CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The world economy is currently in shock and gradually moving towards recession due to the
Coronavirus disease pandemic, also known as COVID-19. The first infections were reported at the
end of 2019 in China and have continued to spread globally, with all continents and 216 countries
and territories affected. The infection is spreading at an exponential rate with over 307,537 deaths,
4,534,731 confirmed infections as at 17th May, 2020, around the globe (WHO Situational Report
17th May 2020). This global reach of the infection led WHO to declare it a pandemic on 11th
March, 2020.

Simulations by the International Monetary Fund (IMF), predict a fall in global growth by 0.5 in
2020. The impact of the pandemic may be felt more than that of World War II due to its predicted
social, economic and humanitarian effect. The effect of COVID-19 on Africa is not only linked to
the rate of morbidity and mortality but to the disruption of economic activities within the continent.
With global oil prices dropping below $30 a barrel, tax revenue is lost and commodity prices have
skyrocketed with an increase in public expenditure to curb the spread of the infection. National
efforts have resulted in lockdowns of businesses, markets, and sporting activities which generate
millions in revenue.

In Nigeria, the Government is making efforts to contain the virus including closing all land, sea and
air borders, closing down markets, schools and putting a halt to social gatherings. As businesses
except those providing essential or emergency services are shut down, the populace has been
plunged into a vulnerable state. Most Nigerians depend on their daily income the survival as the
report of International Finance Corporation as at 2017 indicates that there are 36,994,578 Micro,
Small and Medium Scale Enterprises (MSMEs) constituting up to 96% of all businesses in Nigeria
(IFC, 2017).

The Nigerian Government is bracing itself for the impact of the unprecedented crisis of COVID-19
by implementing measures to slow down the spread of the virus and cushion its effect on the
economy. The Nigerian Government has requested the National Assembly to approve an
intervention fund of NGN 500 billion for the purpose of relief provision to the vulnerable and to
support the health sector. However, the recently approved $3.4 billion International Monetary Fund
1
emergency funding to Nigeria will provide the much-needed liquidity that will enable Nigeria to
respond to urgent balance of payments needs during the coronavirus pandemic and to support the
authorities’ efforts in addressing the severe economic impact of the COVID-19 shock and the sharp
fall in oil prices. Also, the 850 billion Naira domestic loan approval granted by the federal
government will help the government to finance key approved projects and programmes in the 2020
Appropriation Act. Nevertheless, It is obvious that Nigeria urgently needs to think out of the box on
ways to revamp and diversify its economy even as the world grapples with containing and stopping
the COVID-19 pandemic.

Individuals and private establishments have also made donations to support the Government.
However, these available and projected funds are insufficient to fight the war against COVID-19. In
the first quarter, Nigeria has a negative economic growth as against the 2% growth it had in
preceding years. The second quarter of the year has been predicted to follow the same trend and the
country may take a while to recover from the economic impact of the pandemic.

To this end, this work examined the economic implications of the COVID-19 on the Nigerian
economy, focusing on businesses and how government policies and interventions can fix the gaps
based on our recommendations from the analysis of data. The study would also scrutinize the impact
of COVID-19 on Nigerian citizens and the 2020 budget focusing on capital expenditure.

Nigeria recorded the first case of Covid-19 on the 27th February, 2020. As at 20th June, the total
confirmed cases in Nigeria stood at 19,606 with 6,718 discharged and 506 deaths, representing about
35 percent recovery rate and 2.6 percent fatality rate, respectively. What is evident in the trend of the
Covid-19 pandemic in Nigeria is that there has been an increase in community transmission. Since
the gradual relax of the lockdown in the country, cases of Covid-19 pandemic have increased by
about 60 percent and the corresponding deaths recorded have also increased by about 33 percent;
implying that the country has entered a second wave of infection based on community transmission.

1.2 STATEMENT OF THE REEARCH PROBLEMS

The outbreak of corona virus disease (COVID-19) pandemic in Nigeria has increase the level of
tension and anxiety among citizens in the country. The virus unlike other cases we have had in this
country is highly transmittable with severe signs and symptoms.

The novel coronavirus has taken its grip on Nigeria economy and her citizens, forcing the federal
government to declare partial lockdown in Lagos, Ogun and Abuja and restriction of vehicular and
2
human movements across the country. These measures are aimed at curtailing the further spread of
the virus, even as 35 states of the federation have recorded cases of the virus bringing the number of
cases in the country to 22,020 with 542 deaths as at 24th June 2020.

The measures have affected social and economic situations across the country. Consequently, several
wedding ceremonies have been cancelled while most economic activities have also been halted.
These situations have affected both low and high-income earners in various businesses. More so,
traders and transporters have been affected while religious activities are now being conducted mostly
on the internet and only those who can afford to buy data and smart phones are those favoured while
the poorest poor in the country could not get involved in online worshipping.

The outbreak of corona virus disease (COVID-19) might have effect on the Nigeria economy
through low imports and exports in the country, poor tourism remittance and commodity price rate in
Nigeria. Lastly there have been studies on corona virus disease (COVID-19) but not even a single
study is based on the Implication of corona virus (COVID-19) on the Nigeria economy; hence a need
for the study.

1.3 OBJECTIVES OF THE STUDY

The major purpose of this study is to examine the effect of corona virus (COVID-19) epidermic on
the Nigeria economy. Other general objectives of the study are:

1.  To examine the causes of corona virus (COVID-19)

2.  To examine the impact of corona virus (COVID-19) on import and export rate

3.  To examine the economic impact of the pandemic in Nigeria

4.  To examine the relationship between corona virus disease (COVID-19) and the Nigeria economy

5.  To recommend preventive measures to be adopted by the Nigeria government in fight against the
corona virus disease (COVID-19)

1.4 RESEARCH QUESTIONS

In order to achieve the objectives of this study a number of questions would be explored. Consistent
with the topic and objectives the following questions will guide the study;

1.  What is the impact of corona virus (COVID-19) on import and export rates in Nigeria?

3
2.  What is the economic impact of the corona virus pandemic in Nigeria?

3.  What is the relationship between corona virus disease (COVID-19) and the Nigeria economy?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: Corona virus (COVID-19) has no impact on import and export rates in Nigeria

H1: Corona virus (COVID-19) has an impact on import and export rate in Nigeria

Hypothesis 2

H0: Corona virus (COVID-19) has no significant effect on the Nigeria economy

H1: Corona virus (COVID-19) has a significant effect on the Nigeria economy

Hypothesis 3

H0: There is no significant relationship between corona virus disease (COVID-19) and the Nigeria
economy

H1: There is a significant relationship between corona virus disease (COVID-19) and the Nigeria
economy

1.6 SIGNIFICANCE OF THE STUDY

The study on the effect of corona virus disease (COVID-19) on the Nigeria economy will be of
immense benefit to all the Nigeria citizens, the health sector, and the federal government of Nigeria.
The study will explore the prevalence of corona virus disease (COVID-19), the causes, and the
impact of the corona virus (COVID-19) on the Nigeria economy. Due to the difficulty of quantifying
the real impact as a result of the uncertainty, the rapidly evolving nature of the pandemic, and
scarcity of the data, our work focuses on understanding the possible socio-economic repercussions in
order to propose policy recommendations to respond to the crisis. The lessons learnt from the study
will give more enlightenment on the way forward, as the country is in a critical phase of the
implementation of Nigeria Free Trade Zone. The study will educate the Nigeria government on the
policy implementation to curb the prevalence of the corona virus disease (COVID-19) and how to
improve the Nigeria economy during this period. The study will serve as a repository of information
to other researchers that desire to carry out similar research on the above topic. Finally the study will
4
contribute to the body of the existing literature on the effect of corona virus disease (COVID-19) on
the Nigeria economy

1.7 SCOPE OF STUDY

This study is based on the economic implication of the corona virus (COVID-19) epidemic on
Nigeria Economy taking the Chicken Intercontinental Eatery as a case study. 

1.8 DEFINITION OF TERMS

Virus: A virus is a small infectious agent that replicates only inside the living cells of an organism.
Viruses can infect all types of life forms, from animals and plants to microorganisms, including
bacteria and archaea.

Pandemic: A pandemic is a disease epidemic that has spread across a large region, for instance
multiple continents, or worldwide. A widespread endemic disease with a stable number of infected
people is not a pandemic. Further, flu pandemics generally exclude recurrences of seasonal flu.

Epidemic: An epidemic is the rapid spread of disease to a large number of people in a given
population within a short period of time. For example, in meningococcal infections, an attack rate in
excess of 15 cases per 100,000 people for two consecutive weeks is considered an epidemic

COVID-19: Corona Virus Disease 2019.

Polymerase Chain Reaction: Polymerase chain reaction is a medical test widely used in molecular
biology to rapidly make millions to billions of copies of a specific DNA sample allowing scientists
to take a very small sample of DNA and amplify it to a large enough amount to study in detail.

Health: Health, as defined by the World Health Organization (WHO), is "a state of complete

physical, mental and social well-being and not merely the absence of disease or infirmity. Health
may be defined as the ability to adapt and manage physical, mental and social challenges throughout
life.

Preventive Measures: Intended or used to prevent or hinder; acting as an obstacle. Something

carried out to deter expected aggression by hostile forces. Preventing or slowing the course of an
illness or disease; prophylactic: preventive medicine; preventive health care.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

The corona virus outbreak, later coded as Covid-19, hit the world like a thunderbolt towards the end
of December, 2019. At its inception in Wuhan city in China, it was regarded as a regional health
challenge whose global potential risk was summarily underestimated. Although, many countries
were in solidarity with China upon this health disaster, Covid-19 was nonetheless not perceived as a
threat with a global scale. In fact, the World Health Organization (WHO) declared that the health
crisis in China had no global potential threat2. However, given that the modern world is entrenched
in the concept of globalization and the position of China as the manufacturing hub of the world; a
seemingly less risky Chinese health issue metamorphosed into a global scale with lethal
consequences (Price and van Holm, 2020; Ezeaku and Asongu, 2020). As at the 20thof June3 2020,
statistics showed that the total global confirmed cases of Covid-19 were 8,753,853 while the global
death toll was 463,281. This indicated a 5.29 percent fatality rate and about 20 percent recovery rate
(WHO, 2020).

Africa, being a highly vulnerable continent, soon recorded imported cases of Covid-19. As at the
time of writing this paper, the total confirmed cases of Covid-19 in Africa stand at 287,385 cases;
with about 132,959 recoveries and 7,708 deaths recorded (WHO, 2020). These represent a 46.3%
recovery rate and about 2.3% fatality rate, respectively. However, there have been a lot of debates on
the reasons for the low cases of Covid-19 recorded in Africa (World Bank, 2020; OECD, 2020; Diop
and Asongu, 2020). This seems ironical given the level of public health infrastructure, governance
structure, porous borders, weak institutions, inter alia, in the region. It was rather argued that the low
number of confirmed cases of Covid-19 recorded in Africa was due to low testing capacity and not
necessarily because of location or the effectiveness of containment policies.

Nigeria recorded the first case of Covid-19 on the 27th February, 2020. As at 20th June, the total
confirmed cases in Nigeria stood at 19,606 with 6,718 discharged and 506 deaths, representing about
35 percent recovery rate and 2.6 percent fatality rate, respectively. What is evident in the trend of the
Covid-19 pandemic in Nigeria is that there has been an increase in community transmission. Since
the gradual relax of the lockdown in the country, cases of Covid-19 pandemic have increased by

6
about 60 percent and the corresponding deaths recorded have also increased by about 33 percent;
implying that the country has entered a second wave of infection based on community transmission.

The corona virus pandemic represents both public health and economic crisis. While the public
health crisis addresses disease containment measures, treatment and development of vaccines;
economic crises are reflected in supply and demand shocks as well as oil price shock, consequent
upon disruptions in economic activities caused by global lockdown. The outbreak of the corona virus
has thus disrupted the conduct of major macroeconomic policies across the globe.

Like many resource-dependent developing countries, Nigeria has faced the brunt of the fluctuations
in the price of crude oil -which accounts for about 70 percent of her gross domestic product (GDP)
and 65 percent of total government revenue. The rise in government spending driven by the need to
combat the effect of Covid-19 had increased the country’s fiscal deficit and her susceptibility to high
public debt vulnerabilities. Furthermore, the depressing global capital flows which put serious
pressure on Nigeria’s foreign exchange reserve and exchange rates (KPMG, 2020), has also affected
the conduct of sundry monetary policies in the country. This situation is expected to result into
macroeconomic consequences on outcomes such as economic growth, inflation, unemployment and
exchange rates.

The preponderance of the vulnerabilities of macroeconomic variables due to the consequence of

infectious diseases on the economy therefore calls for proper understanding of the macroeconomic
effects of Covid-19 in Nigeria. This line of research becomes essential for some reasons. First, since
the outbreak of the Covid-19 pandemic, there have been a number of early reviews of its impact
from both policy and empirical perspectives. Given its novel nature, the trend is to assess the impact
of the pandemic from different perspectives in order to understand the country-specific
characteristics. But the attention of many has been to understandably focus on the short-run effect of
Covid-19 on several economic variables. With the second wave of the virus coming due to the ease
of the lockdown measures in most countries of the world, the focus would rather be on how to
conduct macroeconomic policy in the presence of the pandemic. Such decisions would permeate
both public health and economic policies in the post Covid-19 era in Nigeria.

Second, an optimistic projection of the future trajectory of the effect of the pandemic on the global
economy is that it would result into a relatively mild and short-lived global recession, followed by a
V-shaped recovery (Wren-Lewis, 2020). It is therefore important for emerging markets to
understand the best approach to cushion the effect on their economies. This becomes imperative to
7
position the economy to attract the necessary investment needed to undertake meaningful
developmental policies.

Essentially, a developing country like Nigeria already battling with poor performance of basic
development indices is likely to aggravate her challenges with the permanent changes that the
pandemic has brought to the world. Given the heterogeneous households and firms characteristics, it
is important to understand the country-specific characteristics as the nation continues the gradual
relaxation of the nationwide lockdown in order to protect livelihoods and save the economy from
collapse.

2.2 COVID – 19 Effects on World Economy

The Covid-19 pandemic affected the global economy in two ways. One, the spread of the virus
encouraged social distancing which led to the shutdown of financial markets, corporate offices,
businesses and events. Two, the rate at which the virus was spreading, and the heightened
uncertainty about how bad the situation could get, led to flight to safety in consumption and
investment among consumers and investors (Ozili and Arun, 2020). There was a general consensus
among top economists that the coronavirus pandemic would plunge the world into a global
recession. Top IMF economists such as Gita Gopinath and Kristalina Georgieva stated that the
Covid-19 pandemic would trigger a global recession.

In financial markets, global stock markets erased about US$6 trillion in wealth in one week from
24th to 28th of February. The S&P 500 index also lost over $5 trillion in value in the same week in
the US while the S&P 500’s largest 10 companies experienced a combined loss of over $1.4 trillion
due to fear and uncertainty among investors about how the pandemic would affect firms’ profit. The
travel restriction imposed on the movement of people in many countries led to massive losses for
businesses in the events industry, aviation industry, entertainment industry, hospitality industry and
the sports industry. The combined loss globally was estimated to be over $4 trillion.

Several governments in developed countries, such as the U.S. and U.K., responded by offering fiscal
stimulus package including social welfare payments to citizens while the monetary authorities
offered loan relief to help businesses during the pandemic. There were also spillovers to poor and
developing countries that had a weak public health infrastructure and non-existing social welfare
programs.

8
World economic forum report states that the cases of COVID-19 coronavirus have surpassed 2.6
million globally. Firms managing with lost revenue and interrupted supply chains leading factory to
shutdowns and lockdown measures across the globe, reducing movement and commerce.
Unemployment is on the increase, authority across the world are implementing fiscal and monetary
policies to reduce the financial burden on citizens and increase aggregate demand. The International
Monetary Fund (IMF) on 9 April states coronavirus pandemic has increased the economic downturn
that the world has not experienced since the 1936 Great Depression. The IMF states economies in
Asia would lack growth in 2020, for the first time since 1960, with the service sector more under
pressure. Global lockdowns have to affect airlines, factories, shops, and restaurants. The Chinese
economy has reduced in the first quarter, the first since1992. Gross domestic product (GDP) fell to
6.8% in the first quarter of 2020 the opposite of the 6% expansion in the fourth quarter of 2019. The
Chinese economy may nose dive further as a result of reduced global demand for its products due to
the effect of the outbreak pandemic. China's factory output also nose dive sharply in the first two
months of 2020. And Reuters poll states the Chinese economic growth is expecting to fall to 2.5% its
lowest in 50 years.

2.3 Covid-19: The Nigerian experience

2.3.1. The spread of Covid-19

The coronavirus entered Nigeria through an infected Italian citizen who came in contact with a
Nigerian citizen who was subsequently infected with the coronavirus. The coronavirus then spread to
other citizens in Lagos and to other parts of the country.

2.3.2. Covid-19 spillover to the Nigerian economy

2.3.2.1. Direct effect

There are five main ways through which the Covid-19 pandemic spilled over into Nigeria. One, the
Covid-19 pandemic affected borrowers’ capacity to service loans, which gave rise to NPLs that
depressed banks’ earnings and eventually impaired bank soundness and stability.

Subsequently, banks were reluctant to lend as more and more borrowers struggled to repay the loans
granted to them before the Covid-19 outbreak. Two, there were oil demand shocks which was
reflected in the sharp decline in oil price. The most visible and immediate spillover was the drop in
the price of crude oil, which dropped from nearly US$60 per barrel to as low as US$30 per barrel in

9
March. During the pandemic, people were no longer travelling and this led to a sustained fall in the
demand for aviation fuel and automobile fuel which affected Nigeria’s net oil revenue, and
eventually affected Nigeria’s foreign reserve. Three, there were supply shocks in the global supply
chain as many importers shut down their factories and closed their borders particularly China.
Nigeria was severely affected because Nigeria is an import-dependent country and as a result Nigeria
witnessed shortage of crucial supplies like pharmaceutical supplies, spare parts, and finished goods
from China. Four, the national budget was also affected. The budget was initially planned with an oil
price of US$57 per barrel. The fall in oil price to US$30 per barrel meant that the budget became
obsolete and a new budget had to be formed that was repriced with the low oil price.

Finally, the Covid-19 pandemic affected the Nigerian stock market. Major market indices in the
stock market plunged when investors pulled out their investments into so-called safe havens like US
Treasury bonds. Stock market investors lost over NGN2.3 trillion (US$5.9bn) barely three weeks
after the first case of coronavirus was confirmed and announced in Nigeria on January 28, 2020. The
market capitalisation of listed equities, which was valued at NGN13.657 trillion (US$35.2bn) on
Friday, February 28, 2020 depreciated by NGN2.349 trillion to NGN11.308 trillion (US$29.1bn) on
Monday 23 March 2020. The All-share index closed at 21,700.98 from 26,216.46 representing
4,515.48 points or 20.8 per cent drop.5 The stock market crash is illustrated in figure 1 below while
table 3 shows the one-month movement in the all share index.

COVID – 19 Effects on Nigeria Economy

As the world looks to eliminate COVID-19 pandemic with no result in sight. The world economic
outlook is fragile, especially developing countries like Nigeria are struggling to find their fit; the
global GDP growth is estimated to be 2.5 percent in 2020. Developing countries have recorded
relatively lower, Nigeria currently has a 2.3 GDP growth rate before the pandemic, Nigerian had
been struggling with weak recovery from the 2014 oil price shock. They are making IMF revise the
2020 GDP growth rate from 2.5 percent to 2 percent, as a result of relatively low oil prices and some
low fiscal infrastructures. With that, Nigeria debt keeps increasing, the recent estimate puts the debt
service-to-revenue ratio at 60 percent there is a source of concern for the policymaker, its revenue
may continue to decline with fall in the oil prices. The above factors will increase the economic
effects of the COVID-19 outbreak and make it more difficult for Nigeria to get out of the recession.
In Nigeria, the government has been making efforts to increase aggregate demand by increasing
government spending and tax cuts for businesses. Nigeria budget increased from 8.83 trillion naira

10
($24.53 billion) in 2019 to 10.59 trillion naira ($29.42 billion) in 2020, which is 11 percent of the
GDP, small enterprise receives tax relieve on company income tax, and the tax rate for small-
medium enterprise come down from 30 to 20 percent. The COVID-19 crisis affects all components
of aggregate demand. The fall in household consumption in Nigeria will stem from federal
government lockdown order, thus causing consumers to spend primarily on essential goods and
services; 2) low expectations of future income, particularly workers of gig economy sector which are
engaged on a short-term, and the working poor of the informal sector of the economy; and 3) the loss
of wealth and expected wealth with a decline in assets such as stocks and home equity. The state
governors have again imposed a lockdown of four weeks in all states of Nigeria including Abuja.
Nigeria is more of a gig economy and a large informal sector that contributes 65 percent of
economic output in Nigeria. Lockdown has reduced the consumption commodities in general, and
income-generating capacity of the gig and informal sector of the economy, thus reducing
consumption expenditure generally. Firms investments will reduce largely due to the uncertainties
that come with lack of knowledge about the duration pandemic outbreak, the effectiveness of fiscal
policy measures, and the reaction of economic agents to fiscal policy measures, and negative
investor believes causes turbulence in capital markets globally. Of note, the crisis has led to a
massive decline in stock prices, as the Nigerian Stock Exchange records its worst performance since
the 2008 financial crisis, which has eroded the wealth of investors. Taking into consideration the
uncertainty that is associated with the pandemic and the negative profit on possible investment, firms
are likely to hold long-term investment decisions for the future. On the other hand, government
purchases may increase as governments can afford to run budget deficits, using fiscal policy
measures to reduce the fall in consumer spending, and in times like these, excess crude oil account is
to care of the budget deficit. But, the limited fund in that account has made the government reduce
the 2020 budget, implementing reduction 2020 budget will negatively affect Nigeria projected
economic growth. But, governments dependent on oil sales and other commodities, the fall in the
global demand for oil and other commodities due to pandemic will significantly increase their fiscal
deficits. The price of oil was just over $20 a barrel as on April 26, whereas Nigeria’s budget has a
beach make the price of $57 per barrel been a mono-economy with 2.18 trillion naira ($6.05 billion)
deficit. Again, the decline in the demand for oil and oil prices associated with the pandemic will
adversely affect the volume and value of Nigeria's net exports, thus, the Nigerian government will
cut planned expenditure. Of note is the minister of finance announcement of a 1.5 trillion naira
($4.17 billion) cut in non-important capital spending on the 18th March 2020. The restrictions on the
movement of people and border closures further decline the exports of other commodities. With,
11
countries of the world closing their borders and global supply chains for exports have been
disrupted. It is expected that exports of countries with devaluing currency due to the fall in the price
of commodities (Nigeria), will become more affordable, but the limited markets for non-important
goods and services crowed-out the envisaged positive effect on net exports. Another issue is the
floating of the Naira; the Nigerian exchange rate policy reforms is an overvaluation of currency that
is fixed exchange rate.

An overvaluation is a deliberate act when the government allows the value of its exchange rate to
appreciate it with a wrong notion to maximise growth and development. Overvaluation could also
arise from an increase in consumer price index if the increase is not adjusted to the exchange rate.
The overvaluation of a currency is when the domestic currency values higher than other currencies.
(Killick, 1992) that bring about the distortion of the economy. It crowds out local production and
encourages importation; as import becomes relatively cheaper, as local currency cost of importation
will be kept artificially low and discourages export by reducing the profit of producing for world
markets as prices of exports become relatively dearer in the international market. It is being argued
that the combined effect of increasing importation and dwindling exports exerts pressure on the
balance of trade and the economy at large. Zubair and Sanusi (2013). Having looked at
overvaluation and its implication on the macroeconomic variable, Nigeria is faced with higher
immediate low price oil, the Nigerian government had a range of choices to over-valuate its
exchange rate or fine a realistic exchange rate: if the real exchange rate is achieved there be to
increase income currently, in the future as $16.56 billion spend in 2019 to maintain the current
overvaluation of the exchange rate of the Naira would be part of wealth for future consumption, that
is increased investment in foreign assets or domestic physical capital.

2.4 COVID-19 PANDEMIC AND BUSINESS PERFORMANCE IN NIGERIA

In a globalised world, Nigeria, like most countries, is struggling with uncertain times especially as
figures of reported and confirmed cases are on the increase. As an oil-dependent country, Nigeria is
contending with two major shocks - oil price shock and a hydra-headed phenomenon, COVID-19.
To contain the spread of the virus, the Federal and Subnational Governments are responding with
lockdown policies epitomized by restriction of human and vehicular movements and closure of
businesses. As a consequence, domestic demand and supply have fallen and micro, small and
medium scale enterprises (MSMEs) are the worst hit as they rely on imports for their raw materials

12
used in production (Okojie & Faminu, 2020). At the grassroots, the situation is aggravating
experiences of marginalisation, exclusion, deprivations, inequality and poverty.

Apart from such sectors as oil and banking, Nigeria’s economy is largely informal. The Nigerian
Informal Sector (IS) is a major contributor to the Nigerian economy, accounting for a significant
portion of employment and national GDP (BOI, 2018). According to the International Monetary
Fund (IMF), the Nigerian informal sector accounted for about 65% of Nigeria’s 2017 GDP.4 The
state-owned Bank of Industry, writes that the Informal Sector comprises any economic activity or
source of income that is not fully regulated by the government and other public authorities. This
includes enterprises that are not officially registered and do not maintain a complete set of accounts;
workers who hold jobs lacking basic social or legal protection and employment benefits. Examples
of informal employment workers include street traders, subsistence farmers, small scale
manufacturers, service providers (e.g. hairdressers, private taxi drivers, and carpenters), etc.

The sector currently accounts for over half of global employment and as much as 90% of
employment in some of the poorer developing countries. In grassroots economies, the bulk of their
productive activities are informal. The informality of economic production agents in the grassroots
exposes economic production agents to shocks and vulnerability, disproportionately, when compared
to counterparts who operate in the formal business environment.

In 2019, Nigeria’s imports from China was N4.3trillion (25 percent of total imports), while imported
manufactured goods took up about 70 percent of total imports. According to KPMG’s Business
Impact Series, 2020, this is likely to be affected as China and the rest of the world have resorted to
closing down factories, imposing travel bans and even total country lock-downs, as they struggle to
contain the spread of the virus. This could put more pressure on inflation numbers (12.2 percent year
on year as at February 2020) going forward as the cost of local production goes up. The economic
outlook and business performance is likely to worsen as companies adjust to the new economic
realities by laying off workers, further worsening the unemployment rate which conservatively
hovers around 23.3 percent in last available data published by Nigeria Bureau of Statistics.

Certainly, this is not a good time for Nigeria and her economic managers because of the commodity-
price slump and uncertainty in the world market. However, on 16th March 2020, the apex bank
(CBN) through a major policy, announced the creation of a NGN50 billion targeted credit facility to
boost the economy amidst the growing economic devastation of coronavirus. The NGN50 credit
facility will be implemented through the NIRSAL Microfinance Bank for households and SMEs that
13
have been particularly hard hit by COVID-19, including but not limited to hoteliers, airline service
providers, health care merchants, etc. However, the details on how to access this facility are still
unknown and the most problematic component of the policy cycle in Nigeria is implementation. Will
the dedicated funds get to targeted beneficiaries without diversion, misappropriation, gross abuse
and corruption?

This is the puzzle for economic managers and Nigerian government’s top bureaucracy. If designated
funds meant as economic buffers against wholesale devastation by COVID-19 pandemic are not
responsibly applied for the purposes they are created, SMEs and informal business operators will be
worst hit and the consequences will linger far beyond the epidemic. This line of thought mirrors the
thinking of the events that shaped the 2007 global financial crisis. Nigeria cannot afford another
major economic depression especially as it is still “recovering” from her 2016 economic recession
which slowed growth and heightened unemployment, economic hardship and poverty.

2.5 Measures to Prevent the Spread of COVID-19 According to the Nigeria Centre for
Disease Control

It is important that Nigerians strictly adhere to social distancing and other necessary precautions in
place. These measures include taking the following 11 precautions below to protect yourself and
your family:

1. Regularly and thoroughly wash your hands with soap and water, and use alcohol-based hand
sanitiser.
2. Maintain at least one and half metres (i.e. 5 feet) distance between yourself and anyone who
is coughing or sneezing.
3. Persons with persistent cough or sneezing should stay home or keep a social distance, but not
mix in crowd.
4. Make sure you and people around you, follow good respiratory hygiene, meaning cover your
mouth and nose with a tissue or into your sleeve at the bent elbow or tissue when you cough
or sneeze. Then dispose of the used tissue immediately.
5. Stay home if you feel unwell with symptoms like fever, cough and difficulty in breathing. Do
not engage in self-medication
6. Avoiding/postponing events with large gatherings of people including schools, workplaces,
places of worship, crowded supermarkets and pharmacies, social and sporting events.
7. Persons with a persistent cough or sneezing, should stay at home until they recover
14
 8. Make sure you and people around you observe hand and respiratory hygiene by:
i. Covering your nose with tissue when sneezing or coughing. Immediately dispose of
tissue in a covered bin and wash your hands with soap and water. Use an alcohol-based
sanitiser if no water and soap is available
ii. Coughing or sneezing into the sleeve of your bent elbow if no tissue is available.
9. Avoid all non-essential travel to all countries
10. Stay informed on the latest developments about COVID-19 through official channels on TV
and Radio, including the Lagos State Ministry of Health, NCDC and Federal Ministry of
Health.
11. Using as much natural vitamin C as possible will help in strengthen the human body immune
system since

2.6 REVIEW OF RELATED STUDIES

The coronavirus pandemic is corona virus disease which has affected many, leading to deaths and
have had great impact on Nigeria stock market, these have attracted a lot of scholars to investigate
the pandemic. Ozili and Arun (2020) studied the impact of covid-19 on the global economy reveal
that covid-19 have huge negative impact on Nigeria stock market in which the virus encouraged
social distancing which led to a close of financial markets, corporate offices, businesses and events.
The speed in which the virus spread exponentially can result to damage of safety in consumption and
investment among investors, consumers and trade partners. Similarly, Chukwuka and Ekeruche
(2020) researched on understanding the impact of the COVID-19 outbreak on the Nigerian economy,
the study shows Nigeria economy was estimated GDP in 2020 of 2.5% increase, this have been
truncated by the pandemic and lead to high increase of the nation’s debt services and revenue ratio at
60% amid the falling prices of oil has been a great source of concern to policy makers as this will
make it stiff for the economy to grow. This study is consistent with Oladeinde (2020) which
examined Coronavirus and Nigeria Cuts Oil Benchmark to $30, Slashes Capital Budget By 20%
which was discovered that Nigeria will make significant change in its 2020 budget to contain the
effect of the outbreak of corona virus pandemic on the nation’s economy. The bench mark for crude
was placed at $57 per barrel is set to drop down to $30 per barrel, this shows that Nigeria will
experience much reduction in the revenue and projects than what was planned. The report of
International Monetary Fund (IMF) also show global growth will fall by 0.5% in 2020 due to the
covid-19 pandemic, the effects shows that there will be Stiffness of Demand and supply, sharp
decrease in commodity and tourism arrivals. it was predicted that by the first half of the year, the
15
global economy might enter into recessionn, as the result of huge inability to process raw material
and respond to high demand of goods and services. Also, Akanni and Gabriel (2020) investigated
The Implication of COVID-19 on the Nigerian Economy, it was discovered covid-19 pandemic lead
to disruption of activities and economy instability like the united trade and development agency has
cost the outbreak of the pandemic to be at about $2trillion. It was seen that factors like social
distancing, stay at home, limitation in spending and supply factor which include; cutting or stopping
production and output have negative impact on economy growth. These have led to increasing
poverty and unemployment rate, the National Bureau of Statistics (NBS) report 2020 placed Nigeria
21 among 181 counties with high unemployment rate of 23.1%, it is estimated that about 87million
surviving with less than $2 a day benchmark. Olufemi and Bolanle (2018) examined the
International portfolio diversification in the Nigerian stock market, the study was concluded using
vector autoregressive granger causality test for relationship shows there is no relationship between
Nigeria stock market and the five other developed countries. But applying the Generalized Method
of Moments regression, the result shows during crisis and pre crisis period that developed stock
markets have impact on the Nigeria stock market during crisis period. This was further concluded
that Nigeria stock market is safe for investors before the covid-19 crisis but this looming pandemic
that shock the world economy has made it difficult to invest. Also, Alex et al (2020) used
Microscopic Markov chain approach to investigate a mathematical model for the spatiotemporal
epidemic spreading of COVID19. It was concluded that at the first half of April 2020, the pandemic
will be at its peak, and incubation period of 5.2days in which the condition is still asymptomatic, the
beat fit is 2.86days as asymptomatic infection period which later is 3.2days except its mild
symptoms in young people, The fatality rate was fixes at 42% of ICU patient, which from ICU to
death is estimated to 7 days and those recovering from ICU spend 10days. Ndedi (2020) studied the
aftermath of the Coronavirus in Selected African Economies. The study concludes that countries like
Nigeria and Angola are going to feel the pain as they majorly depend on crude oil to have a stable
economy and manufacturers of good and services, importation of foods have been tightened. It will
further lead to African strong economic countries like Nigeria, South Africa, Angola, Egypt and
Algeria will experience fiscal pressure due to sharp drop of commodity price. Lastly, John (2020)
examined COVID-19 Pandemic, a War to be won and understanding its Economic Implications for
Africa. The study concludes that the International Monetary Fund has called on creditors of all
official bilateral to suspend all debt payment as forbearance is requested by International
Development Association Countries to savage the economy instability, and further added that there
will be substantial cost on the economy as the pandemic continue to spread which require strong will
16
and action by the people and government to continue a war against it. The full impact of covid-19 on
the African economy cannot be determined now, but there will be more insight into it as situation
unfolds.

2.7 CHICKEN CONTINENTAL RESTAURANT LIMITED

CHICKEN CONTINENTAL RESTAURANT LIMITED was incorporated in ABEOKUTA, Nigeria

with Registration Number 1145023. It was registered on 27 Sep 2013 and its current status is
unknown. Company's registered office address is 4, PRESIDENTIOAL BOULIVARD, OKELEWO,
, ABEOKUTA, OGUN.

2.8 EFFECT OF COVID 19 ON CHICKEN RESTAURANT LIMITED

The COVID-19 pandemic impacted the Chicken restaurant industry via government closures,
resulting in layoffs of workers and loss of income for restaurants and owners and threatening the
survival of independent restaurants as a category. Within a week after the first closures, the industry
representing independent restaurant was ask for immediate relief measures from local, state, and
federal governments, saying that as many as 75 percent of independent restaurants could not survive
closures of more than a few weeks. By March all restaurants had permanently closed.

Signs read "We're open, carryout & order pickup only at this time. Get it delivered." and "Please
keep social distancing in mind. Keep 6 feet apart from one another. Please take your order to go once
received. Thank you for helping us comply with government health recommendations."

Restaurant closures started March 27th when the Federal Government ordered all bars and
restaurants accross the country to close their restaurants and bars;.

Across the world, restaurants' daily traffic dropped precipitously as compared to the same period in
2019 as the coronavirus impacted the overall industry. Closures of restaurants caused a ripple effect
among dependent industries such as food production, liquor, wine, and beer production, shipping,
linen suppliers, fishing and farming and among musicians, florists, and delivery services.

17
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