It’s an open knowledge that the coronavirus pandemic has led to the deepest global economic crisis since World War II. As many as the world’s 3.3 billion workers are threatened as orders dropped dramatically and supply chains broke down.
At the height of the lockdown, millions are left without any income. For 2020, there is a global consensus that a deep recession is in all continents from Asia to Europe, and from Africa to the Americas. And the recession won’t go away in a few months until a vaccine becomes available. Even then the recession can only ease up, after many years.
The devastation of COVID-19 is better appreciated looking at the labour market figures in Nigeria, especially the unemployment figure. According to the National Bureau of Statistics, Nigeria’s unemployment rate which was 23.1% in Q3 2018 is 27.1% as at the second quarter of 2020 indicating that about 21,764,614 (21.7 million) Nigerians remain unemployed. This confirms that unemployment increased by 4% points between then and the second quarter of 2020! Nigeria’s unemployment and underemployment rate (28.6%) is 55.7% with all the negative impact on already negative productivity and worsening poverty!
The most affected are the people in the so-called informal sector, who already had to live from hand to mouth. Despite the curfews and lockdowns imposed in many countries around the world, they are unable to maintain social distance because of their living conditions. Hunger has increased worldwide as a result of the pandemic. Millions of day labourers fight for bare survival.
Many sectors were adversely impacted. For instance it is on record that half of the more than four million textile and garment workers in Bangladesh are on furlough or were dismissed. With gradual easing of lock downs, it can be said there has been a remarkable global partnership to save lives under the pandemic. Even in countries where some governments promoted false conspiracy theories about the virus, citizens rose in defense of basic rights to life and adequate medicalcare. It’s time for similar solidarity and partnership for a possible post- pandemic recovery.
Nigeria needs harmonised monetary and fiscal measures to stimulate the economy and direct support or palliatives for the vulnerable. Happily there are significant stimulus measures led by the Central Bank of Nigeria (CBN) with complementary measures by the fiscal authorities notably Ministry of Finance. The bank sets out a number of measures to tackle the impact of the coronavirus. They include establishing a fund to support the country’s economy (of N50 billion), targeted at households and micro and small enterprises.
Specifically On 16 March, the apex bank announced a year extension of a moratorium on principal repayments for its intervention facilities in sectors like rice and cotton cultivation. There is also a reduction of the interest rate on intervention loans from 9 percent to 5 percent. Then some N50 billion target credit facility for households, small and medium enterprises. There is an additional N100 billion intervention fund in healthcare loans to pharmaceutical companies and healthcare practitioners intending to expand/build capacity. N1 trillion in loans is also set aside to boost local manufacturing and production across critical sectors. There is also a provision of credit assistance for the health industry to meet the potential increase in demand for health services and products “by facilitating borrowing conditions for pharmaceutical companies, hospitals and practitioners”.
Other fiscal measures include suspension of new electricity tariffs by the Nigerian Electricity Regulatory Commission (NERC) due to poor electricity supply, wide metering gap and the impact of the COVID-19 pandemic. The National Assembly recently commendably postponed the effective date of the new tariff to the first quarter of 2021. CBN has also restructured the loans of most states to provide support to help them settle their overdue salary and pension obligations to workers.
The drop-in commodity prices and resulting effects on government revenue led to a severe drop in the earnings of most states in the country. With all these measures, it is clear that Nigeria is not short of recovery measures. There is urgent need for a robust partnership between the government, organised private sector and organised labour to make sure the stimulus measures are delivered as promised; production is revived, the unemployed are engaged and those at work currently don’t lose their jobs. Further are the interventions in the health sector yielding the desired results of equipped public hospitals. CBN’s credit support facility for the health sector will definitely help pharmaceutical companies and healthcare to expand and build capacity for all times and for all diseases not just COVID-19.
But citizens must monitor the impact of the interventions and ensure they succeed. Why the massive retrenchment in aviation sector despite the promised support for the sector? As I have argued before, for those who care, the 11th CBN governor, Mr Godwin Emefiele, had long seen tomorrow, well before COVID-19. In promoting import substitution through development financing, CBN rightly removed some 43 imported goods from the list of items valid for Forex Exchange in the Nigerian Foreign Exchange Market. According to the circular, “importers who import these goods can no longer buy foreign currencies from the official windows (CBN, commercial banks) to pay their suppliers abroad. Rather, they will have to look for forex (dollars, pounds etc.) from the parallel market or Bureau De change to pay for their imported goods.”
We must ensure that there will not be a return to business as usual with wholesale importation of what we can and must produce locally. More than ever before we should renew commitment to sustainable industrial policies, and the re-industrialisation. Happily, industrialisation is one of the remaining 9 point agenda of President Buhari in the next three years. CBN envisions through monetary policy and targeted development financing creating 10 million jobs in five years. Let other agencies such as NNPC, Nigeria Ports Authority make same commitments and soonest Nigeria can move from unemployment, underemployment to full employment.
