What are the economic implications of Covid-19 on Nigeria?
There are many implications; it depends on the angle you want to approach it from. First of all, as an oil dependent economy, it is very sad that we have been talking about it for more than 35 years on the need to diversify the base of the Nigerian economy away from oil, but nothing really happened for a very simple reason that we don’t have a creative, future focused-minded political class.
Every time we talk about it, we talk about it because it sounds right, because it is the right thing to do, but we don’t have the will to drive it because we really have oil receipt, fund budget, budget fund, opportunity for plunder and we take care of ourselves as much as possible, we carry on.
Unfortunately, it has come home to roost, and we are still incredibly dependent on oil for our foreign earnings and it is those foreign earnings that finance government significantly; those earnings enable us to engage in international trade, especially the ones that actually support ‘other productive sectors’ because many of the ‘productive sectors’ are relying on inputs from abroad.
So, we are in a position, where in the middle of the crisis we are now, there is hardly anything we need that is produced in Nigeria completely. It is not ventilators, even the basic analgesic that help support the people who may be sick because we are bringing in all our pharmaceutical generics and co from India, Indonesia, Turkey, etc.
So, the impact is bound to be very severe because we are fully import dependent, oil prices have crashed, I believe the budget was based on about $57, and oil prices are in 20s, which is far less than half of what was projected.
But I bet you, the political class will not even berth an eyelid, they will still want to spend on themselves everything they have budgeted. So, they are pushing the country towards a class war, which is almost inevitable. We have a situation, where we are asked for a lockdown, so many people cannot do any work; they have to be at home. Many of these people live from hand to mouth, and if they don’t go out within 24 hours, they won’t find anything to eat.
As broke as I’m, I m not joking, I have dozens of text messages from all kinds of people that I don’t know; desperation kind of text messages; in a situation like this, you send five thousand naira to each of them, then the next batch comes, you want to go crazy; you ask yourself what’s going on.
We better look at the situation from how you deal with those challenges. Look at India, how it has responded to lockdown; the kind of money, about $37 billion to support its people, feeding them, etc, but Nigeria, it cannot. I don’t know what is in its treasury.
We are in a moment where we have to make some dramatic decisions. I can’t accept that people who go on hand to mouth could be on lockdown for two weeks, three weeks with nothing happening to alleviate their condition.
Breakdown will take place and states would explode. I will personally suspend government (putting it that way); suspend the National Assembly for the year. First of all, because where oil prices are, we need a revised budget, so what was earmarked for National Assembly should be used to provide a kind of social safety net for the poor.
If then, add to the fact that we need to do something to support most people who are vulnerable, you will see that there is no place you are spending the kind of money you are spending on executive protocols running all over the place blaring sirens, not to talk of having a NASS that does nothing, but just meeting to speak English.
We need a drastic measure like suspending the National Assembly for the year; they can have a few Whatsapp meetings from their homes on anything that is important. The executive branch should trim its budget by 60 per cent; all these running up and own should stop, and then spend what savings you then make on such steps to start a new kind of economic activity; driving agriculture, driving productive sectors, driving the revival of some mining type, etc. Not just these, but take a specific factor endowment, example, we are the biggest producers of cassava in the world, but cassava’s foreign earning in Nigeria is almost zero, while countries like Thailand, Indonesia are earning significant foreign exchange from cassava value chain.
How about encouraging the farmers to grow more cassava, provide them incentives, guarantee some facilities, aggregate all the productions and set up to quick world class new technology cassava plant in Nigeria to make sure that we export starch. There is so much that could be done but the nature of our political class and political system is such that we don’t make the right decisions.
The government has set up what it called, Economic Sustainability Committee headed by Vice President Yemi Osinbajo. If you were a member what direction would you want the committee follow?
I just told you of some of the things, I think we should be doing. My approach to development is to take certain endowments largely in agriculture, solid minerals and develop competitiveness on a global value chain. You don’t just take on everything, just a few. I have given you example of what you can do with cassava and extract value from everything – the cassava leaf, stem, tuber; even curriculum/ training in schools in areas that produce cassava will reflect their skills that will add value to harness or develop the produce.
In almost every agricultural produce, Nigeria’s yield per hectare is one of the worst in the world. Sometimes, the yield in South Africa is ten times what it is in Nigeria because the right information is not going to the farmers, the right seedling is not going to the farmers.
Just take a couple of any endowment, whether it is cassava, plantain, and just try to process them and become a global leader with such skill available for that particular product and Nigeria will be back.
You just mentioned that many people live hand to mouth, and being on lockdown, don’t you think that hunger will chase them out of their homes and what will that portend?
I believe that something will be done to prevent that, and not soldiers forcing them back into their houses. The distance between them and starvation is so close that such situation can easily arise. The thing the government is supposed to do is to develop some strategy that will enable and execute drop of essentials around neighbourhoods, communities, where many of these poor people live. Through them, identify community leaders. They can use the Biafra case of how people survived the war. When Caritas plane lands, how do you determine who got a relief that came. You have to use a census in this kind of situation. We don’t have a census that is accurate. When the Bill and Melinda Gates Foundation tried to intervene with medicals in some parts of Nigeria, they were shocked on how the materials they have been pouring into the areas were not being used. Of course, the answer was very simple, the population of that place is one tenth of what they projected because of politics of census.
So, there is nothing to plan with, like America will say give certain amount to its citizens, you can’t do that here because the politicians will pocket the money. We should do what is done in a war situation like parachuting food into neighbourhoods and something like that.
We have about 40 million verifiable BVN bank accounts, can’t the government through this, pay money into people’s account to cushion the effect of this lockdown, and those without bank account can be handled the way they are doing with Tradermoni?
The BVN is a good outlet, but it doesn’t tell you the economic status of the owner. You can decide to pump ten thousand naira into every Nigerian’s account, it means that the man in the street will get ten thousand naira and Aliko Dangote will also get ten thousand naira. I don’t know if there is anything wrong with that, but the real problem is there are still many people who are not banked; there are still many unbanked Nigerians and they are the ones who need it most. How do you deal with that village woman who doesn’t even know where a bank is? She is the one who mostly need the palliative. It is still a challenge, yet, it is the beginning point; so we have 40 million BVN, so you give everybody ten thousand naira, then what does that do to the budget?
Like I said, if you shutdown the National Assembly in a year, you will save a lot of money. Significantly, if you join the money they want to use to renovate the building, it is enough to revive certain population. These are practical things to worry about.
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