Nigeria’s economic policies weak in shock resilience – Experts

The test of any economic system is partly determined by its resilience to shocks and the managers’ capacity to develop appropriate strategies to keep the economy running.

In Nigeria, the COVID-19 pandemic has raised a lot of issues about the efficacy or otherwise of the various policy measures by successive administrations in dealing with crisis with minimal or no losses. In this analysis on the COVID-19 saga, experts share their views on existing policy measure lapses and proactive approaches that must be adopted by government in the formulation and implementation of policies to grow the economy in the years ahead.

Like a volcanic eruption, the COVID-19 pandemic came with an unimaginable devastating impact on the global socio-economic space late December 2019 and till date remains intractable as it surges across geo-political frontiers causing lethal and material damages to humanity without respect to race or creed.

As with other parts of the world, the pandemic imperceptibly entered Nigeria and for over two months going now, various policy measures adopted by the governments and other initiatives by stakeholders in the health and business sectors to deal with the scourge have not achieved much as the number of reported cases of infection and death rate continue to surge on daily basis.

Dr. Emmanuel Uwem

Speaking on the disease and how government has responded to it, an academic and business management expert, Dr. Emmanuel Imoh Uwem,   lamented that the pandemic unexpectedly threw human activities in disarray and that never in contemporary times, has the Nigerian economy entered a contraction so fast that businesses, financial institutions, institutions of learning, and most government organisations shut down within weeks.

He noted that as expected, the Nigerian government moved to contain the obnoxious situation by establishing a presidential taskforce to oversee the provision of initiatives, such as media hype to highlight the essence of social distancing and hygiene even as  lockdown restrictions were imposed, effectively truncating economic activities.

In what appears a low rating of the government’s response to the scourge, Uwem noted that the pandemic containment processes could accentuate economic adversity with a potential increase in unemployment rate and the likelihood of some businesses going into extinction, due to cost cutting measures and groundswell of poor revenues.

According to him, another area of policy flaw in the government’s initiatives is the fact that the prospect of massive investment at the inception of post-COVID is questionable due to poor potentials of profits, and uncertainty that usually characterise government policies.

Uwem advised that in order to correct current policy lapses that make the future of the economy to look bleak, there was the urgent need for government to pursue the agenda of diversifying the economy to logical conclusion and ensure steady power supply, tax holidays, lower interest rates, corporate governance, amongst other policy imperatives to facilitate the long walk to economic prosperity.

Dr. Muttaka Usman

Appraising the Nigerian government’s response to the pandemic from an economic perspective, seasoned economist, Dr. Muttaka Usman, explained that measuring the total economic impact of the COVID-19 pandemic will be difficult at the moment, stressing, however, that the impact on the nation’s economy will be monumental in the long run.

On the specific funding and fiscal responses by the Nigerian government to deal with the deadly disease over the months, the economist listed the release of the N984 million ($28 million)  contingency funds to Nigeria’s Centre for Disease Control (NCDC), the N6.5 billion ($18 million) allocated for the purchase of testing kits, opening isolation centres and the training of medical personnel as well as a grant of N10 billion released to the Lagos State government to increase its capacity to contain the outbreak as noteworthy.

Other responses he noted include, the review of the 2020 budget in view of the expected huge shortfall  in oil revenues; announcement of plans to cut/delay non-essential capital spending by N1.5 trillion (about 1% of GDP);  increase of the social register by 1 million households to 3.6 million to help cushion the effects of the lockdown; the retention by the CBN in March of  the monetary policy rate (MPR) and other key rates as well its N50 billion intervention fund for SMEs and vulnerable households; the coordination of  a private sector special intervention initiative (CACOVID) by the apex bank; and introduction of regulatory forbearance to restructure loans in impacted sectors.

Describing these measures as not very adequate to cope with the risks associated with the continued spread of the pandemic in the country, Usman, who is a Professor of Economics at the Ahmadu Bello University (ABU), Zaria, canvassed a three-pronged policy approach that would make the responses more effective if adopted by the government to mitigate the negative impacts of the scourge on the nation’s socio-economic well-being.

Usman pointed out that the government should have made massive investments in the Health Sector which has been neglected for long, adding that such investments should bring the sector at par with the needs of the country while also committing more funds to the Education Sector and Research and Development in view of the multiplier effects on the production of the requisite high-level manpower in the Health Sector as well as research infrastructure and funding in order to bring out solution to problems.

“On the palliative measures from the government, these should concentrate on things and with generation of data for the purpose. For example, it should accommodate tax relief to companies only with the condition that they will maintain their workforce and continue to pay their staff salaries.

“It should also use the data of the microfinance institutions to provide some palliatives to the vulnerable in the society. The national drivers’ licenses can as well be used for such purposes. The national grains reserves should also be used to assist farmers through their cooperatives”, the economist added.

Dr. Timi Olubiyi

In a similar tone of concern about the future of the economy in the face of the ravaging impact of the COVID-19 menace, an investment coach and Small and Medium Enterprises (SME) management expert, Dr. Timi Olubiyi, who described the increasing spread of the virus in the country as worrisome, noted that the outbreak had already dampened the economic outlook of the country and that there is a near economic recession outlook.

He attributed the ugly development largely to the consequences of the COVID-19, declining crude oil prices and the depressed state of the nation’s economy.

According to him, since the number of incidences of COVID-19 continues to escalate through community transmission, it has heightened uncertainty in the nation’s economic and social landscapes.

Olubiyi, who is also a chartered member of the Chartered Institute for Securities & Investment (CISI), pointed out that in economic terms, the COVID-19 was impacting negatively on the Nigerian government’s revenues, businesses, families and individuals, noting that palliatives and stimulus packages can hardly go round to all the citizens and businesses.

To cushion the effect of the pandemic’s impact, he advocated fiscal and economic stimulatory measures targeted at taxpayers to save their businesses from collapse to be considered by the Nigerian Government.

He elaborated: “The economic impact of the deadly virus is very high and perhaps government might need to consider more palliatives such as fiscal policy palliatives, concessions on import trades because Nigeria is import-dependent, duties and port charges waiver to reduce the value chain disruption and improved service delivery, more credit facilities and tax breaks – particularly cutting taxes to increase and improve disposable income needs to be considered.

“Most SMEs run their businesses on loan facilities and the current situation has impeded their capacity to service these loans, so government intervention is required.

“Further to this, it is recommended that the guidelines and requirements to access the apex bank’s (CBN) announced palliative measures worth N3.5 trillion should be relaxed to promote wider eligible participation. Those that truly and meaningfully require it might not be able to access it especially the micro businesses and SMEs, if the current requirement is not reviewed,” Olubiyi added.

According to him, to achieve the desired objectives, the listing requirements can be relaxed by NSE to accommodate more qualified companies to list on the Nigerian Stock Exchange in view of the fact that lower transaction and listing costs will directly attract more listings and deepen market participation at this trying time.

He further pointed out that co-operation and co-ordination between and among the various financial markets regulators (SEC, CBN, PenCom, NSE, DMO & NAICOM) needed to be strengthened to assure coherent policies to reduce the negative impact of COVID-19.

Hajiya Salamatu Garba

In her contribution as an agriculture development expert and leading proponent of women farmers’ empowerment in the country, Hajiya Salamatu Garba, noted that though the government had taken a giant stride towards providing palliatives for the less privileged and had made exceptions of the closedown for medicals, security personnel, banks, etc, it, however, forgot the food security sector.

According to her, although markets for foodstuff are open, the sources of the food supply chains were not factored into the consideration of the government, as such ignoring the smallholder farmers and the small and medium enterprises.

Hajiya Salamatu, who is also the founder and Executive Director, Women Farmers Advancement Network (WOFAN), pointed out that failure by successive governments to prioritise agriculture had continued to worsen the food insecurity in the country, thereby contributing to the devastating impact of COVID-19 and continued lockdown of the populace due to spread of the disease which, she feared, may lead to an unbelievable disaster which we never pray to witness.

She cautioned: “Although at the moment, food disruptions can still be said to be minimal, as food supply has been adequate, and markets have been stable so far, while at the same time our general cereal stock is still at a comfortable level, even though part of the reserve had been pulled out for distribution to the poor families across the nation, this is commendable but on the other hand it means  we are not likely to have enough reserve for another one year with many mouths to feed.”

Similarly, she explained that extension workers, including NGOs and private sector-led agencies in the agric-extension areas, had been locked down and not prioritised among the personnel exempted to carry out their duties under the COVID-19 precautionary rules.

The women farmers advancement advocate expressed serious concern that policy inadequacy may heighten malnutrition level in the country as essential foods such as fruits and vegetables are not available; so also are perishables, adding that this is also disastrous to patients on special dietary needs such as diabetic patients.

As a remedial policy framework strategy, the WOFAN leader “called for an inclusive system to address these issues. Government should not concentrate only on the palliatives but also have a short, medium- and long-term plan so we all work with a scale-up strategy.

This is even as she advised the government to “have a realistic work plan that will enable us to tell a story in the nearest future of COVID-19 and the solutions that led to the post COVID-19 pandemic survival and sustainable growth.”

Dr. Hussain Abdu

In his assessment of government’s pre-COVID-19 crisis policy measures, a development expert, Dr. Hussain Abdu, rated the government’s response to the COVID-19 pandemic a bit behind schedule, especially immediately after the first index case emerged which showed that there obviously had been some thought-through attempts.

According to him, some of the responses, which include decisions of some of the principal economic agencies such as the Central Bank of Nigeria and the Federal Inland Revenue Service obviously were geared towards ensuring that the economy does not buckle under pressure as is already being seen in many parts of the world.

Abdu, who is the Country Director, PLAN International Nigeria, a civil society organisation committed to human resource training and poverty reduction, said the moratorium on loans repayment, creation of a N50 billion targeted credit scheme for households and small- and medium-sized enterprises; provision of N100 billion credit support for the healthcare industry and the extension of timeline for the filing of taxes such as the withholding tax and the companies income tax, indicated early that the government was thinking ahead on how to ensure businesses do not collapse and are able to resume regular operations with reduced impact.

He explained that this remained one of the instances in recent times where government’s response appears well coordinated and the different agencies of government appear to think and act in the same direction.

The public policy analyst noted, however, that while the government might have responded well to the corporate concerns of the big businesses, there appeared not to be a good appreciation of the nature and character of the Nigerian economy, which is largely agrarian, informal and with huge level of unemployment.

Abdu, who projected that the farmers and the unemployed would be the surest victims of COVID-19 pandemic, noted that there appeared not to be any significant stimulus to support them, adding that omission will significantly determine  how Nigeria’s poverty level, unemployment and inequality levels will be affected in the months ahead.

He said: “In spite of the emerging fiscal policies and the obvious intention to ensure that the adverse effect of COVID-19 as is being experienced now does not have extreme impact on growth or completely cripple the economy, there however are areas that need be addressed.

“While it is undeniable that the current economic challenges are global and Nigeria is not immune to the slump, there are however pre-existing challenges that have also put the country in a more precarious situation than others. Some of these challenges include lack of implementation of policies or diligence in the implementation where such exist that could stimulate growth, especially from the medium and small-scale enterprises that still sustain the nation’s economy.

“This is compounded by the rent-seeking economy and what many analysts have described as crony capitalism, in which state officials, politicians, other politically exposed persons and individuals in the private sector take unfair advantage of access to put in place preferential regulation and other state/government interventions that favour them”, the analyst stressed.

According to him, the other challenge is the collapse in the global oil market.

Abdu explained that while the current federal government’s economic stimulus responses appeared focused, unfortunately the country still remained exposed and the likelihood of another recession is imminent.