Simulation of Policy Responses and Interventions to Promote Inclusive Recovery from the COVID-19 Crisis in Nigeria

Abstract

The COVID-19 pandemic has exerted huge health and economic effects globally. The Nigerian economy was affected both by external shocks and by domestic measures to stem the pandemic. This study examines the short- and long-term macroeconomic, welfare, and gender effects of a rapid recovery and a prolonged-pandemic scenario and simulates the effects of COVID-related economic policy interventions in Nigeria using a computable general equilibrium model. It also analyses the effects of financing mechanisms for COVID-19 interventions. Using a dynamic, single-country CGE model calibrated to a new 2019 social accounting matrix (SAM), the study finds that, relative to the Rapid-Recovery Scenario, the Prolonged Pandemic Scenario would deepen the negative economic effects and delay the recovery from the economic crisis. The analysis further reveals that regardless of the anticipated scope and duration of the pandemic, women are likely to be more affected than men in terms of job losses and income reduction. The policy interventions initiated by the government would mitigate the economic effects of the pandemic, but do not close this gender gap and the employment effects of the interventions are limited to the short term. The effective administration of COVID-19 vaccines to 40% of the population in 2021 would partially reverse the growth losses if external financing approach is adopted.