Lagos Records

COVID-19: The Fast and Furious Pandemic is a Bully

Covid-19 came fast and furious. It took national governments by surprise and caught even the largest corporations napping.

The pandemic came like a rushing water to the surface of the earth due to wretched carelessness of the Chinese.

China must pay a price for this malfeasance.

In a space of 90 days, it has literally shut down the global economy. Perhaps, the Chinese would be able to raise stake in Africa, her new found love.

Unfortunately, it may take time for the wound to heal as global economies have been brought to it heels.

The pandemic, however reveals the weakness in Africa. While African leaders are following up with the trend, there is no concerted effort to search for a black design, refined and promoted vaccine(s).

The drill is heavy in every sector. In the commodity futures markets, it has forced certain strategic commodities (crude oil) into negative territory.

African countries that rely strongly on petrol-dollars to finance her spending plans for 2020 would be forced to have alternative plans.

Now, cleaner air is more important than oil, nature has shown us the weakness of the things we hold dear and strategically.

Now we are playing catch up. There is no doubt that ultimately, we will prevail, but at a terrible human and economic cost.

In Nigeria, our acclaimed readiness has been put to test. Now, we have realised our foolishness.

This error would have been avoided, but it did not happen just in time!

What is certain in a post COVID-19 World is that work and how it’s done will fundamentally change.

In Sun-Tzu’s the Art of War, the author said, in the midst of chaos, there is also opportunity. The only simple thing Nigeria would love to hope for is for restructuring.

Would this government try to go that way? It is quite unclear because of nefarious sentiment in the corridor of power.

Global trade, global liquidity, health systems, supply chains, China’s place as the global manufacturing hub are all up for serious review.

It is no good news but job losses loom. Companies have become so exposed to going concern threats not envisage when drawing up their plans for 2020.

In a twist of an event, all strategic estimates matter no more. There is need to go back to the drawing board.

Going forward, work will increasingly be remote.

Remote work and the use of robots/artificial intelligence had occupied a small niche. Now they will increasingly be mainstream.

What this means for software and hardware firms in the information and data communication industry is equally clear.

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In Nigeria, a few opportunities are emerging for early seed funding for local firms in this sphere.

In advanced economies, apart from the heavy-hitters Google (for Hangouts), Microsoft (for Skype), and stand-alone companies that focused exclusively on this sphere: Atlassian, Zoom, Blue Jeans, Team View, etc. are set to clean up.


Central and World Banks will seek to provide liquidity for the markets to mitigate business failures, a crash in asset prices and provide stimulus for cash strapped economies.

The utility of interest rates as a tool by monetary authorities in influencing economic variables like employment, the price level, savings, investment and asset prices, is almost at its limit.

In Nigeria, interventions by the government will be more of fiscal/administrative than monetary. That would however depend of the nation’s fiscal buffer.

But wait a minute, did I say fiscal buffer?

It is not clear where Federal Government would see fund to finance budget 2020. This is coming at the time debt position has ballooned to all time high.

Foreign receipts from oil which accounts for some 90% of the nation’s external revenues has been threatened.

Taxes, customs duties and tariffs would be massively affected in 2020 just as the time when FG need to support the economy to hit depression point.

The current reading in the global economy remains that countries would slip into recession. However, some would further the trend down to depression.

The situation needs strategic non-partisan thinking. Do we have that in Nigeria with the current make up?

With the economy doing 1.8-2.2% GDP growth compare with 2.9% growth in population and Monetary Policy Rate at 13.5%, there’s really not much the CBN could reasonably do in this regard without setting off inflationary pressures.

On the other hand in Europe, North America and Asia, interest rates are close to zero.

The collapse of commodity prices has brought on deflationary pressures. Reflation is needed urgently.

They cannot however set rates below zero. “So what to do”? Another round of Quantitative Easing (QE).

This means a flood of cash, some of which are destined for emerging markets like Nigeria.

Perhaps this explains the recent rally in Nigerian blue chip stocks as investors seems to have started taking position.

Globalization: This will continue apace, albeit with a few modifications.

China’s role as the world’s manufacturing hub is up for review, due to trust issues raised in the wake of covid-19, and the communist party’s rather haphazard bid for global political power.

Alternative supply chains are being set up from Vietnam, Laos, Cambodia, India and South East Asia to even parts of Africa, as China loses its low cost advantage.

Also, disruption of supply chains owing to china’s duplicity over covid-19 has highlighted the inherent danger in relying on it as a major supplier and commodities destination.

Again, I say, China must pay a price for this malfeasance.

This has medium to long term political implications for the Communist Party of China’s hold on power.

All things considered, deep, deep damage is being done to national and global economies.

Some analysts equate this with the great depression in the sense that aggregate demand, corporate profits, government tax revenues and employment have already taken or will take a big hit.

In my opinion, the major positive here is that unlike in the 1930s, the, major central banks stand ready, willing and able to provide all the liquidity that the markets may require.

Global trade, construction, agricultural activities are continuing, preventing a fall into that deflationary trap of nearly 100 years ago.

It will take another 5 to 7 years of concerted work to get the world out of this and the speed with which nations will emerge from this will depend on how fundamentally strong their economies are.

Nwafor Arinze, Chief Executive Office, Happy Remit Limited

COVID-19: The Fast and Furious Pandemic is a Bully

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