Effect Of Corona Virus On Global Economy

Project and Seminar Material for Economics

Effect Of Corona Virus On Global Economy


Abstract


The purpose of this research is to investigate how Covid-19 affects the global economy growth, using the Nigerian economy as a case study. Covid-19 has been the source of changes in the business environment across world from the beginning of year 2020. The effects on the Nigeria economy are nearly unknown, therefore this research is unique. The aim of this study is to gain more knowledge on how Nigeria economic growth are responding to the pandemic. By following a qualitative research method, the study will explore and conduct a deeper understanding on the Nigeria economy experience through a data collection. The literature review has been established, theories are mostly related to digital business environment and value chain activities. The literature review has been summed up into a conceptual framework which illustrates the connections between the theories and Covid-19.

Furthermore, the conceptual framework has been used to analyze the findings from the empirical data which was conducted in a multi-case study. The analysis chapter discusses similarities differences between the cases and connection to theory. Lastly, the conclusion chapter of this research concludes the findings and analysis, and it contains theoretical implications, recommendations, limitations and suggestions for future research.


Chapter One


Introduction

1.1 Background to the Study

At present the new name of fear is Coronavirus disease (COVID-19). This is not only killing the people around the world but also causes economic downturn which destroy the country in both ends. Coronaviruses are a group of related viruses that cause diseases in mammals and birds. In humans, coronaviruses cause respiratory tract infections that can be mild, such as some cases of the common cold (among other possible causes, predominantly rhinoviruses), and others that can be lethal, such as SARS, MERS, and COVID-19. Basically, it is a very infectious disease which is caused by a new virus, named after Covid-19.

The outbreak of the novel coronavirus, named as COVID-19 (also known as SARSCoV-2) by the World Health Organization (WHO), has been declared a pandemic by the WHO. The rapid ‘globalization’ of the COVID-19 pandemic is something that the world perhaps has never encountered before. The infection of the COVID-19 virus was first reported in December of 2019 in Wuhan – the seventh largest city of China. Among the family of coronaviruses, the other coronaviruses the world encountered before are the Middle East Respiratory Syndrome (MERS)and Severe Acute Respiratory Syndrome (SARS). Research suggest that the outbreak began from the workers and customers slaughtering animals such as pig, dog, rat, civet cat, rat, and snakes etc. at a wholesale market in Wuhan (Chen et. al., 2020). Once infected by COVID-19, it can cause fever, cough, breathing problem, and in severe cases pneumonia and severe acute respiratory syndrome, heart failure and subsequent death.

Many African countries have relatively weak health care systems, proactive measures to prevent the spread of the virus will be critical. Countries should step up campaigns to educate the public on best practices, including promoting good hygiene and social distancing, discouraging large public gatherings, and encouraging employers to protect the jobs of employees who require quarantine or treatment. Campaigns should elicit the help of religious and civil society leaders for maximum effect.

“It is unavoidable that the novel coronavirus epidemic will have a considerable impact on the economy and society” – China’s president Xi Jinping, televised address, February 23, 2020. “The spread of the new coronavirus is a public health crisis that could pose a serious risk to the macro economy through the halt in production activities, interruptions of people’s movement and cut-off of supply chains” – Japanese Finance Minister Taro Aso. G20 gathering in Riyadh, Saudi Arabia, February 24, 2020. “Honda Motor Co. will reduce vehicle output at two of its domestic plants in Saitama Prefecture for a week or so in March due to concerns about parts supply from China where a new coronavirus outbreak continues to disrupt economic activities” – Honda spokesperson, March 3, 2020. Besides its worrying effects on human life, the novel strain of coronavirus (COVID-19) has the potential to significantly slowdown not only the Chinese economy but also the global economy. China has become the central manufacturing hub of many global business operations. Any disruption of China’s output is expected to have repercussions elsewhere through regional and global value chains. Indeed, most recent data from China indicate a substantial decline in output. China Manufacturing Purchasing Manager’s Index (PMI), a critical production index, fell by about 22 points in February. This index is highly correlated with exports and such a decline implies a reduction in exports of about 2 percent on an annualized basis. In other words, the drop observed in February spread over the year is equivalent to -2 percent of the supply of intermediate goods. Indicators on shipping also suggest a reduction in Chinese exports for the month of February. Container vessel departures from Shanghai were substantially lower in the first half of February with an increase in the second half. However, the Shanghai Containerized Freight Index continues its decline thus indicating excess shipping capacity and lower demand for container vessels.

The case is also the same in Nigeria, the Corona virus disease (COVID-19) outbreak has put everything on hold in the country. The total figures of corona virus patients in Nigeria have risen to 12 after four new cases were confirmed in Lagos State on Thursday.

Lagos State health commissioner Akin Abayomi announced the new cases in Ikeja during a press conference. Abayomi disclosed that 14 people were tested but four tested positive for the coronavirus adding that one of the new index cases had contact with the third confirmed case in Nigeria. The commissioner said one of the patients, a Nigerian female, came into Lagos on Saturday, March 14, 2020, in a Turkish airline TK1830. A Nigerian man in his 50s who never travelled anywhere is among the new four cases, Abayomi said. He said the last patient is a Nigerian male who arrived the country in a Lufthansa (airline) LH568 on Friday, March 13, 2020. Abayomi said the patients have been isolated for treatment at the Infectious Disease Hospital, Yaba, Lagos. The commissioner, however, said more tests are being carried as there is a “combination of imported cases and local transmission. The Executive of Lagos State is meeting on the next stage of social distancing. “The best way to slow the rate is to halt the movement of the virus from person to person,” Abayomi said. “Currently, we are following over 1,300 people right now to find information about the state of their health and the number is increasing.” He appealed to people on the two flights to self-isolate themselves and contact the government.


1.2 Statement of the Problem

The outbreak of corona virus disease (COVID-19) pandemic in Nigeria has increase the level of tension and anxiety among citizens in the country. The virus unlike other cases we have had in this country is highly transmittable with severe signs and symptoms. The outbreak of corona virus disease (COVID-19) might have effect on the Nigeria economy through low imports and exports in the country, poor tourism remittance and commodity price rate in Nigeria. Lastly there have been studies on corona virus disease (COVID-19) but not even a single study is based on the effect of corona virus (COVID-19) on the Nigeria economy; hence a need for the study.


1.3 Research Question

  1. What is the level of covid 19 spread in Nigeria?
  2. What are the effects of covid 19 on the different sectors of the Nigerian economy?
  3. What are the measures taken to determine the measures adopted by the Nigerian government to deal with the outbreak, and the strong measures to curb future pandemic in Nigeria?

1.4 Research Objectives

The overall objectives of this study is to examine the impact of covid 19 on the Nigerian economy.

Specific objectives:

  1. To determine the level of covid 19 spread in Nigeria.
  2. To determine effects of covid 19 on the different sectors of the Nigerian economy.
  3. To determine the measure adopted by the Nigerian government to deal with the outbreak, and the strong measures to curb future pandemic in Nigeria.

1.5 Study Hypothesis

The study hypothesis is:

Ho1. There is no significant implication of Covid 19 pandemic on business operation in Nigeria.

Ho2. There is no significant implication of Covid 19 pandemic on business profits in Nigeria.


1.6 Significance of the Study

The study on the effect of corona virus disease (COVID-19) on the Nigeria economy will be of immense benefit to all the Nigeria citizens, the health sector, and the federal government of Nigeria. The study will explore the prevalence of corona virus disease (COVID-19), the causes, and the effect of the corona virus disease (COVID-19) the Nigeria economy. The study will educate the masses on the mode of transmission of the corona virus disease (COVID-19) and the preventive measures to be adopted. The study will educate the Nigeria government on the policy implementation to curb the prevalence of the corona virus disease (COVID-19) and how to improve the Nigeria economy during this period. The study will serve as a repository of information to other researchers that desire to carry out similar research on the above topic. Finally, the study will contribute to the body of the existing literature on the effect of corona virus disease (COVID-19) on the Nigeria economy


1.7 Scope of the Study

The study will cover on the effect of corona virus disease (COVID-19) on the global economy. The study will be delimited to the effect of COVID pandemic on the different sectors of Nigeria economy.


1.8 Limitation of the Study

Financial constraint

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.


1.9 Definition of Terms

Corona Virus Disease (Covid-19):

Coronavirus disease (COVID-19) is an infectious disease caused by a new virus. The disease causes respiratory illness (like the flu) with symptoms such as a cough, fever, and in more severe cases, difficulty breathing. You can protect yourself by washing your hands frequently, avoiding touching your face, and avoiding close contact (1 meter or 3 feet) with people who are unwell.


Chapter Five


Discussion of Findings, Conclusion and Conclusion

5.1 Discussion

Three of the respondents stated that they have not been too negatively affected by Covid-19 and have therefore not made any major changes in their business operations and the business environment is almost the same as before. Digitalization is a key factor as to why some of these companies are not being too affected and Buer et al. (2018), explains that digitalization is a core element for creating an effective plan and control in a company. The authors argue that digitalization allows these 3 companies to have all the resources they need to operate as normal as possible during these times, and it allows the employees in the firms to have less human contact but still being able to work, as they can do it through digital channels. These companies being e-commerce further allows them to operate as usual and still have customers during a pandemic, as they don´t have to think about closing the store or adjust their opening times like physical stores have been forced to during the pandemic and this also relates to Wigand (2006), who stated that electronic commerce has shifted the definition of a company due to the abilities they have. The interaction between a company and customer no longer needs to be physical and they can instead interact trough

Business models should be adaptable and cope with uncertainties, complex, and rapidly changing environments (Al-debei, 2008), and the external environment has really changed since Covid-19. The changing environment has mainly impacted Royal Design and their current business model has not been able to adapt to it, due to them not being prepared for the consequences which the pandemic has brought and not having the sources to support enough employees. The effects that Royal Design is experiencing can also be a result of having specific suppliers that have not been able to adapt to the changing environment and due to circumstances with strict quarantine and social distancing in some countries, for example, Italy where it has been harder to ship products to companies in other countries. Company X and Outnorth are adaptable firms and they have only changed and adjusted a few things in their business environment and business models, and they are still up and running almost as usual through this complex and rapidly changing environment that Covid-19 brings. Nordiska Fönster has not yet been impacted to the extent where they have to adapt their business model to the situation, however, they are confident that if things were to escalate or change, they would handle the changes, case by case. Hem.com seems to not have adapted to the changing environment either, in a way where they still can operate as usual. Instead, they are taking the approach to work mainly from home as much as they can, make revenue from existing inventory, and mostly wait for the situation out. Keen and Williams (2013), states that the business model should be designed and developed for future planned businesses, and in comparison, to other respondents from the data, Royal Design is in the process of developing their business model which has been affected negatively due to the external environment.


5.2 Conclusions

The novel pandemic, coronavirus (COVID-19) affects every facets of individual’s life, the economy and the society at large. The Nigeria government adopts her policies as against the virus on her economy. The policies are both monetary and fiscal policy. Moreover, the adverse effect of this pandemic is much felt by the government and her citizens, though necessary measures have been taken the government and also adequately supported by NGO’s to ease the burden of the government. Despite response recommendation by the National Centre for Disease Control (NCDC) to curtail the spread of the disease; to avoid close contacts with people who are sick, always wash and sanitize their hands at least every 20 seconds, avoid putting their hands into their eyes, mouth and nose, while sneezing, sneeze to their elbows and should make use of tissue and properly disposed after use, avoid social and religious gatherings, clean and disinfect frequently touched objects and surfaces, also stay home when you are sick and prompt visit to the medical centres. Despite these, monetary and fiscal policies are taken to curb the nation against facing another recession.


5.3 Recommendations

  1. Nigeria being the giant and major player to Africa economy, it should then diversify and transform their economies by strengthening the productive capacity of African private sector to transform raw materials locally. According to them, this will help to improve domestic resources mobilization and reduce the continent dependence on external financial flows, which stands at 11.6% of Africa’s GDP compared to 6.6% of developing economies’ GDP as strongly recommended by the report of African Union (AU, 2020).
  2. Their further suggestion is also applicable to the Nigeria economy, recommending that there should be an increase in agricultural production thereby enhancing the food value chains to meet domestic and dependable exporting consumption by other nations.
  3. Set up and implement strategic job opportunity programs to reduce the alarming rate of unemployment within Nigeria.
  4. After the novel pandemic (COVID-19), more expenditure should be channeled to the educational sector so as to increase the nation’s investment in human capital in the long run.

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