With Nigeria now tagged as one of the ‘Red List’ countries by the United Kingdom, Canada and others following the discovery of new Omicron variant of COVID-19 in the country, members of the organissed private sector (OPS) have raised the alarm that fresh challenges await the economy in 2022.
The private sector investors’ body believe the situation will, no doubt, disrupt some of the achievements recorded so far in trade, investments and businesses in general, if the Federal Government does not show seriousness in containing the pandemic.
In addition, the OPS noted that the new variant could further slip the country’s fragile GDP (Gross Domestic Product) back into recession for the fifth time since the inception of President Muhammadu Buhari’s administration, as the travel ban by United Kingdom and Canada will see other developed countries especially the United States, also extending the ban on travellers from Nigeria and vice versa.
The private sector body raised concern that since the announcement by Canada and Great Britain of Nigeria joining the ‘Red List’ countries, there has been massive rush among Nigerians and foreigners at the airports, mostly US bound flights in anticipation of imminent US government’s announcement. This, they believe, is to forestall their being trapped in Nigeria.
The OPS also stated that the Red List tag would definitely affect in-bound flights of many Nigerians coming for the Yuletide with the country’s aviation sector set to witness massive drop in flights into Nigeria for the second year running after 2020 COVID-19 disruption.
Speaking in a separate interviews with New Telegraph in Lagos, a former Chairman of Lagos Chamber of Commerce and Industry (LCCI) Small and Medium scales Enterprise Group (SMEG), Dr. Jon Tudy Kachikwu, and renowned economist, Founder/ Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE) and a former Director- General, LCCI, Dr. Muda Yusuf, stated that the new Omicron variant should be a cause for concern for government, the business community and Nigerians in general as it would definitely lead to another round of disruptions since 90 per cent of imported goods in terms of raw materials and goods and services come from abroad.
Kachikwu said: “Obviously you know that anything that has to do with political and economic decisions go pari pasu in the global world. So that means that whatever affects political dimension also affects the economy.
“So, it will definitely affect us in all ramifications because once you restrict movements, it affects movement of everything, both human and materials goods. “So that means that, invariably, importation will reduce, export will reduce. So it’s going to affect all the countries, it’s not only Nigeria.
But being a Third World country, because, we rely on almost 90 per cent of imported goods and raw materials in our economy, we will be more affected despite the fact that all this pandemic of a thing emanated from the West, and now that this one is coming out from an African country, which is not that deadly, the Western countries are already blowing it out of proportions by banning travellers from Nigeria.”
The former LCCI SMEG chairman said that the travel ban and the red list tag would also increase the country’s headline inflation rate by three per cent as cost of production locally will go up amid raw materials scarcity.
“Looking at the Nigeria’s fragile economy, instability in the forex market, weakness of local currency, it’s definitely going to increase the cost of production in the country’s manufacturing sector with goods and services going up. So Nigeria’s inflation rate is going to go up like three or more in percentage.
“So, definitely, it’s going to be a serious issue for government to tackle. The earlier our government sit up and retaliate as Canada and Britain have already listed Nigeria among Red List countries in the world, the better. So it’s next for the Federal Government to react immediately before other countries will join to say this is a no go area country.
They just have to ban Britain and Canada by also bringing out stringent policy too. “They have their investments here, so they will equally lose. Canada too has serious investment interests here too. But Britain have more than Canada in Nigeria.
“My only regret is our government is not up and doing. So they need to sit up and do the needful by retaliating swiftly too,” he said. Speaking further on Nigeria’s investment climate, Kachikwu added: “Our investment climate is going to be affected seriously.
Of course, also to be affected are other African countries because of their reliance on Nigeria as Big Brother in economic development.” He pointed out that Nigeria for now is a no go area for boost in foreign direct investments (FDIs).
“So, with this, of course, we should be expecting massive drop in FDI. Movement of goods and services will be disrupted and this is where we generate our foreign exchange earnings. “In addition, most of these investors in oil and gas sectors internationally are not going to come down here to Nigeria for businesses and investments since they have blacklisted us.
For Yusuf, “the new variant of the pandemic should be a cause for concern. It could lead to another round of disruptions. But it should not be a cause for panic. There are already a number of disproportionate responses from some countries leading to restrictions on some countries, Nigeria inclusive.
“This would surely affect many travellers, tourists, investors and citizens returning to their home countries. I do not expect these restrictions to last for long.” The former LCCI DG said that the pandemic’s impact on lives in Africa had not been as calamitous as was earlier predicted.
According to him, the number of fatalities were far lower than gloomy outlook painted at the onset of the pandemic. “These predictions were premised on the extremely weak public health systems and facilities and the low vaccination rate across the continent. “The effect of the new variant may also not be as devastating as expected. But that is not to diminish the importance of observance of COVID-19 protocols and continuous vaccination,” he noted.
Also reacting, a financial adviser and wealth management expert, Gabriel Idakolo, said: “This travel ban could take us to 2020, which witnessed reduction in business transactions and investments from the EU, UK and Nigeria.
“Although the length of the travel ban contributed significantly to the negative impact it had on investment and investor, I hope the present restrictions will not linger for long so that investments, especially by non- residents, will be affected minimally.”
On his part, Mr. Ibrahim Shelleng, MD, Credent Investment Managers, said the ban policy would take a toll on both sides. “There will undoubtedly be an impact on both countries, but the severity of the impact will be determined by how long the ban lasts. “Total trade between UK and Nigeria was worth about £5.1 billion in 2019 but this dipped significantly in 2020 due to the pandemic.
The gradual improvement in global economies will undoutedly be affected by this new setback. “Whilst the United Kingdom have been trading partners with Nigeria from existence, it does not represent the major bulk of our international trade, therefore, the effect of the ban should not significantly affect our position.
The UK is not amongst our top 10 exporting countries, however, it is amongst the top 10 countries that we import from (about 2.2% of total imports).”
“Certainly with the Brexit, the UK has been looking to improve its international trade partnerships and Nigeria is amongst countries that the UK wants to improve trade relations with. Hence this ban would certainly put a dampener on things,” he added