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Post COVID-19: Can the economy be turned around?

Like a thunder bolt, the COVID 19 pandemic has hit the whole world below the belt while the advanced economies was rattled and frantically searching for a solution after thousand souls have been consumed, the underdeveloped economies are yet to be woken up from their slumber because of the advert effect of the deadly virus.

The effect of the pandemic on the economy and all other area of human endeavour was devastating because of poor health system and mono economy that has been operational for many years in the country. It has led to unprecedented disruptions of food chains, reduction in crude oil price and total lockdown of all operational activities.

According to economic pundits, the serious adverse effect on critical sector like oil and gas, airlines, manufacturing and consumer markets was largely due to the mono economy, which the country has depended on for many years until of recent when agriculture was given a phase lift.

Perhaps the apex bank, the CBN, had the premonition of this unforeseen calamity few years back when it went all out to give agriculture a pep in its intervention programmes. Anchor borrower scheme became handy and the saving grace to farmers in the country. The scheme, which was launched by Buhari in 2015, was designed to empower the farmers and create food security.

According to CBN Corporate Affairs Director, Mr. Isaac Okoroafor, over 2.5 million farmers have benefited from the scheme in about 17 agricultural commodities.

Savoring the economic gains of these intervention programmes, the issue of border closure crept in, a policy that did not go down well with some of our neigbouring countries and was heavily criticized.

However, shedding more lights why the border was closed as of the time it was done, the governor of CBN Godwin Emefiele pointed out that “We are not saying that the borders should be closed in perpetuity, but that before the borders are reopened, there must be concrete engagements with countries that are involved in using their ports and countries as landing ports for bringing in goods meant for local consumption, it is understandable

He explained that before the closure of the border the Rice Processors Association of Nigeria have nothing less than 25,000 metric tons of milled rice which they cannot sell due to saturation of the market with imported rice from Republic of Benin, adding that just after a week closure of the border, all the rice were sold.

The CBN boss noted that from his vantage position he can authoritatively say that the closure of the border has brought a good tiding to the Nigerian economy. ““So, when you asked, what is the benefit of the border closure on the economy of Nigeria, I just used two products – poultry and rice. The benefit is that it has helped to create jobs for our people, it has helped to bring the integrated rice milling that we have in the country back into business again and they are making money.

Though the effect of the COVID 19 pandemic has affected the economy of the country in a negative way and the lockdown not only collapsed a lot of businesses but also opened a window of hunger to artisans who majorly depended on daily hustling for their survival, a step that has robbed off the earlier gains before the pandemic.

Speaking to the Nation on the ability of the country to quickly return back to its economic hub that has encouraged a paradigm shift from oil and gas to agriculture and Agro allied ventures, Mr. Mike Osagie an economist noted that though the pandemic took the country unaware, the agricultural programmes embarked upon by the Federal government few years ago had made food available, otherwise the country could have been worst hit.

Osagie explained that a lot of lessons has been learnt during the lockdown which could encourage the government to put on their thinking cap and address all the critical areas like health facilities in the country, adding that it should focus more on agriculture and let the farmer be the center of focus in order to have food sufficiency and create more jobs

According to him post COVID 19 should be a new Nigeria where massive diversification is absolutely necessary to agriculture. ” Since the CBN got it right due to some of its intervention programmes for farmers, manufacturers and Small-scale enterprises. This will go a long way to restore all the economic lost during the lockdown.

However, the CBN in order to cushion the effect of the pandemic on the economy, took some radical steps to meet the yearning of the people. The Director, financial policy and regulation of the apex bank, Mr. Kevin Amugo noted that the bank is committed to providing support for affected household, businesses, regulated financial institutions and other stakeholders in order o cushion the adverse economic impact of COVID,19.

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Amugo pointed out that all CBN intervention facilities are granted a further moratorium of one year on all principal repayments effective March 1, 2020 which indicates that any intervention loan will have additional one year to pay up adding that participating financial institutions are to provide new amortization schedules for all beneficiaries.

In addition to this the apex bank said all interest rates on all applicable CBN intervention facilities are hereby reduced from 9 to 5 percent for 1-year effective March 1, 2020

According to him, the bank has established a facility through the NIRSAL Micro finance Bank for households, small and medium sized enterprise (SMEs) that have been particularly hard hit by COVID-19, including but not limited to hotelier, airline service providers and health care merchants.

He explained that the CBN has extended its grants to all Deposit Money Banks to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid- 19, particularly Oil and Gas, Agriculture and manufacturing.

Amugo noted that the bank is ready to consider additional incentives to encourage extension of longer tenured credit facilities and provide liquidity backstops as and when required in view of its role as Banker to the Federal Government and lender of last resort.

In accessing the situation on ground, Dr Adetunji Ogunyemi, an Economic Historian and a Lawyer who equally doubled as the acting Head of department of History, Obafemi Awolowo University, Ile-Ife, noted that four critical lessons have been learnt from the lockdown due to covid-19.

Ogunyemi while speaking to the Nation said that the Nigerian economy has been founded on an extremely fragile pedestal of monoculturalism due to its excessive dependence on oil revenue and export which health and viability are externally determined.

“The real sectors of the Nigerian economy, such as agriculture, industries and manufacturing, which should have employed the largest proportion of the Nigerian populace have been neglected for too long and this has worked to the peril of the economy”

He explained that the Nigerian private sector, especially in the areas of transportation, small and medium scale enterprises hold the key to the country’s economic development and not an over-bloated public sector that consumes more than 70% of total government expenditure but cannot defend the economy in critical periods such as this.

According to him, real and effective governance happens at the State and Local Government levels adding that the time has come to devolve more powers and resources to those levels by restructuring the power equation in the country under the Constitution of the Federal Republic of Nigeria,

The University don explained there are a lot of things that can be put in place so that the economy will bounce back to normalcy in post covid-19, this include the reality that private sector holds the key to Nigerian economy which all government of all strata must key into and give support to Small and Medium Scale Enterprises (MSMEs)

Ogunyemi noted that the Federal Government also needs to reduce the cost of governance by faithfully implementing most of the recommendations contained in the Steve Oronsaye’s Report on reforming the Federal Public sector.

According to him “we really do not need a public service that is consuming the largest proportions of resources, sometimes up to 80% of the total budgetary expenditure. It is high time we reduced the cost of governance and then increase productivity through a redirection of finance in favour of private sector investments in agriculture, mining, manufacturing, industries and education.”

He argued that the time has come to restructure the country along competitive federalism. “The States of the Federation should be centres of investment and growth and not of distribution of revenue from the Federation Account.

“There should be for now, a suspension of the implementation of the 7.5% Value Added Tax. It is my take that the old rate of 5% should still subsist until the year 2021. This is to allow the MSMEs to recover from the huge losses that the lockdown has inadvertently caused them and also, to stimulate demand and consumption.” he said

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