestic spread of the virus intensifies. The U.S., China, UK, Germany, France, South Korea, Canada, Japan, Italy and Brazil are experiencing economic shocks. Recent reports have shown that the global growth for 2020 slide to 1.2%. Also, in China, automobile sales have plunged 80%, passenger traffic is down 85% from normal levels, and business surveys are projecting record lows. Global economy, in other words, has practically grounded to a halt.

The coronavirus pandemic will most likely result in a new world economic order. There is reduction in demand for goods, sales has depreciated; high net worth business meetings cancelled, conferences and events are being rescheduled, lack of logistic services to move goods, production and manufacturing plants lying idle as companies’ staff seek isolation as a result of the outbreak. The virus is affecting many sectors. However, in terms of the practicalities of trade, economic experts believe that the pandemic will most certainly impact global growth rates as well as the viability of deeply integrated and typical well-oiled regional and global supply chains. On February 2020, the United Nations economist announced a likely $50 billion drop in global manufacturing exports alone. The World Bank finally confirmed last week that the global economy has gone into recession.

The Situation in Nigeria

With the numbers of infected cases rising in Nigeria daily, (presently at about 121, 2 deaths and 5 survivors), there is palpable fear of an explosion as over 6000 potential carriers are currently being contact-chased. The receipt of medical supplies last week from a Chinese businessman and CEO of Ali Baba, Mr Jack Ma, has however helped to increase the country’s testing capacity for the virus. Meanwhile, experts are projecting that the number of infected persons in the country could rise unless the restrictive measures put in place by the federal and state governments are fully complied with by Nigerians.

On Sunday, March 29, 2020, the federal government ordered a lockdown of Abuja, Lagos, and Ogun states to contain the spread of the pandemic. However, the challenge facing the government will come from keeping people at home in a country where, according to the United Nations projections, about 80 per cent of its citizens earn incomes from the informal sector.

Is Nigeria Vulnerable?

Since the outbreak of coronavirus, the Nigeria economy has suffered a decline in foreign trade. Studies have shown that no other country in Africa consumes more Chinese products than Nigeria. More than half of its imports such as clothes, healthcare products, construction materials and even household products come from China. According to data from the Nigeria Bureau of Statistics, Nigeria’s imports from China hit N1.9 trillion in the first half of 2019. These are likely to take hits as China also struggles to contain the spread of the coronavirus.

Nigeria is vulnerable to a prolonged period of low oil prices. Brent crude oil price fell to approximately $27.95 per barrel (bbl) on Sunday, March 29 2019, the worst of its kind since 1991. Economic experts have argued that if oil demand continues to fall with no OPEC intervention in the form of production cuts, tightening supply, a country like Nigeria will be negatively impacted by the downward price trend. It only gets worse for Nigeria as oil is the most significant revenue-generating sector of the economy. The expected revenue to be generated from the oil sector in the 2020 budget is 2.64 trillion, with the rest of the non-oil sector contributing a further 5.5 trillion. Oil prices do affect not only the revenue generated from this sector but also disrupt prices in other sectors such as manufacturing and production, thereby causing inflation to go up.

Conclusion and Recommendations

In the past decades, Nigeria has had to depend on consumer goods manufactured and produced in foreign countries, especially China. Consequently, the country is almost completely reliant not only on trade and investment but also for loans used in funding government's projects from the Chinese government.. Perhaps, as the global economy falls into recession as a result of the pandemic, a country like Nigeria will face untold hardship. Therefore, to liberate the country from this problem, the government needs to diversify investments to other sectors of the economy such as agriculture, manufacturing, solid minerals and human capital development for higher output and employment. This would help the country not to depend solely on oil and generate more revenue, increase export and improve customs and excise duties (CED) and foreign exchange rate as well as her balance of payment position

Secondly, the provision of adequate funding to maintain and sustain an effective national disease surveillance system backed by a reliable laboratory network service is the first step in ensuring national health security and protection of Nigerians from the ravages and deaths caused by disease outbreaks. There is an urgent need for more considerable resources to enhance capacity in low and middle-income countries. The requirements for training are wide-ranging and include surveillance and monitoring of infections, clinical practice, epidemiological research, and use of new ICTs. In many cases, international training exchange programmes are required to enable the sharing of experiences and ideas across national contexts.

Lastly, since the Covid 19 crisis has exposed the huge gap in our health sector, its high time Nigerian government developed the health sector. The poor state makes our economic and political leaders to troop out to access quality healthcare services abroad. With enormous international financial grants and billions of naira being donated by multi-lateral agencies, indigenous business men and corporate organisations to the Corona Virus containment, the federal and state governments should begin to invest the excess funds into building world class medical and health research institutions across the country.