NES recommends post-pandemic measures to get Nigeria’s economy back on track

A food market in Ibafo in Nigeria’s Ogun State. The effects of COVID-19 on food systems will be keenly felt in poorer countries. [Photo - The Conversation]
A food market in Ibafo in Nigeria’s Ogun State. The effects of COVID-19 on food systems will be keenly felt in poorer countries. [Photo - The Conversation]

The Executive Council of the Nigerian Economic Society (NES) has recommended a set of policies as a response to stimulate and fast-track the economy during the pandemic.

The society, through a webinar it held last week, themed “COVID-19 and the Nigerian Economy: Getting the Economy Back on Track- Challenges and Policy Options”, said solving the current economic crisis demands competent political and economic skills.

One of the speakers, a Professor of Economics in the University of Ibadan, Akin Iwayemi, said to enhance the quality of policy decisions and outcomes, policymakers need to understand the concept of opportunity cost in the formulation of public policies.

He recommended that efficient use of resources in production and consumption should be encouraged. He also suggested the enhancement of agricultural productivity and the promotion of domestic value-added products for both agriculture and natural resources.

Others are; retooling the manufacturing sector, integrating SME’s with the rest of the industrial sector, with focus on raising productivity levels based on science and technology.

He also recommended sound macroeconomic management underpinned by the alignment of fiscal and monetary policies, institutional strengthening, review of trade and exchange rate policy to encourage efficiency in production and trade.

“Reduction in the cost of governance through constitutional amendment, accountability and transparency in governance, invest more in research and teaching advancement initiatives with the aim of closing the skills and competency gaps through regular upgrading of research and teaching skills, and driven by linkages with top universities in Europe and North America and Asia o Promote innovative approaches to infrastructure development and financing.

“What is desirable in overcoming this pandemic and its consequences is synergy among different stakeholders underpinned by the politics of convergence among the political parties such that in rebooting the economy via various economic and social measures, the clear focus is how to generate new jobs, restore lost jobs underpinned by increasingly higher productivity and cleaner technologies that advance climate change mitigation goals,” he said.

Another speaker at the webinar, the Director-General, Lagos Chamber of Commerce and Industry, Muda Yusuf, gave monetary, fiscal and forex policies as responses to stimulate the economy.

“Good monetary responses from the CBN – moratorium on CBN facilities, interest rate reduction, restructuring opportunities”.

He recommended that commercial banks need to take a cue from the steps taken by the CBN by creating windows for restructuring, refinancing and interest rate concessions on existing facilities and also the injection of soft loans to the economy through the banking system.

His other recommendations include tax concessions to businesses, tariff concessions on critical imports to boost production, demurrage waivers at the ports, and addressing the ballooning recurrent expenditure, especially governance cost.

Mr Yusuf also recommended that 10 per cent of Pension Funds should be made available to contributors as a step to reflate the economy. This could provide an estimated N1 trillion liquidity to the economy.

He said forex policy should be market-driven to make allocation more efficient and reduce the liquidity problem in the forex market, as it would also incentivise inflows. Also recommended was a reduction in the multiplicity of rates to reduce arbitrage opportunities.

Gloomy Clouds

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Lukman Otunuga, a Senior Research Analyst at FXTM, in a report titled ‘IMF casts gloom clouds over Nigeria’s economy’ said how Nigeria navigates through the coronavirus storm will certainly influence its economic outlook well beyond 2020.

“Over the past few months, the COVID-19 menace has wreaked havoc across Africa’s largest economy, digging its poisonous claws into major industries and sectors. No prisoners were taken, as manufacturing, agriculture, services and oil fell victim to the widespread disruptions,” the report, which was made available to PREMIUM TIMES, highlighted.

“Although the country was able to expand 1.87% during the first quarter of 2020, the outlook for the rest of the year remains depressing thanks to a combination of negative external and domestic factors. Major institutions including the International Monetary Fund (IMF) have expressed concerns over Nigeria’s outlook. It was only yesterday that the IMF said that economic growth will contract by 5.4% this year compared to the -3.2% estimate in April.

READ ALSO: Coronavirus: How to safeguard Nigeria’s economy – Group

“In the past, Nigeria has experienced many trials ranging from severely depressed oil prices, US-China trade uncertainty and slowing economic growth in China among many other themes but COVID-19 is different.

“Africa’s largest economy is dealing with a health crisis that presents lasting psychological consequences on business confidence and consumer behaviour. The next few months may (be) rough and rocky, especially when factoring how oil-output curbs could deepen thanks to recorded coronavirus cases in some offshore oil sites and remote locations.

“With revenue from crude and natural gas exports reportedly falling 31% from February amid low oil prices, this places the Central Bank of Nigeria and government in a tricky position. If foreign exchange reserves and government revenues decline during the second half of 2020, there will be limited ammunition to defend against COVID-19.

“Speaking of ammunition, Nigeria has approved a whopping 2.3 trillion Naira economic stimulus plan to help the disruptions caused by this health crisis. The World Bank has also approved a $750 million loan to Nigeria’s power sector, something that could support the private sector. It will be interesting to see whether the combination of monetary policy and fiscal policy will be enough to guide Nigeria through the current storm.”

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