Coronavirus, a global health emergency, otherwise called Covid-19, has changed the world fundamentally and almost irredeemably. The deadly virus has exposed how fragile and vulnerable societies are. But, on the flipside, it has created a chance for societies to think introspectively to build a more sustainable future.
As a disease, coronavirus has been a huge experience and, as an experience, it has been an encompassing and all-conquering phenomenon. Economists and students of Sociology and Anthropology are yet to come to terms with the consuming impact of this virus on human existence.
This is not, however, time to ‘lay wreaths’; not time to sing the Nunc Dimittis. It is rather time to reflect on individual and group experiences and to work with the lessons learnt so as to build not only a sustainable, but also a resilient future, bearing in mind that experience does not consist in what happened, but the lessons learnt from what has happened.
A major lesson learnt from the coronavirus experience is that man, irrespective of colour or creed, has capacity to think deeply and act fast in the face of an emergency like Covid-19. Again, it has opened the eyes of world leaders, particularly African leaders, that change can happen within a short period of time.
However, the challenge which Maje Gopel, a transformation expert, poses as a question to the world in general and Nigerians in particular is how they can harness these awareness (lessons learnt) to bring about systemic transformation that will put them in better stead to face future unexpected challenge(s).
The world today is in agreement that life after Covid-19 will be tough. The virus has already brought global economy on its knees. Experts say that for a mono-product economy like Nigeria that depends on oil, which is struggling to find buyers at the international market, it is going to be a long trek to recovery.
Though economists argue that Nigeria’s path to recovery from the fiscal and social crisis resulting from the collapse of oil prices and the coronavirus pandemic cannot come from government quarters alone, there are still some structural changes that if made, could avail much for the country.
Like the United States of America (USA), Nigeria runs a presidential system of government. But unlike America, Nigeria runs a bogus and unwieldy government that offers jumbo pay to government functionaries, and more to members of parliament whose bloated take home pay has no moral or ethical justification anywhere in the world.
Again, unlike America, Nigeria runs a government in which political and economic powers are over-concentrated at the centre. This has not only made the federating units docile, but also reduced them to almajiri status, always out with their bowls waiting for the next ration when it is due.
From an Olympian height of over $100 per barrel, the price of crude oil at the international market has tumbled to below $40 per barrel at the moment. That means the country’s oil revenue has gone down by over 60 percent, living it in dire situation economically.
“We don’t need any sermon for us to know that the tea party is over, no thanks to coronavirus. Without a doubt, life after this pandemic is going to be tougher than we can imagine. The economy can no longer sustain the current jumbo pay package of political appointees and legislators,” Brown Oledibe, an economist working with an accounting firm, says.
Anayo Nwosu, a communication expert, agrees, stressing that “the economic hardship that will befall countries like Nigeria after and during Covid-19 is better imagined than experienced.” He likened what will happen to what the Igbos suffered after the Nigerian civil war.
Nwosu reasoned that the experience would be worse now that foreign nations who normally come to the aid of Nigeria are also challenged because the suspension of economic activities due to coronavirus has hit them hard too.
He anticipates a situation where states that depend only on federal allocation would beg to be merged with other states, saying that the whole Southeast will soon find out that they only need one house of assembly not five. This realisation, according to him, will lead to states crying for restructuring.
Since this suffering is inevitable, the concern of all Nigerians should be about survival, not only of the people, but also of the economy. But as a short term measure, Chukwuebuka Idoko, a public affairs commentator, recommends cutting down on the bogus cost of governance at all levels.
Idoko is very particular about the salaries and allowances of political office holders. “Surplus money saved from this should be given as stimulus package to ordinary Nigerians in cash (not palliatives) on caliberated bases. Salaries and allowances as well as cost of running the National Assembly should be reduced by 50 percent”, he advised.
Besides placing a ban on foreign travels and reviewing the 2020 budget downwards, Oludayo Taiwo, a research fellow in a federal government agency, wants the federal government to place embargo on the purchase of vehicles and other non-essential items by National Assembly members.
“Pruning down the retinue of advisers and personal assistants is also a way to go at a time like this,” he said, canvassing support for small and medium scale entrepreneurs to enable them to drive the economic development of the nation.
Ebenezer Osunyomi, an Ibadan-based entrepreneur, shares Taiwo’s view, adding that banks should be enabled to give almost free interest loans to small scale business owners. Private schools owners, he noted, are among the worst hit by the lockdown. “Funds should be made available to them to provide all the necessary amenities and gadgets that will make the guidelines for staying safe among the pupils and students possible and easy,” he said.
Osunyomi believes that in time of war or extreme emergency, the paramount goal is survival. For that reason, he says, the federal government should tell itself the truth about the whereabouts of all recovered loots, sincerely channeling same to farming, both small and large scales.
Diversification, tax cuts key to sustain economy – LCCI, NECA DGs
Experts and key operators in the organised private sector (OPS) say the only way to keep the nation’s afloat post-COVID-19 is to immediately diversify, saying a further slag will puts the economy at greater risk.
Muda Yusuf, the Director-General of Lagos Chamber of Commerce and Industry (LCCI), who spoke with BDSUNDAY, said in diversifying the economy, three critical areas have become imperative.
These, according to him, are the quality of infrastructure, the quality of policies and the quality of institutions.
The DG said it was crucial to get these key parameters right and also critical to ensure proper alignment among these key variables to ensure sustainable economic diversification.
“The policy factor has many dimensions – monetary policy, forex policy, interest rate policy, tax policy, trade policy, procurement policy and investment policy. Each of these policies has a major role to play in the economic diversification process,” he said.
He explained that the policy mix must be right for the desired outcomes to be achieved.
“The monetary policy for instance should be designed to drive domestic investment through a moderation of the monetary tightening stance of the CBN. This is needed to moderate interest rate in the economy,” he said, stressing that it is difficult to drive domestic investment at current levels of interest rate which is well over 25 percent for most economic players.
According to the DG, the economy needs investment, especially domestic direct investment to drive diversification, expressing the delight that, this, however, is beginning to change with the recent policy measures introduced by the CBN and the various interventions in the development finance space.
Aside the above, Yusuf said foreign exchange policy remains another important policy component which impacts on economic diversification.
He pointed out that a foreign exchange regime that perpetuates a rent economy would not serve the cause of diversification, as it creates opportunities for arbitrage, corruption, resource misallocation, impedes the inflow of investment as well as transparency issues in the allocation of forex.
Stating that the multiplicity of rates is inimical to sustainable economic diversification, the GD observed that inappropriate forex policies could impede the inflow of foreign exchange into the economy and contribute to the weakening of the currency.
“It is also important to avoid a forex policy regime that penalises domestic production and incentivises imports. Such policies inadvertently undermine the country’s drive towards self-reliance.
The renewed aggressive tax drive is focused more on investors than consumers. The burden of taxation is more on the investors in the economy than the consumers. It is therefore inherently disincentive to investment and economic diversification. The three tiers of government targets investors more than consumers,” said Yusuf.
The LCCI DG explained that this is not in consonance with best practice principles in taxation, adding that in an economy in which almost 50 percent is informal, this structure of taxation is not investment- friendly. The formal sector of the economy bears the largest burden of the tax system. The tax policy needs to be better attuned to economic diversification through a reduction in the tax burden on investors in post COVID-19 and going forward.
On his part, Timothy Olawale, the director-general of Nigeria Employers’ Association of Nigeria (NECA), said to reflate the economy and put it back on the path of recovery and growth, it was important for the government to bolster aggregate demand through increased government spending and tax cuts for businesses.
He said direct grants and levies waivers should be given to the manufacturing and other hard-hit sectors to enable their recovery.
Olawale also canvassed import duty waivers for critical manufacturing equipment and tools as well as institute structured and strategic cash-transfers/grants for Small and Medium Enterprises (SMEs) to increase economic activities.
“The Federal Inland Revenue Service (FIRS) as well as State Inland Revenue Services (SIRS) should waive payments on personal and corporate income tax for the second and third quarters of 2020, considering that COVID-19 has affected the income and profits of businesses. This will increase the disposable income of citizens and enhance the capacity of businesses to engage in economic activities,” said Olawale.
The DG further noted that CBN’s decision to increase the Cash Reserve Ratio (CRR) from 22.5 percent to 27.5 percent in January 2020 should be revisited to provide liquidity for banks so that they can, in turn, provide needed credit to the private sector, especially the manufacturing and MSMEs.
He further called on for FIRS and SIRS to delay tax collection for the worse-hit sectors including tourism, the airline industry, manufacturing, MSMEs and hoteliers in order to enable them recover from the steep decline in demand.
“Operatives at the various ports in the country including Customs should facilitate economic activities rather than become hindrances to business operations. While the naira has been adjusted as a result of FOREX shortage, it is important that the CBN maintains exchange rate stability by deploying external reserves in order to maintain investors’ confidence and reduce capital flight,” he added.
Olawale also stressed the need for the government and its agencies to honour Value Added Tax (VAT) exemption list contained in the Finance Act 2019, and not charge VAT on importation of milk and other basic food items, which are now exempted, saying this would prevent additional burden on businesses.
“As the pandemic has shown the fragility of our revenue base, government should step-up effort to diversify the economy to prevent external shock from disrupting the economy.
Immediate steps should be taken to deregulate the downstream oil sector and eliminate the billions of naira wasted on subsidy. “Government should drastically cut the cost of governance,” he said, adding that several unnecessary retinues of aides at cost to the state are needless.
He pointed to the ingenious idea of corrupt practices known as security votes and foreign travels by state government functionaries as examples of cuttings in avoidable expenses draining state government purses.
Olawale, however, commend the steps and measures so far taken by government at all levels and urge that a more concerted, coordinated and all-encompassing strategy should be embraced for the quick recovery of the Nigerian economy.
Nigeria is in Catch-22 situation and the rampaging Covid-19 pandemic has compounded the situation for the country. Crude oil, Nigeria’s major Foreign Exchange earner has seen its prices falling amid the pandemic in recent months. The national budget has been slashed and the government of President Muhammadu Buhari is on borrowing spree to address the dire situation confronting the nation at the moment.
However, what appears to be a more desperate measure to diversify the economy was when President Buhari inaugurated the Ajaokuta Presidential Project Implementation Team chaired by the Secretary to the Government of the Federation (SGF), Boss Mustapha while the Minister of Mines & Steel Development is the alternate chairman.
According to the SGF, Buhari’s regime “is focused on making the Ajaokuta Steel Company (ASC) West Africa’s largest fully integrated producer and most importantly to accelerate industrialization in steel-related industries.”
While this appears as the regular slogan of past and present governments, which have wasted precious resources and time on the Ajaokuta project, without the plant producing a single slab of steel in over 40 years, it is now apparent that the present government itself will find it difficult to survive if it fails to revive Ajaokuta and also revamp the energy especially the power sector to attain self-sufficiency. These are the sectors that can lead to industrialization and spur manufacturing otherwise Nigeria will continue to deteriorate. It has become like they say “a task that must be done.”
‘Nigeria needs urgent revival of Ajaokuta, energy sector to spur manufacturing’
A public Affairs analyst, Majeed Dahiru, told BDSUNDAY that resolving the power challenges of Africa’s’ largest economy is most paramount at this time. He alluded to the fact that privatization in the power sector has not helped Nigeria, saying “private sector economy runs better when the public sector is efficient. Without an efficient public sector the private sector will be comatose, it will be a replica of public sector and a privatised problem in the country. We have seen that in the failure of the Nigerian privatization drive since 1999. Nigeria’s competitive edge has blunted largely by political considerations which has led to a paralysis of the private sector. That is why you see the failure in the power sector.”
In this critical sector, Nigeria still has stake in transmission as a public corporation, Nigeria has stake in Distribution Companies (DICOS), Nigeria has stake in the National Independent Power Projects (NIPP), Nigeria also has stake in Generating Companies (Gencos) but the country together with the private partners struggle to generate a meager 7,000 megawatts of electricity and can only transmit 5,000 megawatts to a population of about 200 million people. This is grossly inadequate.
What experts think is the right way to go is to generate resources to invest into power generation, transmission and distribution in order to make Nigeria self-sufficient in power so that it can be used to actually drive industrialization and manufacturing.
Majeed warned that a country that can generate only 7,000 megawatts of electricity and evacuates only 5,000, cannot sustain manufacturing on such a large scale level that can be competitive in the international market, adding that only sustainable power supply can spur manufacturing in the country especially as the nation still has the potential to grow in that sector.
The expert believes that once the problem of power, is addressed, government again must put in efforts to resuscitate the Ajaokuta steel plant and all other steel and allied companies in Nigeria. It is widely believed by experts that Ajaokuta kind of industry is something that no private sector can do for a nation. It is a challenge that the government must take up because this is the building block of any economy, it is this foundation that the private sector can now thrive upon.
“Ajaokuta is to too humongous to be handed over to the private sector it is the responsibility of government because it is a national economic security asset. Its profits may not be in form of naira and kobo. The profit should be in form of how many jobs it was able to spur and how it was able to support the economy to create jobs and put money in the pocket of Nigerians. So the money it is able to put in the pockets of Nigerians is the profit from government whereas a private sector entity would want to profit directly in terms of naira and kobo,” Majeed said.
It is dangerous at this time to toy with the destiny of Nigeria because most of the advanced countries may not have time for a country like Nigeria in the post Covid-19 era as they would be preoccupied with their own crisis.
Therefore, it is only self-sufficiency in steel production that will save the nation’s critical forex from import of steel from China, and Europe. It will also allow the nation’s start–ups in iron and steel as well as in other allied industries to use Ajeokuta as bedrock for industrialisation. It is therefore, pertinent that the Nigerian government should take Ajaokuta as a serious state-owned company. This may not preclude any other foreign investor from setting up its own steel plant.
Revive dead, dying research institutes – Experts
Since late February, when the first case was reported till now, there has not been a homegrown solution despite the over 20 research institutions, university teaching hospitals, medical research companies among others.
Sadly, Nigeria was happy to receive solutions developed by local medical professionals in Madagascar. Then, how is the country the ‘giant of Africa’ when smaller countries are showing strength in areas Nigeria should ordinarily shine?
Of course, the truth is that research institutes across the country vested with the responsibility of finding solutions for cases like the pandemic are not well funded.
The ones that are well funded still cannot deliver because of corruption, which make the leadership of the institutions to divert research money to private pockets.
At a recent joint meeting of the Federal Ministry of Science and Technology and Federal Ministry of Health, Professor Doko Ibrahim, director general, Raw Material Research and Development Council (RMRDC), was happy to announce that the research council has developed PPE, face masks, surgery gowns and gloves according to World Health Organisation’s standard.
But Nigerians had expected the agency, which is under the supervision of Fed Ministry of science and technology go beyond that to promote the utilisation of the health kits because government still imports those kits from abroad.
Nigerians are also waiting for the vaccine for coronavirus, which the University of Ilorin on May 4,2020 said it would soon produce by a team of medical experts and scientists led by Mathew Kolawole, professor of Medical Virology.
The university also stated that the research team had developed three viable proposals for research on various aspects of the contagious disease.
But many are skeptical about the University of Ilorin’s promise going by the poor funding of research in Nigeria, especially in universities.
Ferdinand Aduki, a senior pharmacist with a global pharmaceutical company in Lagos, noted that the team at University of Ilorin can achieve that feat if they have enough funding, dedicated team and trials to confirm the efficacy of the vaccine.
He further noted that many quality drugs have originated from experiment at university laboratories, and that it takes a team of dedicated people to do that.
Citing instance with RMRDC, Ademola Fadahunsi, a marketing expert, lamented that Nigerians would prefer imported health kits instead of the ones manufactured here. “If I am an investor, I will not put my money in products Nigerians prefer to be imported because no matter how cheap or quality, they will go for imported ones”, he said.
He noted that the International Institute of Tropical Agriculture Ibadan has recorded many feats in agricultural production, agronomy among others, but that a lot of Nigerian farmers and even governments prefer imported seedlings, fertilizers and other incentives.
“When Michael Okpara University of Agriculture Umudike, Umuahia was a research institute, it recorded many feats that were even exported. Today, you hear less of the institution in terms of breakthroughs. It is sad”, Fadahunsi said.
Aduki noted that the Federal Government should look into Oronsaye Report on the merging of ministries, parastatals, and agencies for efficiency and collapsing moribund ones.
“We have over 20 research institutes across the country and you wonder what they are researching on and we still remain where we are. Government should review Oronsaye Report implement the recommendations to save money, encourage efficiency and productivity,” he said.
While many are calling for better funding of the research institutes, Amos Nnadi, a university don, said that the mindset of most staff of the institutes is wrong.
“Research is a serious thing, but most of the staff of the institutes think they are civil servants. So, if you give them all the funds, they will embezzle it. We need to change their mindset or employ people who know that research is a serious business,” Nnadi said.
According to him, ordinarily, the Nigerian Institute of Medical Research, and the Nigerian Centre for Disease Control should be offering solutions now if they were well funded, but the pandemic made government to focus on them.
He noted that the fire-brigade approach will not work in research because there are procedures to follow if you want good result.
“If you visit Pax Herbals in Ewu, Edo State, you will understand what team work, dedication and research mean. Reverend Father Anselm Adodo set up an international research laboratory that uses natural materials to formulate their drugs, which is working for many. For me, that is breakthrough and more private sector initiatives like this should be encouraged,” he said.
