As the COVID-19 pandemic spreads its deadly tentacles to almost all countries of the world, its impact has gone beyond health to challenge the global economy along with other facets of human endeavour. African economy and indeed that of Nigeria are also on a downward swing with Nigeria taking a direct hit as the global oil prices crash below $13 per barrel. The world as we know it may change as well as the way we do things, as nations seek for more effective ways to jumpstart their economy. Nigerian economic gurus are expected to find new and efficient ways to revive the Nigerian economy post COVID-19
In the light of the above, the CBN Governor, Godwin Emefiele has come up with some key strategies for stimulating the Nigerian economy which he outlined in a remarkable piece he titled ‘Turning COVID-19 tragedy into opportunity for new Nigeria’. Below are the high points of the Governor’s proposed strategy.
When I became Governor of the Central Bank in June 2014, imports of rice, fish, wheat and sugar alone consumed about N1.3 trillion worth of foreign exchange from the Bank. The immediate question that came to my mind was: can we not grow these ourselves? After all, only a few decades ago, Nigeria was one of the world’s largest producers and exporters of palm oil, cocoa and groundnuts.
Today, we import nearly 600,000 metric tonnes of palm oil, whilst Indonesia and Malaysia, two countries that were far behind us in this crop, now combine to export over 90 percent of global demand. In 2017, Indonesia earned US$12.6 billion from its oil and gas sector but US$18.4 billion in from palm oil. I believe that this pandemic and the immediate response of many of our trading partners suggest it is now more critical than ever that we take back control, not just control over our economy, but also of our destiny and our future.
In line with the vision of President Muhammadu Buhari, the CBN has indeed created several lending programmes and provided hundreds of billions to smallholder farmers and industrial processors in several key agricultural produce.
These policies are aimed at positioning Nigeria to become a self-sufficient food producer, creating millions of jobs, supplying key markets across the country and dampening the effects of exchange rate movements on local prices.
That is why in response to COVID-19, we are strengthening the Nigerian economy by providing a combined stimulus package of about N3.5 trillion in targeted measures to households, businesses, manufacturers and healthcare providers. These measures are deliberately designed to both support the Federal Government’s immediate fight against COVID-19, but also to build a more resilient, more self-reliant Nigerian economy.
We do not know what the world will look like after this pandemic. Countries may continue to look inwards and globalization as we know it today may be dead for a generation.
Therefore, as a nation, we cannot afford to continue relying on the world for our food, education and healthcare. The time has come to fully transform Nigeria into a modern, sophisticated and inclusive economy that is self-sufficient, rewards the hardworking, but protects the poor and vulnerable, and can compete internationally across a range of strategic sectors.
But now is the time to seize this opportunity and create an environment that empowers our people to thrive within our own shores. To this end, the Central Bank has developed a Policy Response Timeline to guide our crises management and the orderly reboot of the Nigerian economy.
The Short-term policy priorities (0-12 months)
As soon as President Muhammadu Buhari and the Health authorities determine our Coronavirus Transmission Curve is flattening and many of the ongoing restrictions are eased, this will be the phase for repositioning the Nigerian economic space. Accordingly, the CBN will pursue the following policies in this phase: 1) Reinvigorate our financial support for the manufacturing sector by expanding the intervention all through its value-chain; 2) With the support of the Federal Government, the CBN will embark on a project to get banks and private equity firms to finance homegrown and sustainable healthcare services that will help to reverse medical tourism out of Nigeria; 3) The CBN will promote the establishment of InfraCo PLC, a world class infrastructure development vehicle, wholly focused on Nigeria, with combined debt and equity take-off capital of N15 trillion, and managed by an independent infrastructure fund manager; and 4) Continue to prioritize the provision of FX for the importation of machinery and critical raw materials needed to drive a self-sufficient Nigerian economy.
Medium-Term Policy Priorities (0 -3 Years):
Once the world returns to some new normal having tamed COVID-19 by a combination of vaccines and social distancing, and the Nigerian economy reopens fully for business, we will act quickly to enable faster recovery of the economy by targeted measures towards particular sectors that are able to support mass employment and wealth creation in the country. We will do so by focusing on four main areas, namely, light manufacturing, affordable housing, renewable energy, and cutting-edge research.
In order to boost job creation, household incomes and economic growth, we will be focusing our attention to bridging the housing deficit in the country, by facilitating government intervention in three critical areas: housing development, mortgage finance, and institutional capacity.
We will pursue the creation of a fund that will target housing construction for developers that provide evidence of profiled off-takers with financial capacity to repay. We will also be considering ways to assist the Mortgage Finance Sub-sector as well as build capacity at the State levels for their land administration agencies to process and issue land titles promptly, implement investment friendly foreclosure laws and reduce the cost of land documentation, as this has remained a major inhibiting factor in the provision of affordable housing in the country.
In conclusion, I believe we must now envision and work toward a Nigeria with the cutting edge medical facilities to provide world class care to the sick and vulnerable; enable our universities and research institutions to provide the requisite education and training that is required to keep these ecosystems functioning sustainably and efficiently; and millions of Nigerians employed in meaningful and well-paying jobs. This is the Nigeria that we must aspire to build.
COVID-19 may have plunged us into a crisis of unprecedented proportions. But, as Winston Churchill once admonished, we must never let a crisis go to waste.