Martins Hile, Editor, Financial Nigeria magazine
Follow Martins Hile
Subjects of Interest
- Social Development
Assessing the economic and human costs of #EndSARS protests 11 Nov 2020
The crippling economic crisis in Nigeria caused by the COVID-19 pandemic has been compounded by the widespread protests that took place across the country in October. In an unprecedented fashion, mostly young Nigerians were galvanised into a unifying call for ending police brutality. The protest movement that began on social media with the hashtag, #EndSARS, also demanded justice for victims of excessive and undue use of force by the police.
Two weeks of the largely non-violent protests were capped by serious acts of extensive vandalism and looting. The criminal acts that ensued ruined years of development and perhaps decades of public and private investment. In Lagos – the nation's economic hub and the state that was worst hit by the crisis – the government said it might spend up to N1 trillion to fix the damages to public infrastructure resulting from the civil unrest in the state. The estimated repair cost exceeds the state's N920.5 billion revised 2020 budget.
In an appeal Lagos State Governor, Babajide Sanwo-Olu, made for an end to the protests, he said, "I am the 15th governor of the state and Lagos has never witnessed this level of destruction. The oldest court in Nigeria was razed down. Many properties were completely destroyed. It is time to heal ourselves and time to heal Lagos." The governor and his counterparts in other states where civil disorder took place, imposed curfews to enforce law and order.
Amid the unrest, which drew global attention, the International Monetary Fund (IMF) released its latest Regional Economic Outlook for Sub-Saharan Africa. The Fund's final projection for the year shows Nigeria's gross domestic product (GDP) would contract by 4.3 per cent in 2020. This represents an upward revision from the IMF's earlier forecast of 5.4 per cent GDP contraction.
The growth projection for Nigeria made by the multilateral financial institution was based on low oil prices, compliance with oil production cuts as stipulated under the Organization of Petroleum Exporting Countries and other major oil producers (OPEC+) agreement, and reduced domestic demand due to COVID-19 lockdown. The IMF also did not foreclose downside risks to the outlook, including a second wave of coronavirus outbreak and the availability of external financing.
Following the significant economic fallouts of last month’s civil unrest, the IMF has further signaled a potential review of Nigeria’s growth projection. During a virtual press briefing on the regional outlook, Abebe Aemro Selassie, Director of the IMF's African Department, said the IMF was concerned about the protests in Nigeria. He said if the unrest persisted, it might be necessary to revisit the country’s growth forecast for 2020, despite closing its projections for the year.
Before the history-making #EndSARS protests occurred, Nigeria’s recovery path from a COVID-19-induced recession was already strewn with uncertainty, including doubt about the government's ability to finance its fiscal response. Working-hour losses, which entails shorter working hours and being employed but not working, persisted into the fourth quarter of this year. Several organisations, including many bank branches, had not reopened their offices in October.
Following the civil unrest that crippled economic activities across major Nigerian cities, various analysts and institutions have provided preliminary estimates on the economic cost of the protests and riots to the country. Greenwich Merchant Bank, a subsidiary of Greenwich Trust Limited, said the unrest and subsequent 24-hour curfew that was imposed by the Lagos State government cost the state at least N54 billion each day that the curfew lasted. Although the curfew – imposed on October 20 – was eased after three days, movement restriction during the night still remained in force for the rest of the month. With Lagos contributing approximately 30 per cent of Nigeria’s GDP, according to the financial institution, significant economic activity was lost.
Cordros Capital, a Lagos-based investment banking firm, said last month’s unrest and the persistence of the curfew around the country would compound the COVID-19-induced economic decline in Nigeria. According to the firm, this will result in tighter GDP contraction of 6.91 per cent in Q4 of 2020, and year-end growth of –4.15 per cent. While the firm’s annualised GDP growth projection for Nigeria is below IMF’s latest forecast, its projection for Q4 is above the country’s Q2 contraction, which was 6.10 per cent as reported by the National Bureau of Statistics.
As governments at federal and state levels begin to rebuild and repair damaged infrastructure and possibly provide some compensation to businesses that were affected by the vandalism, fiscal deficit is expected to expand as the public debt burden would also increase.
Notwithstanding the various measures that have been used to determine the economic impact of the unrest, we would be remiss not to address the human cost. Millions of Nigerians have been bearing the brunt of economic difficulties in the country, which has been breeding poverty as a result of underinvestment in the people and lack of social protection. Even before the onset of COVID-19, the social conditions in Nigeria have been worsening in the last five years.
The Director of the IMF's African Department attributed the civil unrest last month to the weak economic prospects in the country since the 2015-2016 oil price crash. Selassie said the protests in Nigeria were against unemployment and poverty, not just police brutality. “Where you have these kinds of economic difficulties, you know, social protests are not uncommon,” he said. The Ethiopian economist intoned the imperative of investing in education, health and job-creation.
Investing in the Nigerian people, the majority of whom are the youth, is key to achieving economic resilience and social prosperity. It is by no means trite to say the youth are the main drivers of today's economy. They are not just the nation's future.
The October peaceful protests and civil disorder left at least 69 people killed, including civilians and state security personnel, according to Femi Adesina, President Muhammadu Buhari’s spokesman, who spoke with the BBC. The #EndSARS physical gatherings ended after some young people were infamously shot by members of the Nigerian army at the Lekki Toll Plaza and in Alausa, both in Lagos. Since the shooting incidents, which the army outrightly denied initially, the campaign to end police violence has continued on social media platforms.
As the country reflects on the impact of the unrest amid severe economic hardship, policymakers in Nigeria are faced with the challenge of instilling hope in young people and making them believe that there is a bright future for them in the country.