ON September 8, during the Ministerial Performance Review Retreat in Abuja, President Muhammadu Buhari ordered the “speedy and timely release” of the N2.3trillion Economic Sustainability funds to “cushion the effects of Coronavirus pandemic on the citizens and business owners” in the country. Consequently, he directed the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, and the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, to ensure judicious deployment of the stimulus package and the funds for capital projects in the 2020 budget.
The directive by the President is coming months after the recommendations of the Economic Sustainability Committee (ESC) chaired by Vice President, Prof. Yemi Osinbajo, submitted its report and advised that N2.3trillion would be needed urgently to stimulate recovery in the critical sectors of the economy. Why the government dithered for months before ordering the release of the funds is a matter of conjecture. However, it is undisputed that the economy is in the negative territory and needs the stimulus funds, even though the funds mapped out are too small to ramp up growth.
The stimulus funds, according to the president, will support the economy in the face of the challenges of the COVID-19 pandemic. This is the time to walk the talk. We agree with the vice president that the COVID-19 pandemic has deepened the poverty situation in the country as well as the economic distortions and hardship that Nigerians face daily.
Therefore, it has become expedient to ensure that the stimulus funds are effectively deployed to mitigate the effects of the pandemic on the economy. One of the ways to ensure this is to fund production as well as enable consumer spending so that people can afford basic food items as prices of many essential food items have increased beyond the reach of most Nigerians. Currently, the pandemic has adversely affected disposable income of the citizens. Diversification of the economy remains key to economic recovery. We urge the government to show more commitment to national food security.
When the Federal Government launched the Economic Sustainability Plan, it was geared to stimulate the economy by supporting small businesses, manufacturing, constructing about 300,000 houses across the country at affordable prices of not more than N2 million and other components that can create jobs. According to the government, out of the N2.3trillion, N500 billion will serve as stimulus package that is already provided for in the amended 2020 Appropriation Act. These are funds that the government had sourced from special accounts. Also, N1.2 trillion of the funds will be sourced as structured low cost loans from the Central Bank of Nigeria (CBN) and other development partners and institutions. Similarly, N344 billion will be sourced from bilateral and external sources as well as domestic markets.
The government has also adopted a strategy that will enable it respond effectively to the triple problems of low exchange rate, youth unemployment as well as negative growth. Therefore, utmost sincerity of purpose is required to achieve the lofty objectives of the stimulus funds. It has become imperative that the plan should, first and foremost, offset Nigeria’s current negative growth projection, which has contracted to -6.10 per cent points in the second quarter of 2020.
One important lesson from the COVID-19 pandemic experience is the need for nations to diversify their economies, broaden revenue base and make them less dependent on mono-product. Unfortunately, we have paid so much lip service to economic diversification. For once, let us be serious about it. No doubt, countries that will come out of the pandemic better will be those with creative, forward-looking and imaginative leadership. For Nigeria, the lessons of the pandemic are far-reaching that failure to improve the economy and deepen growth through human capital development will be of grave consequences.
The diversification drive must be pursued with vigour and tenacity of purpose. Therefore, everything necessary must be done now to stimulate economic recovery. The Federal Government should ensure that the stimulus package is fully implemented.