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Evaluating economic policy choices to refocus economy

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THE global coronavirus, otherwise called COVID-19, has elicited severe economic disruptions in the world. In an attempt to mitigate the economic impact on the economic activities, there are a plethora of policy choices thrown open by the federal government, public agencies of government and the organised private sector. These policies constitute an amalgam of pragmatic programmes aimed at cushioning the devastating effects of the COVID-19 on the economy to reinvent the economy so as to integrate disengaged private sector’s employees who bore the brunt of negative fallouts of the pandemic.

  Reflecting on the initial stage of the global pandemic, the editorial of a national newspaper which took an over view of the dreaded scourge contended thus: “In its short but tragic history, the coronavirus [COVD-19] pandemic has left humanity no other clues than its lethal devastation of populations and its sickening of millions and global economic paralysis. In a world backed by hundreds of years of scientific knowledge and research, no cure has materialised. There are no dependable therapies and no vaccines. COVID-19 is primarily spread through respiratory droplets when an infected person coughs, sneezes, or talks. The health authorities are unanimous that the quickest and most effective response to the outbreak is the use of face masks as an additional layer of physical distancing to help block the spread of those respiratory droplets from person to person”.

  The social and economic lockdown throughout the world perceived as the effective deterrent measure to scale down the ferocious speed with which  the virus was rampaging the entire world, led to the lockdown of many economic activities, while skeletal services was maintained in some government offices to avoid total breakdown of government.        

  The consequences of the inevitable lockdown of economic activities occasioned great loss in terms of futuristic projections of many enterprises, loss of earnings by traders and general marketing of goods and services by industries and small scale manufacturing ventures. For instance, hospitality industries were completely closed down, aviation sector was shut down to minimise inter-continental junketing and business travels. Super markets counted their losses of unimaginable quantities of perishable goods and farm products that are perishable perished in the farms in addition to those in the ware houses and stores in the market. Agricultural occupation that goes with timing ceased as farmers remained indoors while wild animals fed fat on the farm products, even seed crops for the next planting season.

  When the lockdown was lifted, people began to pick the fragments of their economic life. Many privately employed persons were not immediately reabsorbed by management of the organisations due to huge losses encountered as a result of the prolonged socio-economic lockdown.

  Fact remains that life has to be injected into the economic activities by the government which has the financial and regulatory capacity and capability to do so to enable people in the private sector who were relieved of their duties to gradually re-engage to earn a living to be in the position to train their children and take care of their aged parents and dependants, according to some socio-cultural settings. The case of owners and teachers of private educational institutions remain a conundrum for government since school fees which is the only source of their income had ceased due to closure of educational institutions. 

  In the light of the deluge of the disorientation in the socio-economic activities, government holds the ace and must roll out a gamut of policy palliatives and moral suasion to enable the organised private sector to make far reaching contributions. Speaking to the press on the inevitable burden on the shoulders of the federal government for extra-budgetary appropriations for palliatives and re-jigging the entire sectors of governance, the former governor of Anambra State, Peter Obi, who made analytical evaluation on the 2020 budgetary provisions pertaining to post-covid-19 economic situation, described the budgetary provision to revive the economy as grossly inadequate going by the enormity of the reality on ground.

  He said: “The focus of government should be how to grow the economy and create jobs; the stimulus package is the magic to solving the problem.

  “What the government provided as stimulus package is meager and cannot achieve much. In the support of every country, you could see the quantum of their physical and monetary intervention.

  “In our case, the total intervention is about N2.3 trillions; and that is approximately about $5 billion. In a country of over 200 million populations, such intervention lacks effectiveness. In other words, we have crises; and I want you to look at countries with comparative size in terms of economy and in terms of population. If you go by population, a country like Indonesia that has a population of 250million,  is spending over $60 billion to be able to tackle their

economy.

  “Smaller countries that have half of our population like the Philippines and about the same size of GDP is spending $20billion. Countries like Vietnam with a population of over 90 million, is spending $26billion. South Africa is devoting $5billion for their SMEs. They are putting $4bilion to create new jobs alone.

  “Our entire package for this is $5billion. We should be asking ourselves what other countries are doing that we are not doing. I want us to focus on the economy, focus on creating a viable economy that can create jobs and it is not rocket science. Economies are driven by SMEs. Economies are driven by paying attention to the critical areas of development. The more you invest in education, the more a country will develop. The more you invest in health, the better for the economy because these are critical arrears”.

  It is pertinent to look at the role the apex bank [CBN] which appear to have fore-sighted the advent of COVID-19 but being the guardian of the nation’s economic trajectory, had rolled out pragmatic economic stimulus packages to refloat the critical growth drivers of the economy. Evaluating the CBN interventions on the economy with particular reference to COVID-19 pandemic, Simeon Ebulu said: “The COVID-19 was not in view when the Central Bank of Nigeria [CBN] initiated and vigorously implemented its intervention programmes across the various  and health challenges induced by the global coronavirus spread.

sectors of the nation’s economy. Somehow, after five years since the interventions commenced, the policy has, by coincidence, turned out as about the only safeguard, or a hedge the nation can point to against the ravaging twin catastrophes of the economic collapse and health challenges induced by the global coronavirus spread.

  “The interventions were intended to revamp and propel the productive capacities of the economy in its various facets, ranging from agriculture to manufacturing, aviation, rejuvenate the Micro Small and Medium enterprises [MSMEs] growth resulting in the establishment of various start-up schemes, fashion and design, mining, and entertainment and hospitality, among others, with the aim of refocusing the economy from its dependence on revenue [over 90 per cent]from crude oil exports and other related petroleum products”.

  It is heartening that the CBN, apart from its core statutory function of monetary and interest rate management, made proactive intervention policy to rescue the economy from sliding to another round of recession. Ebulu continued: “It conceived a scenario where as much foreign exchange earnings would be derived from mining and export of primary, processed and semi-finished products, just as is the case with crude oil, especially in areas where Nigeria has strategic comparative advantage. This policy was also designed to fill the obvious noticeable void in the fiscal space.

  “It is no longer news that the CBN has over the years been directly or indirectly involved in the financing of growth enhancement programmes and projects of the federal government. The involvement is incidental to bank’s core mandate and part of its development and corporate social responsibilities to accelerate growth and development of the Nigerian economy”.

  In conclusion, it is pertinent for the apex bank to concentrate on its core mandate by applying its finances to those areas to serve the nation in specialised areas. For the apex bank to be expected to be embarking on interventions in certain developments in the economy will vitiate its efficiency and effectiveness.

  It bears repeating that the federal government has to be realistic in diversification of the economy which needs the abrogation of federal laws that prevent the state and local governments to delve into socio-economic sectors that will enable them meet the needs and aspirations of their areas. For instance, a group of states can embark on railway transportation projects and electricity supply to enhance economic activities that will create jobs and create wealth and physical wellbeing.

  The pervasive employment crises will be significantly reduced when there is realistic diversification of the economy and not the federal government apparently deceptive propanganda and boasting that it has diversified the economy in agriculture and solid minerals. That is no diversification in a federal system of government which we are committed to from the country’s independence in 1960.

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