The Federal Executive Council (FEC) recently approved the immediate implementation of the N2.3 trillion Nigerian Economic Sustainability Plan (NESP). The programme is one of the recommendations of the Economic Sustainability Committee chaired by Vice President Yemi Osinbajo. It is to support the economy in the face of the disruptions caused by the COVID-19 pandemic. The Federal Government launched the sustainability plan with the objective to stimulate the economy, support small businesses and ensure liquidity. The measure will ensure the retention and creation of jobs using labour-intensive methods in key areas like agriculture, facility maintenance, housing and direct labour interventions, among others.
It is commendable that the approval of the programme was done after deliberations by the ministers. We also believe that the recommendations were thoroughly debated in the overall interest of the country. We think that effective implementation of the recommendations is of critical importance, especially now that the economy is in distress.
According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, out of the N2.3trillion, N500 billion will serve as stimulus package. Good enough, the amount has been provided for in the amended 2020 Appropriation Act. These are funds that the government had sourced from special accounts. Also, N1.2 trillion will be sourced as structured low-cost loans from the Central Bank of Nigeria (CBN) and other development partners and institutions, while N344billion will be sourced from bilateral and external sources as well as domestic markets.
In all, the government has adopted a strategy that will enable it respond effectively to the triple problem of low exchange rate, youth unemployment as well as negative growth. Undoubtedly, the magnitude of the economic crisis currently facing the country is such that requires a better and more nuanced approach to policy implementation. Therefore, utmost sincerity of purpose is required to achieve the lofty objectives of the Economic Sustainability Plan. It has become imperative that the plan should, first and foremost, offset Nigeria’s current negative growth projection.
In the first quarter (Q1) 2020, the economy contracted -3.4 per cent, largely due to the impact of the ravaging virus. However, the economy managed to post a positive growth of 1.87 per cent in the same Q1, 2020. Recently, the International Monetary Fund (IMF) projected sharp recession for the country with growth contraction of -5.4 per cent in 2020. The negative growth rate may be attributed to the prolonged Foreign Exchange (FX) illiquidity that is impacting on business activity as well as the increasing number of COVID-19 cases across the country.
The Federal Government has estimated -4.40 per cent decline in the economy if it sticks to the 2020 budget with no stimulus. In 2021, global growth is projected at 5.4 per cent. Based on the predictions of the IMF on the economy, we believe that so much is required to rejig the economy on the path of sustainable recovery and growth, especially with the huge amount being spent on repayment of external loans and others.
With the advent of the COVID-19 pandemic, nations have learnt so many useful lessons. For Nigeria, the pandemic has given us the opportunity to diversify the economy, broaden our revenue base and avoid undue dependence on one crude oil. Countries that will come out of the pandemic better will be those with creative and imaginative leadership. Posterity will be kind to governments that take seriously the lessons of the pandemic and turn around their economies. Nigeria should also deepen growth through human capital development and improve critical sectors of the economy. This is the time the government must drastically reduce the cost of governance and deploy the resources to other sectors such health, education, and many others.
While the recommendations of the economic sustainability plan look very good, we urge the government to ensure that they are fully implemented. Diligent implementation of the plan will, to a large extent, reduce the projected negative growth rate. We also advise that no sector of the economy should be neglected under the new plan.