COVID19 Economy Special Report

Rethinking Nigeria’s Economic Response to Covid-19 Pandemic

The world is faced with very challenging times with the advent of the novel coronavirus, now better known as covid-19. The disease has left in its wake over one hundred thousand deaths in about three months and over one and a half million people infected.

Health infrastructure globally has never been this stretched in modern history as the disease continues to wreak havoc while a search for its cure remains elusive.

Beyond the deaths and turmoil of those hospitalized by covid-19 is the misery it has caused the economies of virtually every nation on the planet. The economic destabilization is unparalleled, coupled with the uncertainty in its wake. In two months or less, over twelve million Americans have unemployment Insurance, representing 13% of the labour force. This is the worst unemployment record since World War Two. Petrol consumption in Europe has fallen by 88%. Demand has fallen elsewhere in China and the United States owing to the shut-ins, leaving a barrel of crude selling at $23.1 at the time.

Contrary to sentiments in certain quarters, China is also severely hit by the pandemic in economic terms. It has recorded a 6.2% unemployment rate, the worst since it started taking such records in the early nineties. This represents about 200 million people unable to return to their jobs.

In Nigeria, the grimness is not yet clear. However, the World has predicted the first recession in 25 years in Sub Saharan Africa, where Nigeria belongs. Before the virus, Nigeria’s unemployment rate stood at 23.1%, no one knows for sure by how much it would have risen by the time the survey is carried out.

What we know

What we know for certain is that revenues have dropped as demand for the nation’s crude witness continuous decline. This much was announced by the Group Managing Director of the NNPC, Mele Kyari at last month’s CBN Going for Growth 2.0 series were announced that fifty barges carrying the nation’s crude had nowhere to berth.

This is uncharted territory and portends grave consequences for the nation existentially. Oil still accounts for 60% of Government revenues and 80% of foreign exchange earnings.

No economic expert is required to forecast that things will change dramatically. Our ability to survive as a nation will depend on how much we can adapt to these changes and very swiftly too.

Unemployment is sure to rise as aggregate demands fall while the nations, we readily fall back to borrow from, will be nursing their own wounds. Export will fall globally as Governments try to learn the best approach to revive their economies.

This leaves us as a nation with virtually one option- Ourselves. What we failed to do in the past in form of diversification, import substitution, promotion of locally made products and solutions will be our only hope for survival.

As a business mogul, Aliko Dangote alluded to recently, we have frittered away several opportunities for developing the local economy and have wastefully depended on imports to meet our needs. Their new dispensation will have no room for such waste and policy inconsistencies. Good enough, we have a population large enough to consume whatever begin to produce.

Producing and consuming locally will have to be pursued without hypocrisy while the waste that has become a culture will have to be stopped. This is the time to start implementing strategies that will bring down the burdensome cost of governance.

Softer landing to private sector

It is commendable the CBN announced a N50bn fund for small and medium scale businesses as part of its response to the covid-19 pandemic. The fund should be increased substantially and transparently administered because the SMEs will be the nucleus of growth. Also, other previous interventions for SMEs that have been largely unaccessed should be reworked to enable genuine small business owners’ benefit.

On the fiscal side, the Federal Government should offer softer landings to private sector operators who have been hit badly by the inactivity in the economy. It will not be out of place to consider tax reprieve over some periods for these companies to enable them to restart and lessen the possibility of a huge layoff of employees.

Also, the funds being requested from the multi-lateral development financial institutions in this period must be tied to projects that will have the most impact on the economy, especially, Agriculture, Infrastructure, Healthcare as well as Education and Innovation.

Since necessity is the mother of invention, the nation’s much-touted greatness can assume reality, if the right economic decisions are taken and followed through, post covid-19.

Writing by Biodun Dare or our News Directorate, editing by Saadatu Albashir