Nigerian budgetary response to the COVID-19 pandemic and its shrinking fiscal space: financial sustainability, employment, social inequality and business implications

Amanze Ejiogu,Obiora Okechukwu,Chibuzo Ejiogu

doi:10.1108/jpbafm-07-2020-0101

Abstract

PurposeThis article aims to explore the Nigerian government's budgetary response to the COVID-19 pandemic as well as the economic and social implications of the pandemic response.Design/methodology/approachOur analysis is based on a review of secondary evidence such as Nigerian Federal Government budget documents, policy documents, Central Bank of Nigeria circulars, news media articles, World Bank and International Monetary Fund reports, reports from Big Four accounting firms and policy think-tanks.FindingsThe authors highlight how increased borrowing to fund COVID-19 related economic and social interventions have significantly squeezed Nigeria's fiscal space. The authors also highlight that while some interventions provide short-term economic relief to the poor and small businesses, other interventions and gaps in the policy response have the potential for significant negative impact on businesses, households and unemployment. In addition, the authors highlight the potential for long-term benefits to the health sector and for private sector engagement in corporate responsibility and philanthropy.Originality/valueThe authors present a comprehensive account of the Nigerian government's budgetary response to the COVID 19 pandemic and the economic and social implications of this response.

Highlights

The coronavirus (COVID-19) pandemic has affected most, if not all, countries in the world albeit to varying degrees, as some countries have been more successful than others in limiting the spread of the disease and in preventing deaths
The slump in oil prices from the first quarter of 2020 further weakened the Nigerian economy, shrinking even more its fiscal space and ability to manage in times of crisis
This article engages with the budgetary response of the Nigerian government to the COVID-19 pandemic

Summary

Introduction

The coronavirus (COVID-19) pandemic has affected most, if not all, countries in the world albeit to varying degrees, as some countries have been more successful than others in limiting the spread of the disease and in preventing deaths. Prior to the COVID-19 pandemic, Nigeria was already facing significant shrinkage of its fiscal space. Nigeria has a diversified economy, the government relies disproportionately on the oil sector for its revenue. A fall in global oil prices and poor macroeconomic management led the country into a recession in 2016 from which it only started to recover in the second quarter of 2017. The slump in oil prices from the first quarter of 2020 further weakened the Nigerian economy, shrinking even more its fiscal space and ability to manage in times of crisis

Objectives

Findings

Conclusion