A Feeble Post-Lockdown Bounce – FBNQuest

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This week, FBNQuest is sharing the findings of the third round of COVID-19 Impact Monitoring, a telephone survey conducted by the National Bureau of Statistics (NBS) with support from the World Bank. The bureau contacted the same 1,950 Nigerian households in April/May, between 02 and 16 June, and now between 02 and 16 July. The first survey was held during the selective lockdown, the second once some restrictions had been eased and the third when the country was making further steps towards what passes for normality. At this stage, a total of twelve rounds are planned with the World Bank.

We can see from the latest survey that the Nigeria Centre for Disease Control (NCDC) has kept most Nigerians informed remotely through text messages. More than two-thirds of respondents had received guidance and health tips from the centre, and of this number almost 90 per cent were happy to make use of the service. The use of mobile telephony to spread simple, practical messages has been a successful government tool across many developing countries.

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Responses in the third round tell us that economic activity is picking up from the low point in March/April, and that we are seeing a slow recovery in Nigeria rather than a bounce. This week the national accounts for Q2 2020 were released by the NBS: the overall result (-6.1 per cent y/y) is the worst for about 15 years but likely to prove the weakest in 2020.

The share of respondents in employment in July (81 per cent) is close to the pre-COVID level of 85 per cent and way above the low of 43 per cent in lockdown. This picture must be qualified however, urban Nigeria lags rural. A good number of respondents have moved industries, typically from agriculture to commerce or services. Some have found their new posts precarious. Almost half the wage workers surveyed, who represent just 12 per cent of respondents, were working fewer hours than pre-COVID, and only 11 per cent more hours.

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That the virus has brought more inflation is evident from the NBS inflation reports and from this third round. Access to staple foods has improved, above all for cassava, yet price and availability remain deterrents for many households. The same applies to public transport: more services but higher prices. Nigerians surveyed are struggling to pay their rents, with 23 per cent in urban areas termed ‘rent insecure’ as a result of declining income and higher food and non-food prices.

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The responses on safety nets and coping mechanisms confirm what we have already learnt from the national accounts and the quarterly results of listed companies about the squeezing of household budgets. Relative to the first round in April/May, dependence on food assistance, and domestic and external remittances has sharply fallen while drawing on income from property, savings and investments has picked up nicely. (The NBS note suggests that the decline in food support may have been the consequence of the school holidays.)

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As for the mechanisms to handle shocks, we note a rise in the share of households that have reduced their food consumption from 54 per cent between mid-March to April/May to 69 per cent between April/May and July. There was a sharper increase, from 11 per cent to 33 per cent, for those engaged in additional income generation. Many of these new posts, as indicated earlier, are expected to prove insecure.

The main positive is the rising share of respondents in employment. It is outweighed, however, by the findings on prices, household finances and safety. Economic recovery is expected to be slow.

BRAND SPUR

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