COVID-19: Turning adversity into opportunity
Never in our lifetime have we endured the kind of socio-economic disruption the world is currently experiencing, as the Novel Coronavirus (COVID-19) ravages people, and continues to cause massive economic displacements across the globe. Since the virus was discovered, it has infected two million people, and caused over 131,000 confirmed deaths in 213 countries, areas or territories. Apart from the significant loss of lives, the virus is now likely to cause a contraction in the global economy.
Nigeria is not insulated from the public health and economic crises. We have recorded 493 cases with 17 deaths, across 19 states and the Federal Capital Territory. Thanks to the proactive actions of the Federal Government, complemented by our efforts as State Governments, and our heroic healthcare workers and resilient people, we have minimized the loss of life, albeit at a necessary, but great cost to our economy and livelihood. The pandemic will leave Nigeria facing a significant economic crisis, due to the rapid decline in oil prices, coupled with the necessary restriction on movement taking its toll on our economy. Our people, many of whom require daily activity to earn an income, are struggling to support their families. However, as we deal with the implications of this pandemic, we must remain resolute in the face of adversity, and chart a course for Nigeria to emerge stronger and more resilient in the aftermath of COVID-19.
This crisis has taught us one big lesson, that we are only as strong as our weakest link. Globally, the virus has been particularly unkind to our senior citizens, and people with underlying health conditions. Economically, the restrictions put in by the Federal and State Governments have been tough on our more vulnerable people, leading to widespread concerns about job losses and food security. Even in the aftermath of this virus, many have suggested the world as we’ve known it will change permanently, and force a review of many existing businesses and even government models we took for granted.
Nigeria must emerge from this crisis with a plan to create jobs, reduce poverty and put food on the table of its citizens.
In providing jobs, we must attract the investment required to bridge our infrastructure deficit. While the National Sovereign Investment Authority (NSIA) has shown what is possible with the progress of the Lagos-Ibadan Expressway, Abuja-Kano Expressway and the Second Niger Bridge; and the Ministry of Transport has ensured the Lagos-Ibadan-Kano rail line is progressing, even during this challenging period, we need much more, and quickly too. Domestically, we must ensure that NSIA and its partners including Central Bank of Nigeria (CBN), National Pension Commission (PENCOM) and other stakeholders, implement a framework to ringfence regenerative infrastructure assets for private capital to invest.
These investments will be led by domestic capital, and we expect the Nigerian pension industry, with assets under management in excess of N9 trillion, will certainly invest a portion of its assets in well-structured infrastructure projects, provided the structure gives the necessary comfort to guarantee both investments and returns. However, domestic capital will not be enough. We will require significant international capital, and with over $10 trillion invested in assets with negative yields, Nigeria has an opportunity to attract these flows, if we ensure our exchange rate is reflective of market realities. If we successfully shift these projects to private investors, Federal and State Governments can focus their limited resources on critical investment in education, healthcare, security and other social protection needs.
However, as we create the enabling environment for the economy to grow, we must ensure a skilled and healthy workforce is developed to benefit from these investments, and the expected adjustments to the global supply chain. We must optimize our population by preparing for the future of work. From early stage education, to technical and vocational training, and digital skills training, we should equip our young people with the skills needed to take jobs in the Fourth Industrial Revolution. This will require a comprehensive review of our education policy, but one that must be done with the private sector. We have seen the impact of companies like Lambda School in the United States, and closer to us, the likes of Andela, who are providing people with the required skills to compete for jobs globally. These kinds of initiatives must now be implemented in partnership with our formal educational institutions at all levels. As State Governments, we must complement the efforts of the Federal Government by making it cheaper and easier for the deployment of broadband infrastructure across our States, especially as this pandemic has taught us the importance of ensuring even the remotest locations have access to good quality internet services.
Agriculture, the mainstay of our national and many subnational economies, has never been more important, especially as we seek to reduce hunger. COVID-19 has shown the importance of food security, and our ability to call on the nation’s food reserve at this time, only validates the Federal Government’s decision to prioritize food production. Our next set of interventions must focus on the following areas: a massive national land clearing programme to open new land banks for agriculture; farm roads that ensure the effective transportation of inputs to, and produce from farms; extension services leveraging mobile and digital technology, which will not only enumerate and geotag farm lands to unlock dead capital, but also share best practices with our farmers using mobile phones; irrigation infrastructure to support wet and dry season farming, which bring an immediate uplift to yields; funding for our research institutes and universities, to develop more productive inputs; and finally, improving the linkage between farmers and markets by promoting more off take and out grower schemes with the private sector. Governments at the state level are ready to engage partners keen to work on these issues.
However, as we chart a long term plan for Nigeria to emerge stronger from the crisis, we must also reflect on the immediate actions to address our short term challenges. With a reduction in revenues, we must reduce the cost of Government. Apart from the passage of supplementary budgets by Federal and State Governments, we need to explore various recommendations on streamlining Ministries, Departments and Agencies, to reduce wastage. We must also be ready to eliminate or minimize non-core expenses, and also ensure the wage bill at all levels of Government is accompanied by accountability, productivity and effectiveness of our workforce.
Though unfortunate, the current situation validates the need for increased focus on social welfare. With the exit from an expensive petrol subsidy, the gain should be used to meet specific needs arising from the impending fiscal challenge, which will require synergy between the NNPC and the fiscal authority to maximize this opportunity.
The Federal Government, again working with States, should consider implementing the concept of an Ultra Universal Basic Income (UUBI). As Nobel laureates, Esther Dufflo and Abhijit Banerjee argue, this concept is crucial to poverty reduction, and helps to simplify Government aid programs. This should require beneficiaries to use basic electronic channels, which will not only encourage a growth in national identification, but also help to deepen financial inclusion. We have seen the importance of the National Social Register, which contains 2.6 million poor and vulnerable households, and now provides cash transfers of N5,000 per month to benefitting families. At the Governors’ Forum, we are working with the Ministry of Communications and Digital Economy, and service providers to mine poverty data and improve the Social Register. The UUBI will deepen the impact of these and other complementary programmes like Homegrown School Feeding and Special Public Works Programmes, to ensure that as we focus on rebuilding the economy, our poorest and most vulnerable are not left behind.
There is an immediate opportunity to support our businesses, particularly SMEs by asking financial institutions to suspend loan repayments for at least six months, for which the Central Bank has already taken some commendable steps. Subsequently, the Central Bank, by modifying the conditions for existing loan guarantees, can encourage financial institutions to create new loans for small businesses recovering from the economic slowdown. In order to boost consumption, Government can also allow employees who have lost their jobs to access a portion of their pension contributions earlier than the period stipulated in the Pension Reform Act.
There is no national or subnational plan that will not depend on the security of lives and property to succeed. By focusing on job creation and poverty reduction, we will reduce the lack of opportunity, which remains a big incentive for crime. However, for those who still insist on criminality, we must be ready to tackle them with well-trained, equipped and appropriately remunerated security agencies.
As State Governments, we recognize the importance of improving our collaboration to ensure an aligned national agenda. These collaborations include regional collaboration among states within the same geo-political areas; a national collaboration among all States, under the auspices of the Nigerian Governors Forum, and stronger collaboration between States and the Federal Government, hence our advocacy for a joined up national strategy. In future, we will look at existing programmes that require both Federal and State Government participation, and seek to optimize them. For example, reviewing the law undergirding the Universal Basic Education programme from a counterpart funded programme to a Programme for Results (PfR) approach, will shift the requirement to access the federally managed fund from an ability to match the FGN’s contribution, to a reward for meeting agreed milestones in basic education. This is only one example of what can be done, if as States, we provide the Federal Government with on-the-ground guidance on how to deliver better solutions to our people.
In conclusion, as we battle a pandemic that has no appreciation of tribe, religion, or political affiliation, we only require bold ideas, but also the conviction to press ahead with good decisions, and the courage to jettison bad ones that impede our progress. As Jawaharlal Nehru famously said, “crises and deadlocks when they occur have at least this advantage, that they force us to think.”
Fayemi, Governor of Ekiti State and chairman, Nigeria Governors’ Forum, wrote from Ado-Ekiti, Nigeria.
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