Impact of COVID19 Pandemic in the aviation industry in Nigeria


Impact of Coronavirus Pandemic in the aviation industry in Nigeria


Background to the study

Since the end of the Second World War in 1945, no single global event has taken centre stage than the novel Corona virus, otherwise known as Covid-19. It has taken the entire world by storm, spreading like a wildfire. Pneumonia of unknown cause was detected in Wuhan, China and was first reported to the World Health Organisation (WHO) Country Office in China on 31 December 2019. WHO has consequently declared it a global pandemic. Since then, the world has confronted significant challenges on all spheres of human endeavour: political, social, economic, demographic among others (WHO, 2020a & 2020b). The unprecedented problem being confronted globally has no equal in recent memory. Apart from its clear threat to humanity in terms of health, life and safety, COVID-19 poses significant economic and financial risks to businesses, employment and livelihood. Governments all over the world have therefore been taking important steps to control the spread of the disease, ranging from severe restrictions of human movement in terms of lockdowns, closing down of internal and international borders in a bid prevent the spread of the infection and in order to manage the health concerns of those who have been infected. Consequently, various global businesses, political, social and even sporting events like the Tokyo Summer Olympics 20202 have all been postponed or outrightly cancelled. The

growth projection for the global economy as the Covid-19 outbreak threw its earlier projection into serious doubt (International Monetary Fund, 2020). The flow of goods through global supply chains have reduced drastically, given that China is one of the world’s largest manufacturers and exporters, and the Chinese government ordered the closure of major factories in the country. There is a general consensus among economists and financial analysts that the pandemic will likely plunge the world into another global recession (Financial Times, 2020). Covid-19’s effect on the global economy is broader and more severe than most epidemics, pandemics, and economic crises of recent decades. Most recessions are triggered by a lack of spending, which governments can address through fiscal stimulus, but COVID-19 is interrupting economic activity at multiple points, creating a complex combination of supply and demand shocks at the same time (Baldwin, 2020). For the primary time in world history, about 90% of the world’s citizens are restricted from travelling, either to return home or to destinations of choice either for business trip or tourisms. Without a doubt, the foremost affected in travel & tourism is that the aviation industry. An estimated 25 million aviation jobs and 100 million travel and tourism jobs across the world are in danger . That is not all; the growth recorded in the industry in the last seven years

would potentially be lost across the world as a result of COVID-19 (IATA, 2020) Sub-Saharan Africa reported its first case of Covid-19 infection in Nigeria on February 27, 2020, through an Italian man who came to Nigeria from Milan. According to the African Centre for Disease Prevention and Control (African CDC), 14,524 Covid-19 cases were reported in 52 of the 54 countries in Africa, with 788 deaths and 2570 recoveries, as of April 13, 2020 (ACDC, 2020). Even though over four million cases of this pandemic infection have been confirmed world-wide as at mid-May 2020, reported infections in Africa remain comparatively low. Infection rate figures appear to be evolving differently in Africa, and recorded Covid-19 fatalities remain considerably lower than elsewhere, leading some to suggest that the continent may yet be spared from the worst (Pilling 2020). Reasons ascribed to this phenomenon include the fact that the continent has a young population, warmer weather and also the prevalence of BCG vaccinations against tuberculosis. Figures started rapidly rising late April 2020, when Africa experienced a jump of more than 40% in just over a week (Burke 2020).
In May 2020, the WHO further warned about mass casualties and overwhelmed health systems over a longer period of time if countries fail to take a proactive approach to the crisis (WHO 2020b). In the Nigerian situation, President Muhammadu Buhari announced the lockdown of two states from the South West region of the country, Lagos, Ogun and the Federal Capital Territory, Abuja on 13thof April, 2020. Other State Governors also announced various measures including total or partial lockdowns all in an effort to contain the spread of the growing Corona virus pandemic. The Nigerian Government has issued several Directives and Orders to assist in containing the spread. Included is the COVID-19 Regulation, 2020 which imposed significant restrictions on the movement of persons and non essential goods all over the country especially the epic states (Lagos, Ogun and Federal Capital Terriory (Adekilekun, Ahmed & Egbewole, 2020).

The respective state governments also imposed varying degrees of restrictions on movement of persons and goods, including public gatherings and markets within their states. There were also various fiscal and economic stimulatory measures introduced by the Federal Government of Nigeria to ameliorate the impact on businesses and save the economy from collapse (Shittu, 2020; Adekilekun, et al., 2020). Of particular note is the financial framework taken out as measures by the Federal Government of Nigeria and Central Bank of Nigeria on fiscal and monetary which include Conditional Cash Transfer, Food Distribution to the Less Privileges, tax reliefs, tax waives, credit facilities and loan rescheduling among others. COVID-19 pandemic brought to fore the serious underlying challenges that have bedeviled the Nigeria health system over the years. While Africa’s major health indicators (life expectancy, mortality and morbidity) have improved significantly in the last two decades (United Nations, 2019), the emphasis has been on confronting specific health threats (child mortality, maternal health and child health, malaria, tuberculosis, ebola and HIV/AIDS). Even though there were existing health institutions charged with responsibility for this type of infection in Nigeria – National Centre for Disease control (NCDC), Institute of Human Virology (IHV), National Institute for Medical Research (NIMR) – poor funding and lack of preparedness made them ineffectual in the face of rampaging Covid-19. A major concern is the inability of Nigeria to manage the challenges posed by the need to maintain social distance. The major cities are overcrowded with many informal settlements and slums which are inevitably overcrowded. Added to this is illiteracy and lack of enlightenment. People live very closely together in slums and shanties and use shared infrastructure and sanitation which quickens the spread of infectious diseases. The absence of a social safety net exposes millions of Nigerians working in low-paying jobs in the large informal sector to the vagaries of the economic environment. The challenge of a drastic fall in the oil prices for a major oil exporting nation like Nigeria can be better imagined.
The closure of factories and businesses globally has virtually eliminated the demand for Nigeria’s crude oil. The resulting demand-supply imbalance has led to Nigeria selling her oil at discounts not seen even during the 2009 financial crisis. The resultant effect has been the downward review of national and sub-national budgets. Also foreign remittances and other vital sources of foreign currency have also dried up. The exchange rate has been on a negative against the local Naira with the obvious effect on inflation. All of these have left Nigeria in an extremely vulnerable position, with economic growth expectations slashed, falling revenues, rising unemployment and weakening currency. Thus far, African countries, including Nigeria, have only been able to adopt stimulus packages worth an average 0.8% of GDP, in comparison to an average of 8% in developed countries (Okonjo-Iweala, Coulibaly, Thiam, Kaberuka, Songwe, Masiyiwa, et al., 2020).

It is against the background that the study seek to investigate the Impact of convic19 pendemic in the aviation industry in Nigeria