Experts in various sectors of the Nigerian economy have given indications that the COVID-19 pandemic has hit the private sector negatively as many firms are struggling to survive. The pandemic is already affecting businesses in advanced economies such as the United States and United Kingdom.

For instance, the US Department of Labor recently announced that employers cut over 700,000 jobs in March. While there is yet no current statistics on job losses in Nigeria, the National Bureau of Statistics (NBS) reported that in 2019, Nigeria’s unemployment rate rose to 23.1% and underemployment to 16.6%. This might be further worsened by the effects of the pandemic, experts say. NBS data indicate that over 20 million Nigerians are unemployed as at 2019 and looming job cuts as a result of COVID-19 will likely worsen the situation. Minister of Finance, Zainab Ahmed An economist, Tope Fasua, said the recent partial shutdown of Nigeria’s commercial nerve centre, Lagos, and the administrative headquarters, Abuja, by President Muhammadu Buhari and other movement restrictions across the country as a measure to check spread of COVID-19 is likely to affect the prospects of many businesses.

“Goods are acquiring demurrage at the ports and if the lockdown persists, many importers will simply abandon the goods – and many will go bankrupt,” he said. On looming job losses in Nigeria, Fasua noted; “The bankruptcy that is already rolling abroad will soon make a landfall here (Nigeria).” Meanwhile, the International Monetary Fund (IMF) has predicted that the global economy will fall by 12% due to the impact of COVID-19.

Already, businesses are already feeling the brunt of the pandemic even as the Nigerian economy is bleeding. The international price of oil has fallen far below the country’s bench mark upon which the 2019 budget was predicated. “Rating agencies have downgraded Nigeria to B Negative, almost the default zone, and the prognosis is not looking good at all. Foreign investors are listless right now,” Fasua said. Workers in the aviation sector, hotels, oil and gas as well as the financial services sectors are likely to be affected the most.

Daily Trust on Sunday’s findings show that key employers in the aviation sector have asked some of their staff to proceed on compulsory leave without pay pending when the situation improves. An employee of a top hotel in Abuja told Daily Trust that they were asked to go home without details of what to come next. He said they were categorically told that they would only receive half of their salaries in April, and what comes after that would be determined by the prevailing situation in the country. The employee noted that operations at the hotel have virtually been grounded with no over 95 percent of the rooms now vacant, adding that the future of many of the company’s staff remains uncertain.

Meanwhile, analysts have unanimously argued that banks and other financial institutions will almost certainly need to manage the earnings impact from the sudden COVID-19 pandemic which has forced a near shutdown of economic activities. Most financial sector players have activated their business continuity plans and strategies for survival. Analysts at PwC said post COVID-19, banks would need to rethink their balance sheet challenges while managing loan stresses.

They noted that the banks would need to find ways to trim their costs quickly by resetting their revenue outlook and recalibrate for the future. An analyst said, “The COVID-19 pandemic could be the most serious challenge to financial institutions in nearly a century. As the economic fallout spreads, retail banks will find themselves juggling some big priorities that require concrete steps to reposition now while also recalibrating for the future.

Read more: https://www.dailytrust.com.ng/job-cuts-loom-as-covid-19-takes-toll-on-private-sector.html

It is scary...