It is no longer news that Nigeria has entered another recession, thanks to COVID-19. This induced recession followed a similar pattern across the world, where many countries are swimming in the murky water of economic recession.
Thankfully, the Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmed, on Monday, November 23, 2020, said the country would exit recession by the first quarter of 2021. In a chat with Channels Television, she said the Nigerian government is working towards reversing the declining economic trend in the country.
But the reality at the moment is that businesses are tied like a goat to a silo and more people are sinking below the poverty line.
The International Labour Organisation in its report titled, ‘ILO Monitor 2nd edition: COVID-19 and the world of work’, describes the coronavirus pandemic as “the worst global crisis since World War II”. COVID-19 is hanging nations by a piece of thread; millions of people now wallow in grief for job losses.
The Federal Government had projected that the economy would contract by 4.4 per cent by the end of 2020, down from a growth of 2.27 per cent in 2019, due chiefly to fallouts of the Covid-19 pandemic. The International Monetary Fund on the other hand said that the pandemic would trigger the worst economic recession since the Great Depression, and far worse than that seen during the 2008 financial crisis. In a similar vein, according to figures released a few days ago by the National Bureau of Statistics, the Cumulative Gross Domestic Product for the first nine months of 2020 stood at -2.48%, in contrast with -6.10% recorded in the second quarter. This is a second consecutive negative growth, contracting by 3.62% in the third quarter.
On April 28, 2020, the IMF Executive Board approved US$ 3.4bn in emergency support to Nigeria under the Rapid Financing Instrument, to support the government’s efforts in addressing the severe economic impact of the coronavirus shock and the sharp fall in oil prices. But this money is a tip of an iceberg to what is needed for the economy to rebound.
Each country is discussing the various ways to pull their people out of poverty. To do that, they must rejig their monetary and fiscal policies. The Buhari regime has rolled out some monetary and fiscal policies to cushion the effects of COVID-19. On March 16, 2020, the Central Bank of Nigeria announced new measures such as: one-year extension of a moratorium on principal repayments for its intervention facilities; the reduction of the interest rate on intervention loans from nine per cent to five per cent; strengthening of the loan to deposit ratio policy (i.e. stepped up enforcement of directive to extend more credit to the private sector); creation of N50bn target credit facility for affected households and small and medium enterprises; Other fiscal policy are: reduction of the crude oil benchmark price from $57 to $30.
Pledge to pump N1.1tn ($3bn) into critical sectors of the economy.
Commencement of a three-month repayment the moratorium for all TraderMoni, MarketMoni, and FarmerMoni loans.
A similar moratorium to be given to all Federal Government-funded loans issued by the Bank of Industry, Bank of Agriculture and the Nigeria Export-Import Bank.
Although the above policies have been pronounced, the most important thing is implementation. Most people are delving into the abyss of poverty, as a matter of fact. Samu, an Ijaw man who lived in a rented apartment in Yaba, Lagos, has left for a retched hovel of mud and straw in the waterlogged part of Ebute Metta of Lagos. His family now clothed in rags and subsisted chiefly on the lump. This was a man who was proud of being a doorman in a four-star hotel on Lagos Island. He now derives joy in gulping dry gin every morning…sad!
To John Asuquo who resides at Ipaja, a Lagos suburb, “constant increase of rent by the landlord has forced me and my family to relocate from Ilasa, Lagos to my uncompleted building at Ipaja.’’ Though he no longer pays rent, he now sprays a ring of repellant on the floor each night to keep mosquitoes and roaches at bay. Poverty in the land is no more tears of laughter.
How do we get out of this extreme poverty?
We are never short of solutions on paper but to deviate from this narrative, Nigerians must start to explore its large, young population and abundant resources to support sustainable growth and poverty reduction.
The key indicators are transparency, infrastructural development, health, security, friendly policies among others must be vigorously pursued.
And more elaborately, investing heavily in education and training, continuous diversification of the economy, and strengthening the administrative and governance systems- political, economic, and corporate will eclipse the status quo.
What economic lessons can we learn from the heaviest pandemic in the world? From the archives, the economic recession between 1929 and 1932 made Herbert Hoover eschew large-scale efforts to boost federal spending and rescue stricken industries. Once F.D.R. took over, in 1933, he pursued a far more activist approach. His administration provided cash payments to farmers, debt relief for mortgage holders, public-works projects for the unemployed, and low-interest loans to stricken banks and railroads. With the above and many jet measures, there are tons of palliative steps to unveil that can reduce the poverty level not only in the developing economies but also developed economies as well.
Whatever programmes the government is doling out to reduce poverty in Nigeria, they might not yield the desired result until high levels of inclusive growth in consonance with economic diversification and increased productivity are broadly embraced.
The economies of most developing nations seem crossed and tangled in all directions because of COVID-19 and that is why borrowing is raging like wildfire. Some of the funds borrowed will of course, find their course into the foreign accounts which are stacked to the brim like a corn silo as most of our rulers are profoundly selfish, mixing sordid avarice with solid valorous.
Until the people begin to splutter and hiss like a cobra whose tail has been stepped on to a distorted system, more people will sink below the poverty line.
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