Gideon Dunioh Publisher and Editor-In-Chief At Econs Media and Economics Correspondent At TrueNewsNG
As it stands now no one in the world is safe because of the COVID-19, it is a virus that we have never seen before there have been other coronaviruses but this one particularly seems to be different as very little is known about it and it spreads rapidly.
We are dealing with fear and uncertainty, a menace we cannot see, in this circumstances it means that the entire world should be interested in making sure that economies do not suffer economically as the economic impact is already being felt.
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In Nigeria the COVID-19 has presented an unprecedented threat to national development as well as presenting a huge opportunity.
This paper seeks to highlight what is perhaps known as the most profound, global and domestic challenge especially in health and economy in the whole of human history.
In Nigeria alone there are over 182 number coronavirus related deaths and the figures are predicted to rise (as at Sunday, 17th May 2020).
From an economist point of view, managing the COVID-19 crisis will not be easy ‘’Coronavirus pandemic economic fallout ‘way worse than the global financial crisis,’ IMF chief says the Coronavirus pandemic has created an economic crisis “like no other,” the top IMF official said. “It is way worse than the global financial crisis “ of 2008 – 09, Gergieva said during a World Health Organization news conference’’
Nigeria will go into recession if COVID-19 continues beyond six months – Finance Minister
“If it is an average of three months, we should be able to close the year with positive growth. But if it goes longer than that – six months, one year – we will go into recession.”
Hence the need to identify the opportunities herein, by answering the following questions of the unseen COVID-19 danger
Some Questions Of The Unseen COVID-19 Danger In Nigeria
- How long will the covid-19 crisis last in order for us to envisage the impact ?
- What sector in the economy needs critical attention ?
- How does the Covid-19 affect our most pressing business needs in terms of laying off staff and salary cuts ?
- How does the government influence your decision on savings, investment and consumption ?
- How can the private sector compliment the government in the covid fight?
Until these questions can be answered and a better coordination of govt policy responses and measure put in place to curb the effect of the covid crisis then can we begin to tap into the opportunities
Here Are Some Of Nigerians Fiscal And Monetary Policy Responses
| FISCAL POLICY RESPONSE | MONETARY POLICY RESPONSE |
COVID-19 CRISIS INTERVENTION FUND
|
Reduction of interest rates on all applicable CBN interventions from 9% to 5% |
SUB-NATIONAL SUPPORT
|
Liquidity injection of ?3.6 trillion (stimulus package in the form of loans) into the banking system |
| BUDGET REVISION AND FUNDING
Benchmark oil price revised to US$30/b from $57/b and production to 1.7mbpd from 2.18mbpd. • Concessional funding from WB, ADB, IDB and IMF’s COVID-19 Rapid Credit Facility • No intention to negotiate or enter into a formal programme with the IMF • Downwards adjustment of non-oil revenue projections, customs receipts and proceeds of privatisation exercises • Budget Office to revise 2020-2022 MTEF / FSP • Amended Appropriation Act will provide for COVID-19 Crisis Intervention Fund |
Provision of ?100 billion to support the health sector, ?2 trillion to the manufacturing sector, and ?1.5 trillion to impacted industries in the real sector |
| TAX RELIEFS AND ALLOWANCES
2019 Finance Act already grants tax exemptions to small businesses while the tax rate for medium-sized companies has been reduced from 30% to 20% • VAT exemption for expanded list of basic food items plus medical and pharmaceutical products • Ministerial Orders for charitable donations to fight COVID-19 to be tax deductible • Release and (where necessary) enhance the hazard allowances of federal health sector workers • Affected States are enjoined to take similar measures. |
Creation of ?50 billion targeted credit facility through NIRSAL Microfinance Bank for households and MSMEs |
| The CBN granted all DMBs leave to consider temporary restructuring of loan terms for businesses/ households affected by COVID | |
| Strengthening of the CBN Loan to Deposit ratio (LDR) policy. | |
| Suspension of the sale of foreign currency to members of the Association of Bureau De Change Operators of Nigeria (ABCON). |
Nigerians should expect some more unprecedented economic shock even though a comprehensive structural policy reforms can reduce the impact
Further impact of the Covid-19 in Nigeria
Massive spike in employment
- Massive number of people in informal sector not earning daily wage between lockdown and recession
- Huge food security challenge
- Fiscal crisis at both Federal (FG) and State level
- Depletion of external reserves
Note that : Nigeria entered the crisis with pre-existing vulnerabilities such as low growth, low private investment and severely constrained fiscal policy which was only compounded by the Covid-19 pandemic which are
Very low tax to GDP ratio (less than 6%)
- High debt service to revenue ratio
- Low level of tax compliance
- Significant fiscal risks due to COVID-19 economic disruption
- Exposure to the risks of a sustained decline in oil prices
- Dated Brent oil prices as low as US$18.49/barrel as at Friday 1 May 2020
- Compared to 2020 Budget benchmark of US$57/barrel
- Oil production in 2020 year-to-date is 2.0mbpd vs Budget projection of 2.18mbpd.
- Little fiscal buffers compared to 2008/2009 or 2015/2016