Zainab Ahmed, the minister of finance, confirmed that Nigeria is inevitably heading for a recession following the adverse effects of the novel coronavirus disease on the price of crude oil and general economic productivity in Nigeria and across the world. The International Monetary Fund forecasts that the recession will be the deepest in three decades.
President Muhammadu Buhari had, at the onset of the pandemic, set up and economic sustainability committee (ESC) led by Vice-President Yemi Osinbajo. After months of deliberation, the committee published its report and recommendation; it suggested that Nigeria would slide into a recession as deep as 4.4 percent contraction of gross domestic product.
In the application of stimulus, the VP’s committee projected four scenarios as follows:
1. With “no stimulus economy will decline by minus 4.40% at best”
2. With a stimulus of “just N500 billion, the economy will decline by minus 1.94%”
3. With a stimulus of “N2.3 trillion, the economic decline will be lower at minus 0.59%”
4. With a stimulus of “N3.6 trillion there will still be negative growth but only of -0.42%”.
Based on the these, the VP’s team recommended to the president that scenario three be adopted, with funds “from N500bn from Special Accounts, N1.11 trillion of CBN structured lending and N302.9bn from other funding sources”.
The final recommendations by the ESC and here are the highlights of the federal government’s plan to be considered for implementation over the next three to 12 months — to save the economy.
CREATE 10.12 MILLION JOBS IN ONE YEAR
The Osinbajo committee recommended the creation of over 10
million jobs within a 12-month period. The jobs cut through agriculture, power
generation, real estate, ICT and other sectors of the economy.
The “food for all project” is expected to create five
million jobs by focusing on increasing land under cultivation with state
governments contributing “between 20,000 to 100,000 hectares from a combination
of aggregated smallholder farms and utilisation of abandoned states farm
settlements and agricultural projects”. The project is expected to gulp N635
billion in 12 months.
The “mass housing strategy” envisages the creation of “1.8
million jobs starting with the construction of 300,000 homes in the next 12
months”. The solar power strategy is expected to “create 250,000 jobs in the
energy sector while providing solar power to 5 million households”. Also in the
plan is the 774,000 “jobs for youths and women post Covid-19”.
As for jobs in technology, the team is looking to “the
digital economy to create 1 million jobs in outsourcing”. The National Gas
Expansion Programme is expected to “support the creation of 1 million jobs
through the conversion of 30 million homes from dirty fuels (kerosene, charcoal
and diesel) to LPG”
Road construction and rehabilitation is also projected to
create “296,000 jobs in the 6 geo-political zones of the country,” bringing the
total jobs to be created to 10.12 million jobs within a twelve month period.
N50BN SURVIVAL FUND
FOR SMES
The report also recommends the creation of N50 billion
survival funds to help small and medium scale enterprise by providing “payroll
support” for the businesses.
“The scheme is a conditional grant to support vulnerable
SMEs in designated vulnerable sectors in meeting their payroll obligations and
safeguard jobs from the shock of COVID-19,” the report read.
“The scheme will seek to support 50,000 SMEs employing a
minimum of 10 employees and a maximum of 50 employees each.”
This scheme is only for vulnerable sectors of the economy,
including — but not limited to — “hotels, creative industries, road transport,
tourism, and private educational institutions”.
‘NIGERIA AIR’ AND
AVIATION BAILOUT
According to the committee, the aviation industry “has been
hard hit by the COVID-19 pandemic as over 90% of its activities and operations
have been adversely affected, resulting in losses that are valued at N21bn on a
monthly basis”.
Responding to this challenge, the committee proposed a “fast
track” of the “establishment of a private sector-driven national carrier to
generate revenue and contribute to GDP”. In 2018, the federal government
proposed the Nigeria Air, which it said would be driven by the private sector,
but would serve as a national carrier.
The project gulped millions of taxpayers money, but was
suspended in 2019. While the ESC document does not mention Nigeria Air, it
called for the fast-track of the national carrier.
Also in the aviation sector, the committee recommended the
implementation “of the removal of value added tax (VAT) from airline tickets as
approved by FEC”, and targeted stimulus package for airlines to save existing
jobs.
EXPAND NHIS TO COVER
THE POOREST
The committee also recommended strengthening the healthcare
sector to cater to the poorest of the poor by linking the National Health
Insurance Scheme (NHIS) to the national social register (NSR).
It also recommended an acceleration of the “implementation
of the Basic Health Care Provision Fund (BHCPF) to achieve at least a 65%
increase in the share of the population covered by primary healthcare”.
The plan to develop a robust health system with the capacity
to withstand shocks is expected to cost over N198 billion naira over the next
12 months.
Nigeria Social Insurance Trust Fund (NSITF) is also expected
“to launch insurance scheme for health workers to cover exposure to COVID-19
and other infectious diseases”.
ZERO INTEREST LOANS
AND DEBT RELIEF
Part of the plan is to mobilise external funding and seek
debt relief from bilateral and multilateral institutions. The policy focus
includes engaging “with multilateral and donor agencies to access additional
funding for crisis response, i.e. IMF – $3.4bn; World Bank – $2.5bn; AfDB –
$0.5bn, African Export-Import Bank – $0.5bn, IsDB – $113m”.
The federal government was also asked to seek debt relief
and moratorium from its lending partners.
In turn, the government will grant interest-free loans to
artisans and smallholder farmers to ensure they stay alive and thrive through
these challenging times.
All of these are in addition to the existing and expanded
social investment programmes which would “enroll one caregiver (and one
alternate) per household and start disbursement of Cash Transfers to all the 2,644,495
households” in the national social register.
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I PRAY THEY IMPLEMENT IT(OPTION 3) BUT UNTIL THEN, AM STILL NOT BELIEVING THIS GOVERNMENT ABILITY TO GET US OUT OF THIS MIRE
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