Nigeria may be inching close to recession quicker than earlier envisaged as economic losses arising from the #EndSARS protest amounted to about N960billion, LEADERSHIP Sunday investigations revealed.
Already, the nation’s economy is still bleeding from about three months of total and partial lockdown imposed by the federal and state governments to curb the spread of the rampaging coronavirus in the country, leading to high inflation, low disposable income, increased unemployment, shrinking government revenue, forex volatility, among others.
The protests, which brought the nation’s economy on its kneel for 16 days, has added insult on injury, further dragging the nation backward in its bid to move farther from recession.
The World Bank had earlier predicted that Nigeria is facing “potentially the most severe downturn in four decades…even if the coronavirus outbreak is contained.”
According to the World Bank report released in August 2020, the double whammy of the oil price fall, and the COVID-19 pandemic had put Nigeria on the path to economic ruin and the country may not get out of it quickly if significant policy changes are not made.
The report pointed out that the oil price collapse was destabilising the economy and affecting fiscal and external balances, and growth, even as the COVID-19 pandemic was reducing foreign remittances and adding to the households’ loss of income and consumption.
It also noted that foreign capital inflows are also expected to decline adding to external payment pressures.
In the wake of all these, and at a time the country was looking towards external borrowing to finance its N13 trillion 2021 national budget, economists said this was not the best of times for Nigeria to continue to incur additional costs, which the #EndSARS protests seem to have brought on the country.
The experts said from experience, it will take the country several weeks and months to recoup back the N960billion economic losses which arose from the protests and its attendant effects on the nation’s economy.
Meanwhile, LEADERSHIP Sunday checks showed that the economy was losing about N60 billion daily, translating to N960 billion for the 16 days the protest lasted.
The youth protesters had, during the protests barricaded major highways within Lagos and Ogun States to push home their demand for an end to police brutality and scrapping of Special Anti-Robbery Squad (SARS), whose operatives were accused of killing and injuring innocent people in the country.
Lagos-Ibadan Expeessway, Lagos-Abeokuta Expressway, Oshodi-Apapa Expressway, and most major and inner roads within Lagos were barricaded by the angry youths and became impassable for people to go to their places of work, thereby affecting the flow of economic activities majorly in Lagos and neighbouring Ogun State.
Companies had to instruct their workers to work from home, while the offices remained closed.
Although, there were similar protests and vandalism in Abuja, Ogun, Edo, Anambra, Akwa-Ibom, Cross River, Ekiti, Ondo, Osun, Oyo, among others, our investigations revealed that Lagos remains the most affected state where hoodlums hijacked the protests, taking advantage of the 24-hour curfew imposed on the state by the State governor, Babajide Sanwo-Olu, between Tuesday and Friday, to vandalise and set ablaze public buildings, robbing shops and carting away goods worth several billions of Naira in the process.
The Lagos Chamber of Commerce and Industry (LCCI) had on Tuesday disclosed that the economy had lost N700billion in 12 days as at Monday, October 19, 2020, to the protests which led to restriction of business activities across the commercial centre of the country. This translates to about N60 billion losses daily.
The losses, according to findings, arose from partial operations of players in the manufacturing, financial, aviation, maritime, oil and gas sectors, as they could not conduct full operation, hence limiting the profit that ought to accrue to them.
However, the estimated losses do not include public and private properties that were vandalised during the three-day curfew in Lagos State, running into about N50 billion. When this is added to the previous losses, it took the total loss to over N1 trillion.
Sectoral experts who spoke to LEADERSHIP Sunday confirmed these losses, calling on the government and the protesting youths to come to an agreement, so that normalcy could return.
Meanwhile, fuel scarcity looms as loading of petroleum products from major facilities in Lagos which feeds other South West States and parts of North Central, had been halted in the last three days, following intense breakdown of law and order, especially in Lagos.
LEADERSHIP Sunday reports that all public and private petroleum products depot in Lagos and adjoining States of Ogun have shut operations while trucks line up along road corridors as protesters block key entry points to depots.
Mr. Akin Akinrinade, chairman, Independent Petroleum Marketers Association of Nigeria (IPMAN), Lagos chapter confirmed to our correspondent that for four days, petrol tankers have not been able to load.
“We have approximately 4,000 trucks of 33,000 liters capacity each loading from both privately operated and public depots run by the Nigerian National Petroleum Corporation, NNPC. As I speak with you in the last three days no single truck has left the depot. Those that successfully loaded on Monday were unable to leave because of road blockade and then the curfew announced by government,” Akinrinade said.
Corroborating this, the national president of IPMAN, Elder Chinedu Okoronkwo, told our correspondent on phone that activities in the downstream sector is largely hampered by imposition of curfew by state governments.
He said, “We are gradually witnessing a lull in the industry. Initially petroleum tankers had access to haulage operations but now with curfew imposition by States, it is becoming difficult to sustain operations and the implication is that scarcity will creep in.
“We are not against anyone agitating for better governance however, there is need for us to embrace dialogue so that socio-economic activities will not be negatively impacted”.
On her part, the president of LCCI, Mrs Toki Mabogunje, appreciated the value of citizens’ engagement and the demand for accountability which the EndSARS protest essentially represents.
She however expressed concern about the negative impact that the protracted nature of the protest has on business activities across the country.
Over the past days, she said, economic activities have been crippled in most parts of the country and have been particularly profound in the urban areas.
Similarly, in Lagos, the management of Primero Transport Services (PTS) Ltd, the operator of Bus Rapid Transit (BRT), Lagos has disclosed the loss of over N100million in six days due to the #EndSARS protests.
The head, corporate communications, PTS, Mr Mutiu Yekeen, who made the disclosure in Lagos on Wednesday, October 21, said the company made a lot of losses between October 16 and October 21, adding that the management was not currently operating at any level because the protest in Ikorodu had been hard on its operations, even as the BRT had not been operating since penultimate Friday, coupled with the curfew declared by the state government which means no transporter could operate from 4 p.m on Tuesday.
“We are hoping something better will come out of the situation because presently, the situation has impacted negatively on our business in terms of revenue generation. Also, we have lost over N100 million in the last six days but we decided to stop operations to avoid damage to our vehicles and also for the safety of commuters as an organisation,” he stressed.
In the meantime, the Lagos State government has equally revealed the loss of at least N234 million due to the closure of tollgates as the #EndSARS protests on the Island persisted.
The state, before now, had continued to generate money from adverts at the toll plazas.
The figure was obtained from the daily and monthly targets set for the tollgates by the government, which owns the tollgates being managed by the Lekki Concession Company (LCC).
Moreover, the national president of Nigerian Association Of Chamber Of Commerce Industry Mines And Agriculture (NACCIMA), Hajiya Saratu Iya Aliyu, expressed condolences of the association to immediate and extended families of all those who have lost dear ones in the violence being witnessed across the nation.
“We recognise the right of citizens to peaceful legitimate protests, but we condemn and are totally against the wanton destruction of properties and looting by hoodlums who have hijacked the peaceful protests. We cannot sit by and allow the looting and other criminal acts by hoodlums to go on unchecked. We must work with others to put an end to the violence and lawlessness we are now witnessing,” she advised.
She said the impact of the crisis and wanton destruction of properties as being witnessed is clear for all to see, saying, billions have been lost in arson and looting going on.
“Business operations have also been seriously impacted. NACCIMA’s efforts as a national chamber, to help project our country as a favourable and investment friendly destination to our Business partners abroad, and other Foreign investors over the years is now suffering a serious setback,” she pointed out.
In the same vein, a capital market analyst, Dr Timi Olubiyi, said the protest and the crisis emanating from it will have a lasting and devastating effect on the Nigerian economy.
He noted: “Foreign Direct investment will wane; we might witness a decrease in portfolio investment exposures. The insurance companies might have huge claims to settle in the coming days and months that are likely to be challenging.
“The SMEs will further experience situations that might impact negatively on their sustainability. Furthermore, capital, collateral and cost of funds might be issues for businesses going forward. The earlier the government fully intervenes and have an impacting resolution to curb these agitations, the better.”
Analysts at Cordros Securities Limited noted that the transportation, trade and manufacturing sectors are expected to be the hardest hit, saying, “on transportation, we expect reduced domestic and international flight operations pending when normalcy is restored.
“Similarly, we expect compliance with curfew directives to hinder the free movement of people and goods across the country, further compounding the woes of the transport sector which is yet to recover from the COVID-19 induced decline.
“While the manufacturing sector is currently being hampered by forex related issues and an unfriendly business environment, the imposition of curfews will further exacerbate the challenges of the sector. For the trade sector, the decline in household consumption brought about by higher food prices and shrinking consumers’ income will cascade into weak wholesale and retail trade in conjunction with the pre-existing supply chain constraints,” they stressed.
The destruction of public properties, including the Lagos Theatre Oregun, among others, has left the tourism industry in total displeasure.
Tourism expert and organiser of the Africa Travel Market (Akwaaba), Ikechi Uko, said, “It is sad that Lagos had to lose such property amongst others. When I saw the burnings going on, I was gutted because this is what the enemies of Lagos wanted. It is sad. For me, the theatre was personal.
“I am devastated because I didn’t know Lagos had such a wonderful product until I went there for world tourism day. And I was excited by the quality of the product with everything you need in a modern theatre. That is a purposeful built and intelligent-designed and executed product.”
In the maritime sector, the protest had earlier disrupted economic activities at the Lagos ports Complex – Apapa and Tin-Can Island as truck drivers, clearing agents and truck owners joined protesters clamouring for an end to police brutality under the #EndSARS campaign.
The port protesters numbering over hundreds sought an end to extortion by security agencies controlling traffic as well as sharp practices by officers of the Nigeria Customs Service (NCS).
The protesters succeeded in blocking the two major ports access roads with articulated vehicles, thereby crippling operations at the ports. The economic loss between then and now in that sector was put above N50 billion.
The banking sector was not immune from the multiplier effect of the protest, as branches of some banks were vandalized and burnt in the process, while the affected banks will need a large chunk of money to rebuild those branches back.
Similarly, the Telecommunication sector was equally affected, with the closure of several branches of mobile network companies, thereby, obstructing the network services of mobile phone users.
In the aviation sector, both local and international carriers have lost huge sums of money running into millions of dollars.
As at Tuesday, October 20, 2020, most local airlines in the country canceled their inbound and outbound flights, due to curfew already imposed in some states.
On Thursday, 22nd October, Arik Air also extended the cancellation of flight operations due to the curfew in Lagos state and some other parts of the country.
This time, all scheduled flights have therefore been cancelled until the lifting of the 24 hours curfew by government.
The airline had earlier cancelled all scheduled flights for Wednesday, October 21, 2020 due to the 24 hours curfew announced by the Lagos State government on Tuesday.
Similarly, Africa World Airlines (AWA) had also canceled its Wednesday flights.
In their reactions, aviation experts have put the aggregated losses in that sector to hundreds of millions of dollars, which translates to several billions of Naira.
Moreover, insider sources disclosed that insurance companies might have huge claims to settle in the coming days and months, with some of the properties damaged and burnt during the protest, having some level of insurance coverage, which entitled the owners to claims.