How can Nigeria soften the impact of coronavirus on economy?

The global economy is facing unprecedented challenges due to the impact of the coronavirus pandemic, with oil prices experiencing one of the biggest drops since 2008. Nigeria, as Africa's largest economy, is not immune to these challenges. In a recent interview with CNBC Africa, Oluwole Adelokun, Associate Director at KPMG, provided insights on how Nigeria can soften the impact of the coronavirus on its economy. Adelokun highlighted the significant drop in oil prices, which has had a profound impact on the Nigerian economy from two perspectives. First, there is a substantial impact on government revenue due to the decrease in oil prices. Second, the ability to defend the currency is also a concern. Adelokun mentioned that the Central Bank of Nigeria's response to the situation is encouraging, and he believes they will be able to defend the Naira. However, the reality is that the revenue from oil is expected to decline by about 37% based on current price levels, posing a significant challenge to the government's budget. When asked about the expectations from the fiscal committee set up to review the budget, Adelokun expressed optimism. He noted that investors found the CBN's response reassuring, as evidenced by the positive trend in the Nigerian Stock Exchange. Adelokun also pointed out that the recent financial releases included support for small and medium-sized enterprises (SMEs) to help businesses navigate the economic landscape. He expects a focus on critical infrastructure spending and a possible reduction in overhead costs to reallocate funds effectively. Regarding Nigeria's borrowing plans, Adelokun acknowledged that borrowing might become more expensive in the current global economic climate. He suggested a thorough review of the budget to identify items that can be deferred without compromising essential services. While some capital expenditures may be reduced, Adelokun emphasized the importance of prioritizing critical infrastructure projects to support economic growth. In conclusion, Adelokun believes that there is potential for Nigeria to find ways to mitigate the economic impact of the coronavirus. By implementing targeted measures to support businesses, reevaluating budget priorities, and focusing on critical infrastructure investments, Nigeria can navigate these challenging times. While the road ahead may be challenging, Adelokun remains hopeful that Nigeria can weather the storm and emerge stronger from this crisis.