Nigeria and other African economies are projected to record substantial revenue losses, particularly from the oil and gas sector, as the devastating effects of the Coronavirus pandemic continues its devastating toll on the various economies.
Giving the projection in a statement on the risks of the pandemic to the continent’s economies, Africa Energy Chamber, quoted the Atlantic Council, an American Atlanticist think tank in the field of international affairs, as noting that the immediate effect of COVID-19 for the sector has been on the demand for crude oil, and on its prices.
According to the chamber, most analysts and operators now agree that 2020 could see a negative demand growth for oil globally as industries shut down and countries around the world go on lock down with the attendant effect of oil prices reaching their lowest levels since 1991.
It clarified: “For Africa, this means an immediate pressure on state budgets and macro-economic stability. Apart from South Africa, the continent’s biggest economies rely heavily on oil revenue to fuel state budget and public spending and ensure macro-economic stability.
“All sub-Saharan Africa’s producers had budgeted 2020 with an oil benchmark well above $50, from $51 in Equatorial Guinea all the way up to $57 in Nigeria. With predictions that oil prices won’t go anywhere above $30 for the rest of the year, most budgets need to be re-adjusted and public spending needs to be drastically cut”, the chamber added.
On the pandemic’s direct impact on Nigeria’s revenue potential, the Atlantic Council specifically predicted that COVID-19 would cause the country to suffer the biggest lost in the continent with $15.4bn, representing about 4 per cent of the nation’s GDP
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