COVID-19: Nigerian Businesses Await Disbursement Of CBN’s N3.5tr Economic Stimulus Package

Godwin Emefiele

Until the index case of COVID-19 involving an Italian was recorded in Lagos on February 27, Nigeria had treated the global pestilence with levity, different from the knockout punch it gave to Ebola disease years ago.

Nonetheless, the Federal Government appeared to have suddenly woken from its illusion of invulnerability, when Europe, the United States, the United Kingdom and other allies began to shut their borders, airports and key economic infrastructure as a containment strategy.

Expectedly the Federal Government last week took more pragmatic steps to forestall further spread of the disease when the number of people that tested positive to the disease spiraled into the double digit.

For the government allowing the status quo to remain would amount to passing the death sentence on millions of vulnerable Nigerians most of whom have been swimming in the illusion that COVID -19 cannot kill the black man.

Consistent with the preventive measures, the government had announced the closure of all tertiary institutions in the country, suspension of flight operation from thirteen countries of the world including Europe, China and America, while a number of high- profile events like the National Youth Service Corps orientation campout across the country, and National Sports Festival earlier scheduled for Benin City Edo State were cancelled.

Similarly, the government announced an embargo on overseas trips for government officials while those returning from outside were told to quarantine themselves for the mandatory 14 -day COVID 19 incubation period.

From the nation’s economic capital, the Lagos State Government announced the suspension of gatherings or programmes involving 50 or more including churches, mosques and other mass meetings.

Unfortunately, Nigeria is battling the pandemic from a vulnerable economic disposition considering that crude oil, its economic mainstay had already taken a hit having crashed to less than $30/barrel below the 2020 budget bench mark and consequently forcing the Federal Government to slice N1.5 trillion off its ambitious N10.6trillion projection.

Part of President Muhammadu Buhari’s headache fighting the COVID-19 battle is the national debt overhang of over N24.7 trillion, a depleted external reserve of less than $38 billion and Excess Crude Account of a paltry $17 million; at a time, the World Health Organisation has asked African countries to prepare for worse days ahead.

Already experts have warned that Nigeria risks slipping into another recession when indeed the economy is yet to fully overcome its shaky exit from the 2016 episode.

On the monetary side, the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, rolled out a number of intervention measures aimed at reducing the economic impact of the pandemic.

The apex bank is also rolling out a bumper stimulus package of N3.5 trillion in support of local manufacturing and import substitution activities across all critical sectors of the economy.

This is in addition to the N100 billion loan already earmarked in 2020, to support the health authorities to ensure laboratories, researchers and innovators work with global scientists to patent and or produce vaccines and test kits in Nigeria to prepare for future health challenges.

There is also the reduction on interest rate on its N3 trillion multi-sector intervention packafrom 9 per cent to 5 per cent, while also extending its moratorium on various loans for one year, effective March 1, 2020, to guarantee easier repayment plan since the cash flow of most businesses has drastically reduced due to the coronavirus pandemic.

Accordingly, it directed participating financial institutions to provide new amortization schedules for all beneficiaries.

The apex bank also said it would increase the N50 billion earmarked for soft loans to small businesses by another N100 billion in loan this year to support the health authorities to ensure laboratories, researchers and innovators work with global scientists to patent and or produce vaccines and test kits In Nigeria to prepare for any major crises ahead.

He further advised the banks to adhere strictly to the directives, advice, and notices from the Federal Ministry of Health, National Centre for Disease Control and other relevant government agencies on national response measures to COVID-19.

But as welcome as these interventions may seem, experts say they are insufficient for a global pandemic that has literally forced Europe, Asia and the Americas to shutdown by forcibly disrupting supply chains, crashing stock markets and suffocating the transportation infrastructures

They have also argued that not all responses to the crisis appear to be well targeted.

For instance, so far only Lagos State has shown capacity to manage the crisis, just the Federal Government strategies have only focused on the international airports, while land borders have been left bare without necessary equipment and quarantine centres.

Adeyemi Adeniji, an investment consultant lamented that the country does not seem to appreciate the enormity of the pandemic that has worsened the already vandalised economy.

He called for a better synergy between the fiscal and monetary sides to fashion out policies that will strengthen the nation’s economy.

He said: “The economy is in bad shape. It was already in bad shape before the coronavirus outbreak. We depend solely on oil and have not really diversified the economy.

“We need a policy that will synergise all agencies to deal with the issue, not a fire brigade approach. We should have short, medium to long term strategies. Some of the Federal Government policies are in silos and are not working.

“The major problems we have lie with policy making and implementation. We do not have a strong economic policy. We really don’t follow any rule. We’re big on fire brigade measures”, he said.

Also commenting on the matter, Orji Udemezue, an economist said the COVID-19 pandemic was something the legislative, executive and other key stakeholders in Nigerian should escalate as number one threat to the country’s survival.

He said: “We need to understand that this is an emergency situation. Banks and other players in the economic space will be heavily impacted.

“The CBN always does its best in emergencies like this but there should be a marriage of the fiscal and monetary side. What are we doing in the health sector? We need test kits and other materials to tackle this health emergency. How will the N100 billion be spent? We need to know the details of the fiscal spend. Do we have sufficient isolation centres nationwide? How can we really do social distancing? Isolation is very expensive for the average Nigerian. Many live in crowded areas and share many facilities like toilets and kitchens, how can you achieve social distancing in such environments? If coronavirus hits such an area or a major market, how can it be tackled? We’ve millions of SMEs who rely on daily interactions to survive, how can you take care of them? These are things we want answers to.

“The next 14 days is crucial to Nigeria. If this coronavirus spreads, government expenditure will crash, investment will be zero. Hotels, bars, restaurants, transportation and many others will be impacted.

“Are our hospitals ready to take in patients, especially those in the rural areas?

Governors should collaborate with their philanthropists to create isolation centres that are fully equipped and manned by experts and with a hotline. Next 14 days are critical”, he said.

A director in one of the agencies under the Finance Ministry who pleaded anonymity expressed sadness over the Federal Government’s initial foot-dragging in its response to the COVID-19 pandemic.

“The government convinced itself that it can merely slow down the spread of the virus, rather than taking the steps needed to halt it in its entirety. The overcrowding in hospitals in many parts of the country has already exposed the folly of such complacency”, he said.

For also commenting on the government containment strategies, Mr Odilim Enwegbara, a developmental economist, said “this is the time for government to cut wastes.”

“Crude oil has crashed and it’s because of coronavirus. Airlines and shipping companies and vehicles that consume petroleum products have drastically restricted their movements. So, demand is very low.

“Unfortunately in Nigeria, we’ve almost depleted our excess crude account. Our reserves have also reduced.

“So, the government should ensure workers salaries are paid regularly. We can suspend some capital projects at this time. This is not the time to travel all over the place spending heavily.

“Unfortunately again, our economy is not diversified. If not, we won’t be vulnerable to these external shocks. It would have been a blessing in disguise. We would have sufficiently produced what we hitherto imported and saved the foreign exchange. It’s quite a challenge but we can pull through with what I’ve said above”, he said.

In Nigeria, the federal government said N1.6 billion has so far been spent on coronavirus since the first index case was recorded last month. But many are querying block spending as lack of any breakdown makes it look like a means to feed fat on taxpayers funds.

Globally, the coronavirus pandemic has killed more than 10,000 people, making it the greatest global threat since the great depression and World War II. All governments of nations with coronavirus need to follow China in taking direct action against Covid-19. According to him, nobody on the frontlines should be constrained by lack of funds.

Surrendering to the pandemic simply is not an option.

The Organised Private Sector (OPS) however has seen the N1.1trillion intervention fund to support critical sectors of the economy in the wake of dwindling oil prices and global economic effects of the Coronavirus as commendable.

The Nigeria Employers’ Consultative Association (NECA) said the gesture would aid the survival of businesses and the economy at large.

The Director-General of NECA, Dr. Timothy Olawale, stated that the bold step taken by the apex bank was consistent with global economic best practices and will help the economy to stabilise, while ensuring improved economic activities.

He said, “the impact of the coronavirus across over 100 countries have affected global supply chains, as well as demand for goods and services. Commodity prices have also been affected, as crude oil prices have plummeted. The stimulus by the CBN, if strategically deployed will not only keep the wheel of economic activities going, but will also protect jobs and stop the slide in recession”

President of the Nigeria Labour Congress (NLC) Ayuba Wabba, in response to Daily Sun enquiry said that Organised Labour has since devised its own strategy – the worker-based strategy – to compliment the national strategy to contain the disease. A worker-based strategy, he said is necessary given that workers are at frontline risk given their exposure at points of entry or departure, in hospitals or other places of interest.


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