The COVID-19 pandemic has had a massive impact on the commodities market, shrinking global consumption as a third of the world was forced into lockdown to curb the spread of the new coronavirus. With the unprecedented plunge in demand for fuel, prices collapsed in March and the futures market fell into negative territory last month, leaving oil-dependent economies such as Nigeria facing a precarious future.

“The world has changed, we are living in a very different environment and the oil market is very significant for Nigeria. Not only in Nigeria but most oil-exporting countries both in Africa and elsewhere,” said Lesiba Mothata, Head of Strategic Clients at Alexander Forbes, a strategic partner of Mercer.

Most African governments, particularly Nigeria, Ghana, Rwanda, and Kenya, have been unable to respond with sufficient stimulus packages unlike those seen in developed countries mainly due to declining revenues from exports amid reduced consumption in key trading partners.

Stimulus package in G20 economies – an international forum for the governments and central bank governors from 19 countries and the European Union – is around $1600 per capita and about 10 percent of GDP while that of sub-Saharan Africa is 6 percent of GDP with very little per capita contribution, adds Mothata in a presentation titled Economic impacts and prospects for Nigeria during a recent webinar held by Mercer.

But amid the crisis, there are glaring opportunities for diversification of Nigeria’s gross domestic product based on shifts in the non-oil economy over 36 years to 2017, Mothata said. Moving forward, the government has to develop a “barbell strategy” that involves nurturing sectors that have increased in significance (agriculture, trade, and services) and opening for private capital sectors that have declined (manufacturing, construction, financial services, public sector, and transportation).

More so, available data shows that Africa as a whole is well on its way to adopting next-generation connectivity. According to GSMA, a global trade organization for mobile operators, seven African countries, including South Africa, Nigeria, and Kenya, will have 5G network by 2025.

Although other regions in the world have done much more in terms of technological advances and widespread connectivity, the pace of increase in the population covered by at least a 3G mobile network per 100 inhabitants on the region over the last five years (51 to 79 percent) is very significant. “Much of that I believe is from the leadership that we’ve seen come out of Nigeria in embracing 3G and also moving higher into more next-generation connectivity,” he notes. 

According to him, regulators might be encouraged to expedite the commercial use of 5G technology to enhance faster mobile connectivity particularly to aid the new normal in the wake of the pandemic such as working from home, virtual meetings, and classrooms, etc.

There is also untapped potential in remittances, according to Mothata, noting that Nigeria’s diaspora is a significant market player with half of Africa’s remittances destined to its largest economy. Though the World Bank expects a 23 percent decline in diaspora remittances this year due to the ongoing pandemic, this remains a huge opportunity to be neutralized for entrepreneurial considerations. “If you were to focus all these tech advances and also hike that contribution from the financial sector, Nigeria has a good story to tell,” he said.

Mothata adds that for companies to seize these opportunities, they have to look beyond the COVID-19 short term impacts and all the negativity. Also, there is a need for Nigerian leaders to emphasize and give policy directions for the post-pandemic era to guide businesses.

“As a company, you don’t give up contributions around Nigeria,” he said. “This remains the most interesting part of Africa that can do the most from where we sit. You have to obviously remain committed to opportunities around Nigeria despite all the negativity.”

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