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COVID-19: Osinbajo recounts how FG tackled pandemic-induced economic downturn

At the graduation ceremony of participants of the Senior Executive Course 43 (2021) of the National Institute of Policy and Strategic Studies (NIPSS) in Kuru, Jos, Vice President Yemi Osinbajo recounted how President Muhammadu Buhari’s government saved the Nigerian economy from total collapse during the COVID-19 pandemic crisis. MURITALA AYINLA reports

Regardless of whatever improvement noticed in the nation’s economy by the experts, to many Nigerians, the economy is getting worse as long as many citizens still grapple with inflation, rising cost of food items even as more Nigerian household are now dropping Liquefied Petroleum Gas (LPG) for charcoal pots, following skyrocketing price of the commodity in the face of continued fall of the Naira against the United States dollar and other currencies. But at the just concluded Course 43 (2021) graduation ceremony held for the Senior Executive of the National Institute of Policy and Strategic Studies (NIPSS) in Kuru, Jos, Vice President Yemi Osinbajo recounted how the President Muhammadu Buhari-led Federal Government saved the Nigerian economy from total collapse, following the outbreak of COVID-19 pandemic in the country.

Osinabjo said the situation would have gotten worse if not for the far-reaching interventions by the Federal Government. He said the damage to the economy by the COVID- 19 pandemic and the global lockdowns was great as the Gross Domestic Product (GDP) contracted to 6.10 per cent during the second quarter of 2020. His words: “Oil price at one point was about $10 dollars, then it finally settled at about $45 per barrel during the second quarter of 2020. Unemployment went up to 33.3 per cent in the fourth quarter of 2020.

The transportation sector declined by 49 per cent, the hospitality sector fell 40 per cent, the education sector fell 24 per cent, real estate declined by 22 per cent, trade declined by 17 per cent and construction declined by 40 per cent.

“So, we were in a terrible economic situation and in response, the President took two swift steps. One was to set up a small interministerial committee headed by the Minister of Finance, Zainab Ahmed, to quickly work out the implications and the immediate mitigation for the economic shocks we were headed for. “The second thing the President did swiftly was to direct me, a team of ministers and interagency heads to draw up a 12-month economic emergency plan, which became known as the Economic Sustainability Plan.

We were clear that the only way of avoiding an economic disaster that could last for years was for the government to essentially put forward a major fiscal stimulus plan. Such a plan must have clear objectives of saving jobs and creating new ones, supporting businesses that may close down, and employees that may not be paid during lockdowns, and, of course, healthcare support to reduce the COVID-19 caseload.

“So, we promptly put forward a stimulus plan in the order of N2.3 trillion. We took quick fiscal measures including the grant of additional moratorium of one year on Central Bank of Nigeria (CBN) intervention facilities; reduction in the interest rate on intervention facilities from nine per cent to five per cent; grant of regulatory forbearance to banks to give borrowers some breathing space, including through restructuring of outstanding debts; the CBN also reports the disbursement of N798 billion to 3.9 million smallholder farmers under the Anchor Borrowers Programme; N134.6 billion to 38,140 beneficiaries under AGSMEIS and N343 billion to 726,158 beneficiaries; the release of N1 trillion to 269 real sector projects; N103 billion disbursed to 110 healthcare projects MSME Survival Fund was designed to keep as many junior private-sector workers as possible employed and paid 1.1 million people benefitted from the fund.”

Realizing that greater impact the interventions in agricultural value chain could make, Osinbajo said that through a mass agriculture scheme, 6.39 million farmers were enumerated under the programme and 320 hectares of land has been cleared across eight states at 40 hectares per state. To boost the sector, he added ₦471 billion was allocated as loans to farmers across 14 crop value chains, beef production, aquaculture and poultry farming. The President, he said, also approved the Fertilizer Subsidy Programme, adding that the subsidy payment is evidence-based and tied to the farmer enumeration process.

The subsidy is paid directly to each farmer’s BVN verified account. A subsidy of N5.1 billion was paid to 1,013,126 farmers. “The third component of the ESP is the Social Housing Programme, 300,000 homes to be built across the country with the states providing land free. This is creating and will create thousands of jobs and boost the local building materials industry. The design is to build two-bedroom homes costing not more than N2 million. So that a person earning the minimum wage can pay back the mortgage in 15 years. Borno State working with the Family Homes Fund has built 8,000 units.”

Osinbajo said that with five million new solar connections, in the programme is designed to reach 25 million people. It is also designed to create several jobs and develop a local solar industry including the assembly or manufacturing of components of solar home systems and off-grid solutions. “Now, I come to the Unicorns and the future of youth employment. In the past few years, we have seen Nigerian start-ups owned by young men and women grow from scratch to billion-dollar businesses.

As of 2021, more than six of such companies have been named Unicorns. A Unicorn is a company that is worth over a billion dollars. Six of those companies started between 2016 in the middle of two recessions and the global health crisis. The companies are: Opay, Paystack, Flutterwave, Andela, Piggyvest and Jumia.” The Vice President said that Paystack was cofounded in 2016 by two graduates of Babcock University in their twenties.

He described the firm as a payment processing company now estimated to worth a billion dollars. Flutterwave, he said, is also a payment processing company founded in 2016 in Lagos, adding that company now worth nearly over $3 billion and both companies employ hundreds of young men and women.

“There is also PiggyVest, co-founded in 2016 by ex-students of Covenant University led by a 21-year-old lady, Odunayo Eweniyi. PiggyVest is a wealth management platform that at the end of 2019 had helped one million users save about $80 million dollars with her classmates at Covenant University. “What is responsible for some of these successes? Providence and good policies.

Providence because COVID-19 was a boom period for online payment systems. Policy because Mr. President approved the establishment of a Technology and Creativity Advisory Group that helped to formulate new banking policies to accommodate new tech-enabled payment systems, such that these tech companies could process payments without being full-scale banks. “The Central Bank of Nigeria was then able to issue new types of licences for payment processing.

The Federal Government has established a N75 billion National Youth Investment Fund, which provides financial support for small businesses in any field,” the VP said. To further assist young people in entertainment or technology, Osinbajo said the CBN has also established a Creative Sector Fund.

“There is also the new programme called Investing in Digital and Creative Enterprises (IDICE) programme, an over $600 million programme that will support young tech and creative sector entrepreneurs through the provision of finance, skills development and infrastructure.

“Earlier this year, the Federal Government partnered with the UNDP and the private sector to start a programme called the Jubilee Fellows Internship programme. For the next five years, every year 20,000 students after the National Youth Service Corps (NYSC) scheme will be given internship opportunities in private sector companies and in public agencies. The idea will be for the participants to gain relevant career and life skills that will enable them to transition seamlessly into professional, business or public sector careers, while also earning very good pay during the internship.”

He further explained that the panoramic snapshots of possibility are enough to show us that the Nigerians are not facing an uncertain future without any tools at our disposal. However, to inaugurate a new age of accelerated growth, he said that the nation must adopt a new strategic direction and policy orientation. “This is precisely what the Federal Government seeks to do through the National Development Plan 2021-2025, which was recently approved by the Federal Executive Council,” he said.

In terms of strategic direction, the vice president said that the cornerstone of the Federal Government’s strategy is boosting productivity by focusing on value addition as the guiding principle for all sectors, especially agriculture, manufacturing, solid minerals, digital services, tourism, hospitality, and entertainment.

“In agriculture, for example, just as we seek to increase the production of rice, we are paying equal attention to other parts of the value chain such as storage, transportation, processing and marketing. Similarly, in the mining sector, we recognize that exploitation and extraction will not create jobs. Our aim is to focus on resource beneficiation, local industries, thereby creating wealth along the mineral value chain. There are a number of cardinal principles of the strategic direction enshrined in the National Development Plan but let me speak on three of them.

“The first is the centrality of job creation; all programmes and policies are viewed from the lens of the number of jobs – direct and indirect that they create. Secondly, the loosening of restrictions on trade, generalised restrictions on trade are counterproductive when they impede the ability of local industries to procure critical inputs. Our focus instead will be on allowing imports of goods to which value can be added before domestic consumption or exportation. For example, importing cotton for garment making might be smarter than insisting on growing all your cotton.

The focus must be on value addition. “Bangladesh only grows per cent of its annual cotton requirement and imported $11.8 billion of textiles and apparel while it exported $31bn of garments in 2019. Thirdly, the main fiscal policy challenge facing Nigeria is inadequate revenues especially in the face of lower oil revenues.

It is therefore essential to improve tax administration, vigorous collection of all revenues due to the Federal Government from its Ministries, Departments and Agencies; bring all high earning agencies into the Federal budget. Concurrently, we must lower customs duties and tariffs on raw materials and intermediate goods used in manufacturing while giving reciprocal, non-tariff based support like procurement, subsidies and tax breaks to priority sectors. “Fourthly, is creating a conducive environment for business to thrive.

We need to eliminate red tape, extortion and harassment of small businesses which increases their costs,” he said. Osinbajo, however, reminded the new MNI that every MNI belongs to an elite club of thought leaders of Nigeria. He said the new graduates are the frontlines of the present administration’s efforts to build a better future for our country, urging them to be the first promoters of Nigeria’s unity as the seminal policy work they produced shows what can be done where the best Nigerian minds regardless of ethnicity or religion, work together for the good of our nation and its people.

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