09 October 2014, Makurdi – Nigeria’s high dependence on oil and gas as well as low traffic of foreign tourists into the country are the buffers that shielded her from economic devastation that could have resulted from the outbreak of the Ebola Virus Disease, the World Bank has said.
In a report titled: ‘The economic impact of the 2014 Ebola epidemic: Short and medium-term estimates for West Africa’, which was made available to our correspondent in Abuja on Wednesday, the bank estimated that the sub region could lose as much as $25.2bn to the viral disease.
The bank said Nigeria’s economic loss to Ebola included the initial reduction in commercial activities in Lagos, which ranged between 20 and 40 per cent, as well as the significant resources the government spent to contain the disease.
The report stated, “If Nigeria succeeds in containing the virus, the economic impact is likely to be limited. The recent decline in commerce likely reflects initial shock, fear and uncertainty following the appearance of Ebola in Lagos and Port Harcourt.
“If confidence builds around what has been a successful containment effort, commerce should soon return to near-normal levels. While even a contained presence of Ebola in Nigeria will discourage foreign tourists from visiting the country, Nigeria has a relatively small foreign tourist industry to begin with; so, the effect will be marginal.
“Nigeria’s high dependence on oil to fund exports and provide budgetary resources may actually be an advantage in the face of Ebola, as the oil sector is highly regionally concentrated with much activity located offshore, and should not suffer Ebola-related disruptions in the absence of a mass epidemic.
“Official trade flows with West Africa are relatively small. Informal trade flows are much larger, although it is not clear how these flows would be affected by any Ebola-related trade disruptions. The GDP growth in Nigeria is expected to be close to six per cent in 2014 and the general government budget to be close to balanced.”
For the three West African countries of Liberia, Sierra Leone and Guinea hit by the Ebola disease, however, the story is different, according to World Bank analysis.
Beyond the terrible toll on human lives and suffering, the Ebola epidemic currently afflicting the sub region is already having a measurable economic impact in terms of forgone output, higher fiscal deficits, rising prices, lower real household incomes and greater poverty, the bank said.
The economic impacts include the costs of health care and forgone productivity of those directly affected but, more importantly, they arise from the aversion behaviour of others in response to the disease.
The World Bank said, “The short-term (2014) impact on output, estimated using on-the-ground data to inform revisions to sector-specific growth projections, is on the order of 2.1 percentage points of GDP in Guinea (reducing growth from 4.5 per cent to 2.4 per cent); 3.4 percentage points of GDP in Liberia (reducing growth from 5.9 per cent to 2.5 per cent) and 3.3 percentage point of GDP in Sierra Leone (reducing growth from 11.3 per cent to eight per cent). This forgone output for these three countries corresponds to $359m in 2013 prices.
“The short-term fiscal impacts are also large, at $113m (5.1 per cent of GDP) for Liberia; $95m (2.1 per cent of GDP for Sierra Leone) and $120m (1.8 per cent of GDP) for Guinea. These estimates are best viewed as lower-bounds. Slow containment scenarios would almost certainly lead to even greater impacts and corresponding financing gaps in both 2014 and 2015.”
– The Punch