Nigeria may Lose N324bn to Ebola in Q1, N567bn in Q2 – Analysts

After careful analysis of possible impact of the Ebola virus on the Nigerian economy, analysts are afraid that the country may lose a whopping $2 billion or N324 billion in the first quarter of its entrance to Lagos by late Patrick Sawyer of Liberian-American.
Bismarck Rewane, chief executive officer of Financial Derivatives Company (FDC) Limited, “the sectors that will be impacted the most in Nigeria are Aviation, Hospitality and Tourism, Trade, Medical and Agriculture. Analysing these sectors’ contribution to GDP shows that Nigeria may lose about $2 billion in the first quarter of the outbreak. The chance of the out-break going into a second quarter is very slim; which could extend the loss to $3.5 billion”.
Whilst a small part of the Nigerian economy is already benefiting from the Ebola scare such as shop owners selling sanitizers, a larger part is experiencing losses.
For instance, in the aviation industry, where air transport was 0.09 percent of Nigeria’s Gross Domestic Product (GDP) in the first quarter of 2014 and the second most used means of transportation after road, several airlines including Arik Air, Asky, British Air-ways and Emirates have suspended flight operations to and from any of the Ebola affected countries. Saudi Arabia also suspended giving out visas to Muslim pilgrims from West African countries. Serious screening for Ebola has also begun at several international airports before passengers are allowed to board an airplane. We expect revenues in the aviation sector to plunge downwards, which would affect both the airlines and the support industry (handling companies, oil marketers, and catering, duty free shops, among others).
In the Hospitality and Tourism industry, preliminary information shows that many hotel and airline bookings in Lagos have been cancelled by in-bound travellers due to Ebola scare. This is not surprising since India and Greece have openly advised their citizens to avoid non-essential travel to Nigeria and other Ebola-affected countries. It is estimated that restaurant visits in Lagos have already declined by 50 percent.
The Accommodation and Food Services sector was approximately one percent of total GDP in the first quarter of 2014.
“This amount is not negligible considering the importance that restaurants play in the lives of many working-class Nigerians. In addition, a direct implication of the low turnout to social events is a decline in the events management business”, said Rewane.
The virus is expected to hit trade even more adversely. In the first quarter of 2014, trade contributed 17.35 percent to Nigeria’s GDP. Trade and investment flows are critical to the external sector of this vibrant country and the West African region. The region enjoys almost a custom union with common external tariff and movement of visitors without visas. Since movement of people is restricted in and out of the affected regions, fewer goods will be equally transported. Air transportation is very critical to trade.
“Hence, a reduction in the number of international flights literally means a reduction in international trade flows. Domestic trade is also likely to be negatively affected significantly if the disease spreads”, said Rewane.
Also, agriculture which contributed 19.65 percent to GDP in the first quarter of 2014 will be affected. There will be a decline in sales of several animals, even when they have not been linked to Ebola. Farmers or hunters living in areas where there is co-mingling of animals connected to Ebola will reduce their exploits. The hunter’s association in Nigeria has already complained about a slowdown in business due to experts’ directive that people should abstain from consuming bush meat. Other meat sellers may also witness a reduction in patronage if the disease spreads further. In addition, in a bid to prevent illegal movement of Ebola-linked corpses across states, there will be many stops at checkpoints. This is expected to affect the time taken to deliver agricultural goods.
The medical sector is not left out. In the first quarter of 2014, the human health and services sector was 0.71 percent of GDP. Given Nigeria’s weak health care system, especially lack of facilities to hold patients in isolation and intensive care units, an outbreak may overwhelm the poorly-equipped facilities. Because of the infectious nature of the disease, expenditure on preventive healthcare has risen, especially spending on personal hygiene and care products. Currently, the demand for sanitizers and hand wash liquids has surged upon news of the Ebola outbreak in Nigeria. Almost every store in Lagos has run out of supply, despite increased inventory levels. It is also expected that medical tourism will decline as people become discouraged by the intense checks at international airports.
The Food, Beverage and Tobacco (FBT) that contributed 4.85 percent to GDP in the first quarter of 2014 will be affected as well. Demand for these kinds of goods is increasing as people are stocking up in case a state of emergency is declared if the Ebola disease spreads further. This will lead to an immediate increase in revenues for sellers of these commodity items. However, over time, the market for consumer goods will decline as people boycott social events and ceremonies. The breweries and distilleries industry will be affected due to a decline in drinks, especially for spirits. This will result to a loss in revenues and de-cline in profits in the medium to long term.
Funeral parlours are not left out. The government has advised against burial ceremonies and visits to mortuaries since coming in contact with an infected dead body is the easiest way to contract the disease. Hence, undertakers should see a slowdown in business.
It is however expected that sectors like Petroleum, Telecommunications and Power will not be affected by the outbreak of Ebola.
Ebola was first identified in the Democratic Republic of the Congo and Sudan in 1976. Named after the Ebola River in Congo, Ebola is a hemorrhagic disease that is believed to occur when an Ebola virus is transmitted to human via an infected animal host. Human-to-human transmission occurs via direct con-tact with blood or bodily fluids from an infected person. The Ebola virus is highly contagious and has flu- like symptoms such as catarrh, headache, fatigue, vomiting and loss of appetite. Ebola has one of the highest fatality rates of any disease, killing between 50-90 percent of victims. There is no known cure or vaccine, though research is ongoing to provide a remedy. Early detection and treatment leads to a better chance of survival. Good personal hygiene is encouraged such as frequent hand washing and use of sanitizers to prevent contracting the disease. Abstinence from ‘bush’ meat and wearing protective clothing around a person with the disease are other suggested ways of reducing the chances of being infected.

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