The initiative by the United Nations in collaboration with some development partners to complement Nigeria’s COVID-19 economic recovery efforts under the Nigerian Economic Sustainability Plan (ESP) is a fitting acknowledgment of the country’s effort in addressing the disruptions caused by the pandemic, according to Vice President Yemi Osinbajo. DAVID AGBA reports.
Basis of the plan
The COVID-19 pandemic has created severe economic consequences for all countries around the world.
Nigeria has also been very badly hit. The lockdowns froze economic activities, causing massive job losses and supply chain disruptions. It has also depressed the demand for crude oil and precipitated an unprecedented oil price crash. Nigeria’s dependence on oil for revenue and foreign exchange makes it particularly vulnerable in this situation. It is expected that if oil prices average $30 over the rest of the year, oil revenues (assuming Nigerian National Petroleum Corporation reduces Joint Venture operating costs by 20%), would amount to about N88.4 billion monthly.
FAAC
Assuming that non-oil revenues are sustained at the lower level projected in the revised budget estimates, the total allocations to FAAC for the rest of the year would then be around N485 billion a month.
This time last year total allocations to FAAC was N669.9 billion monthly. The very steep decline in revenues available for sharing among governments of the federation will have serious implications for wages, overheads and capital expenditures at Federal, State and Local Government levels. Unemployment rate which was 23.1% (or 20.9m people) at the end of 2018 is expected to rise to 33.6% (or 39.4 million people) at the end of 2020, if urgent steps are not taken.
Hopelessness that gives rise to criminal activities
The major problem with unemployment of a very large youth population is the hopelessness that gives rise to criminal activities and anti-social behavior, which can ultimately create potential recruits into the ranks of insurgents.Even for those able to earn a living, the situation is dire.
The NBS recently released a household survey of poverty in Nigeria, a five-year study which showed that over 40% of Nigerian households earn less than N137,000 per annum. This is barely N11,000 per month. With the COVID crisis, this poor income will drop much further.
Given these indices, the National Bureau of Statistics (NBS) projects that economic growth could fall by as much as minus 4.40% to minus 8.91% depending on the length of the lockdown period, the potency of the economic plans that are put in place, and, in particular, the amount of stimulus spending. The time-tested approach to fighting a recession is a stimulus package.
The strategy
The federal government decided that the best way to beat the triple problem of very low foreign exchange, huge unemployment and negative growth is by focusing on Mr. President’s mantra to produce what we eat and eat what we produce. This meant focusing on agriculture, increasing the acreage under cultivation and engaging thousands of young people in farming and agro-allied jobs, with a scheme for guaranteeing off-take of farm produce. This ensures that farmers are assured of an income.
Other signature programmes include mass social housing, using local materials, installing solar power in 5 million homes, and providing assistance to daily-paid and self-employed workers – petty traders, artisans like bricklayers, vulcanisers, and electricians as well as commercial drivers and barrow-pushers.
Many businesses have suffered severe losses due to the lockdowns and have had to decide on laying off staff, the government has developed a strategy to ensure that as many as possible do not collapse and are able to retain their staff.
“For other businesses – aviation, hotels, private schools, restaurants, finding it difficult to continue making loan repayments to banks, we have developed a scheme for the restructuring of their loans. For the extremely poor and vulnerable, we have increased support available under the Social Investment Programme.”
Prof. Osinbajo made the federal governments’ position known Monday at the launch of the United Nations Plus Offer for Socio-Economic Recovery attended by the UN Deputy Secretary-General, Mrs Amina Mohammed, and top officials of the world body, at the Presidential Villa, Abuja.
The UN Plus Offer is an initiative of the UN in Nigeria and Nigeria Development Partners Group.
The offer aligns with the government’s Economic Sustainability Plan. It seeks to mobilise close to $250 million and will provide targeted support to the development of health response systems ($13.78 million); protecting people ($53.3); macroeconomic stability and economic recovery ($30.7); as well as social protection (26.6 million) to assist communities in building back better. Speaking on the importance of the initiative, the vice president said “I think that rallying to support and thinking through a programme such as the UN Plus Offer for socio-economic recovery is a demonstration of the kinship that we developed with our partners and the United Nations.”
According to Prof. Osinbajo, “this initiative is also important because it mirrors our Economic Sustainability Plan and also does so in excellent complement of our plan. This is very helpful to us because we put together a plan that will cost us N2.3 trillion and half of that is in the form of loans and facilities and the other half of it is budgeted funds.
The huge gap
“But we still have a huge gap and that gap is being made up in this initiative. And we are extremely pleased that this had been a thoughtful collaboration because it takes into account where we have been unable to make up the financing and takes into account a plan which we had developed. So, it is not in any sense, an attempt by supporters and friends to impose new ideas or trajectories upon us. We are all at one in the direction that we intend to go and we think that this is an excellent feat for all our plans.” Aligning the UN initiative to Nigeria’s ESP, Prof. Osinbajo said “much has been said about the ESP but one of the critical issues is social protection. And it has become even more urgent especially in the light of the COVID-19 pandemic, the lockdowns and of course the disruptions that have taken place.” His words: “The ESP is one that we intend to vigorously pursue. We don’t really have much of an option if we are to address the real concerns of several of our people. The other aspect of it is the informal sector – young men and women who make a living by daily pay. And the focus of several of our initiatives in the plan is addressing the particular concerns for this category of workers.
“So, part of what the president approved in the ESP is more funding for about one million new entrants in our Social Investment Programme. And we think that we really have to do a lot more, we have increased the numbers because really, what people need the most is to be given the opportunity to earn a living.” Earlier in her remark, the UN Deputy Secretary-General, Mrs Amina Mohammed said the launch of the initiative is a demonstration of an effective partnership between the UN system and the Buhari administration. She said various components of the initiative will expedite interventions in the four key areas which according to her is also being addressed under the Nigerian Economic Sustainability Plan.
Supporting Nigeria in its immediate efforts
“This offer is aimed at supporting Nigeria in its immediate efforts at risk mitigation by cushioning vulnerable communities, and through medium-term measures that will aid socio-economic recovery while addressing structural drivers of exclusion, inequalities and discrimination as a component of recovering better,” Mrs Mohammed noted.
On his part, the United Nations Development Programme (UNDP) Resident Representative and Chair of the Nigeria Development Partners Group, Mr. Mohammed Yahya said the offer was in response to the UN Secretary General’s call for action, noting that the Offer is to support the government’s action on post-COVID-19 medium-term socio-economic recovery.