Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, has estimated that the 14-day lockdown of the Federal Capital Territory (FCT), Lagos and Ogun states ordered by President Muhammadu Buhari would cost the economy N5 trillion.
Besides, the presidential order, some governors, such as Chief Nyesom Wike of Rivers State also restricted movements in a bid to curtail the spread of COVID-19.
President of the Manufacturers Association of Nigeria (MAN), Mr. Mansur Ahmed, also expressed concern over the survival of the manufacturing sector and asked the federal government to roll back the implementation of the new Value Added Tax (VAT), which took effect on February 1, in order to enable businesses, especially the manufacturing sector, to cope with the aftermath of the pandemic on the economy.
Yusuf, however, told THISDAY that no price was too much for the efforts to contain and ultimately overcome the pandemic because only the living could do business.
He said his estimate was based on Nigeria’s nominal Gross Domestic Product (GDP) value of N146 trillion as of December 2019 released by the National Bureau of Statistics (NBS).
He said: “From an economy-wide perspective, the contraction in the economy over the two-week lockdown, coupled with the various restrictions at the state level, is estimated to cost the economy a loss of N5 trillion over the period.
“The prognosis is that if the lockdown persists, the impact will be more pronounced and there would be heightened job losses.”
He attributed the loss to the consequences of the tumbling aggregate demand, the dip in investment spending, the slump in export and the plunge in government spending.
“All these are the key drivers of output in an economy. Activities in practically all sectors have been grounded – manufacturing, transportation, aviation, trading, entertainment, hospitality, financial services, real estate, printing, and publishing, etc.
“The prognosis is that if the lockdown persists, the impact will be more pronounced and there would be heightened job losses.
“The informal economy has been practically grounded. This segment of the economy provides the source of livelihood for over 60 per cent of the economically active population. This segment of the economy is the main pillar of the non-oil sector of the economy – the trading, road transportation, and agricultural sectors. Together they account for 40 per cent of the nation’s GDP.
“The lockdown has compounded the problem of weak aggregate demand. The travel restrictions and the closure of state borders have completely crippled domestic economic connectivity, which is at the heart of trade and commerce in the country,” he said.
He added that the macroeconomic fundamentals of the economy has continued to weaken as the country experience the double whammy of a tumbling oil price and disruption caused by COVID-19.
Yusuf said: “For an economy that is greatly oil-dependent, the impact is best imagined. The lockdown has practically crippled what is left of the economy.”
LCCI advocated the immediate implementation of import duties and tax waivers for medical equipment, pharmaceutical products, food processing, raw materials, and intermediate products and other essential items.
“All customs bottlenecks to these sectors should be removed without delay. The Central Bank of Nigeria (CBN should prevail on the banks to give concessions on pending private sector credit liabilities with the deposit money banks over the period of this economic crisis. The Nigerian Customs Service, the terminal operators and other agencies of government should extend similar concessions to port users at this time,” the chamber said.