The economy has been battered, human movement caged and turmoil in global stock and financial markets due to COVID-19 pandemic. However, experts say the situation is redeemable, writes SINA FADARE
THE COVID-19 pandemic hit the world unexpectedly. While the advanced economies were rattled and are frantically searching for a solution after thousands of lives have been lost, the underdeveloped economies are yet to wake up from their slumber in terms of confronting the deadly virus and its adverse effect.
The effects of the pandemic on the economy and all other areas of human endeavour were devastating because of the poor health system and the country’s mono-economy that has been operational for many years. The situation has led to the unprecedented disruption of food chains, reduction in crude oil price and total lockdown of all economic activities.
According to analysts, the adverse effects on critical sectors such as oil and gas, airlines, manufacturing and consumer markets were largely due to the mono-economy which the country has operated for many years until lately when agriculture is being considered as an alternative to oil in terms of revenue earning and food security.
Perhaps, the Central Bank of Nigeria (CBN) had the premonition of this calamity a few years back when it gave agriculture a pep in its intervention programmes.
Anchor Borrower Scheme became handy and the saving grace for farmers. The scheme, which was launched by Buhari in 2015, was designed to empower farmers to ensure food security.
According to the Director, Corporate Affairs of the CBN, Mr. Isaac Okoroafor, over 2.5 million farmers have benefited from the scheme in about 17 agricultural commodities.
Savouring the economic gains of these intervention programmes, the issue of border closure crept in, a policy that did not go down well with some of our neighbouring countries and was heavily criticised.
However, shedding more lights on the closure of the border, the CBN Governor Godwin Emefiele pointed out that “we are not saying that the borders should be closed in perpetuity, but that before the borders are re-opened, there must be concrete engagements with countries that are involved in using their ports and countries as landing ports for bringing in goods meant for local consumption, it is understandable,”
He further explained that before the closure of the border, the Rice Processors Association of Nigeria has nothing less than 25,000 metric tons of milled rice which they cannot sell due to saturation of the market with imported rice from the Republic of Benin, adding that just after a week of the closure of the border, all the rice were sold.
The CBN boss emphatically said the closure of the border has brought a good tiding to the Nigerian economy.
“So, on what the benefits of the border closure on the economy of Nigeria are, I just used two products – poultry and rice. The benefit is that it has helped to create jobs for our people, it has helped to bring the integrated rice milling in the country back into the business and they are making money.
Though the COVID-19 pandemic has negatively affected the economy and the lockdown not only collapsed a lot of businesses but also opened a window of hunger for artisans who majorly depended on daily hustling for their survival, a situation that has invalidated earlier gains before the pandemic.
Speaking to The Nation on the ability of the country to quickly return to its economic hub that has encouraged a paradigm shift from oil and gas to agriculture and agro-allied ventures, Mr. Mike Osagie, an economist, noted that though the pandemic took the country by surprise, the agricultural programmes embarked upon by the Federal Government a few years ago had made food available, otherwise the country would have been worse hit.
Osagie further explained that a lot of lessons has been learnt during the lockdown which could encourage the government to put on their thinking cap and address all the critical area such as health facilities, adding that it should focus more on agriculture and let the farmers be the centre of focus to ensure food sufficiency and creation of more jobs.
According to him, post-COVID-19 should be a new Nigeria where massive diversification in agriculture is made necessary.
”Since the CBN got it right due to some of its intervention programmes for farmers, manufacturers and small-scale enterprises. This will go a long way in restoring all the economic losses during the lockdown.
However, the CBN, to cushion the effect of the pandemic on the economy, took some radical steps to meet the yearnings of the people. The Director, Financial Policy and Regulation of the apex bank, Mr. Kevin Amugo noted that the bank is committed to providing support for affected households, businesses, regulated financial institutions and other stakeholders to cushion the adverse economic impact of COVID-19.
Amugo pointed out that all CBN intervention facilities are granted a further moratorium of one year on all principal repayments effective March 1, which indicates that any intervention loan will have additional one year to pay up, adding that participating financial institutions are to provide new amortisation schedules for all beneficiaries.
In addition to this, the apex bank said all interest rates on all applicable CBN intervention facilities are hereby reduced from nine to five per cent for one year effective from March 1, 2020.
According to him, the bank has established a facility through the NIRSAL Micro Finance Bank for households, small and medium-sized enterprises (SMEs) that have been particularly hard hit by COVID-19, including, but not limited to hoteliers, airline service providers and health care merchants.
He explained that the CBN has extended its grants to all Deposit Money Banks to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak, particularly oil and gas, agriculture and manufacturing.
Amugo noted that the bank is ready to consider additional incentives to encourage the extension of longer-tenured credit facilities and provide liquidity backstops as and when required given its role as Banker to the Federal Government and lender of last resort.
Assessing the situation, Adetunji Ogunyemi, an Economic Historian and lawyer who equally doubled as the Acting Head of Department of History, Obafemi Awolowo University, Ile-Ife, noted that four critical lessons have been learnt from the lockdown due to COVID-19 pandemic.
In a chat with The Nation, Ogunyemi said the Nigerian economy has been founded on an extremely fragile pedestal of mono-culturalism due to its excessive dependence on oil revenue and export whose health and viability are externally determined.
“The real sectors of the Nigerian economy such as agriculture, industries and manufacturing, which should have employed the largest proportion of the Nigerian populace, have been neglected for too long and this has been to the peril of the economy.”
He explained that the private sector, especially in the areas of transportation, small and medium-scale enterprises hold the key to the country’s economic development and not an over-bloated public sector that consumes more than 70 per cent of total government expenditure but cannot defend the economy in critical periods such as this.
According to him, real and effective governance happens at the state and local government levels, adding that the time has come to devolve more powers and resources to those levels by restructuring the power equation in the country under the Constitution of the Federal Republic of Nigeria.
The don explained that there are a lot of things that can be put in place so that the economy will bounce back in a post-COVID-19 pandemic. This includes the reality that the private sector holds the key to the nation’s economy which government at all levels must key into and give support to Small and Medium-Scale Enterprises (SMEs).
Ogunyemi noted that the Federal Government also needs to reduce the cost of governance by faithfully implementing most of the recommendations contained in the Steve Oronsaye’s Report on reforming the federal public sector.
He said: “We do not need a public service that is consuming the largest proportion of resources, sometimes up to 80 per cent of the total budgetary expenditure. It is time we reduced the cost of governance and then increase productivity through redirection of finance in favour of private sector investments in agriculture, mining, manufacturing, industries and education.”
He argued that the time has come to restructure the country along with competitive federalism.
“The states of the federation should be centres of investment and growth and not of distribution of revenue from the Federation Account.
“There should be, for now, a suspension of the implementation of the 7.5 per cent Value Added Tax. The old rate of five per cent should still subsist until the year 2021. This is to allow the SMEs to recover from the huge losses that the lockdown had inadvertently caused them and also to stimulate demand and consumption,” he said.