Nigerian economy may lose $3.5bn to Ebola

The nation may lose $3.5bn to the Ebola epidemic by December this year, if nothing is done to contain the spread of the deadly disease.

The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, who stated this in the firm’s latest report on Friday, said the fear of the disease had affected economic activities significantly.

According to him, the sectors of the economy mostly affected by the fear of the disease are aviation, tourism and hospitality, trade, medical and agriculture.

He added, “Analysing these sectors’ contribution to the Gross Domestic Product shows that Nigeria may lose about $2bn in the first quarter of the outbreak. The chance of the outbreak going into a second quarter is very slim; which could extend the loss to $3.5bn.”

The Boko Haram insurgency had been the headline news in Nigeria until July 25 when it was confirmed that Ebola was imported into the country.

Since then, fear, panic, disbelief and frustration have set in as economic, particularly in Lagos, have gradually slowed down. Global rating agency, Moody’s, has announced that the outbreak of Ebola in Nigeria can lead to serious disruptions in some sectors of the economy with negative financial consequences.

The World Health Organisation has also reported that the Ebola crisis is vastly underestimated as the reported cases and deaths do not reflect the scale of the crisis.

About 1,069 persons have died in the affected countries, out of which three are Nigerians and 198 other persons are currently under quarantine in the country.

Teneo Intelligence estimates that economic growth in Liberia, Sierra Leone and Guinea may reduce by two percentage points.

In other words, Sierra Leone’s growth rate in 2014 may not exceed 12 per cent instead of the initial forecast of 14 per cent. Liberia, Sierra Leone and Guinea have a combined GDP of approximately $13bn, equivalent to 2.5 per cent of Nigeria’s GDP.

Rewane said that a small part of the Nigerian economy was already benefiting from the Ebola scare. These include shop owners selling sanitisers.

He, however, said a larger part was experiencing losses.

He said, “Air transport was 0.09 per cent of Nigeria’s GDP in the first quarter and the second most used this means of transportation after road. Since the outbreak of Ebola in West Africa, several airlines including Arik Air, Asky, British Airways and Emirates have suspended flight operations to and from any of the Ebola affected countries.

“Saudi Arabia also suspended giving out visas to Muslim pilgrims from West African countries. Serious screening for Ebola has also begun at several international airports before passengers are allowed to board an airplane. We expect revenues in the aviation sector to plunge downwards, which would affect both the airlines and the support industry (handling companies, oil marketers, catering, duty free shops, etc.)”

He further said, “Hospitality and tourism preliminary information shows that many hotel and airline bookings in Lagos have been cancelled by in- bound travellers due to Ebola scare. This is not surprising since India and Greece have openly advised their citizens to avoid non-essential travel to Nigeria and other Ebola-affected countries. It is estimated that restaurant visits in Lagos have already declined by 50 per cent.”

“Trade in the first quarter contributed 17.35 per cent to Nigeria’s GDP. Trade and investment flows are critical to the external sector of this vibrant country and the West African region. The region enjoys almost a custom union with common external tariff and movement of visitors without visas. Since movement of people is restricted in and out of the affected regions, fewer goods will be equally transported. Air transportation is very critical to trade.

“Hence, a reduction in the number of international flights literally means a reduction in international trade flows. Domestic trade is also likely to be negatively affected significantly if the disease spreads.”