On Wednesday, top officials of the monetary and fiscal authorities, as well as the Organised Private Sector (OPS), met at the headquarters of the Central Bank of Nigeria (CBN) in Abuja to deliberate on how best to reduce the impact of coronavirus, which has become a global emergency, on the Nigerian economy
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By Emma Ujah, Abuja Bureau Chief
On Wednesday, top officials of the monetary and fiscal authorities, as well as the Organised Private Sector (OPS), met at the headquarters of the Central Bank of Nigeria (CBN) in Abuja to deliberate on how best to reduce the impact of coronavirus, which has become a global emergency, on the Nigerian economy.
Tagged, Going for Growth, it was the second in a series of Round-table Discussions on the economy by the apex bank. Sunday Vanguard was there and serves you the views of some of the participants.
CBN to fund drugs production, specialist hospitals – Emefiele
In his address, the CBN Governor, Mr. Godwin Emefiele, disclosed that the apex bank would fund local drugs production and the establishment of specialist hospitals in the country.
This, he said, would be the bank’s immediate response to the coronavirus pandemic which has made some countries to ban drugs export.
His words, This session is more relevant today than ever before, given the external headwinds that the Nigerian economy faces, such as the effects of the trade and technology wars, and more importantly the recent spread of corona virus, which has emerged as a major threat to global growth in 2020.
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“The impact of corona virus across over 100 countries has affected global supply chains, as well as demand for goods and services. Commodity prices have also been affected, as crude oil prices have plummeted by over 45 percent since January 2020.
“Central Banks in key markets across the globe have responded by reducing policy rates in order to stimulate growth, while measures are being taken by fiscal authorities to build resilient buffers to contain the spread of the virus. “The CBN fortunately had already embarked on similar measures which have resulted in significant reduction in lending rates, as part of our efforts to boost growth. Working with the fiscal authorities, we will not hesitate to deploy additional measures to strengthen our buffers and insulate the Nigerian economy from the global headwinds.
“Given this challenge, it is imperative that this roundtable session comes up with well-structured funding models, that will mobilize funds from banks and other financial institutions to fund critical infrastructure projects, while providing attractive returns to investors.
“We must also use this opportunity to consider funding for infrastructure projects that improve access to markets for farmers and SMEs, while also connecting the railways to our ports, in order to increase our non-oil exports. “Such schemes will support greater economic growth and help free up funds for the government to focus on other priority objectives.
Diversification
“Indeed, the current oil price shock validates some of the measures taken by the fiscal and monetary authorities on diversification of the Nigerian economy. “These measures, which have focused on improving domestic production of goods and services, particularly in the agriculture and manufacturing sectors, are necessary if we are to insulate our economy from volatilities in the crude oil market.
“We must build on the successes of these measures and reduce our dependence on excessive imports.
“On our part as central bank, what we put on the table is that we will extend our intervention. Given the impact of coronavirus, I heard some countries have decided to ban the export of pharmaceuticals.
“At this time we at the CBN will now be looking at our pharmacists and pharmacologists and I say that it is high time they stopped dispensing in hospitals.
“We will now begin to do what they learnt in schools – the formulation of drugs and the development of pharmaceutical industries will now form part of our intervention activities.
“We will also be looking at the possibility for us to see that we reduce the drain on our foreign exchange where we find that people travel abroad for common medical checks.
“We are going to intervene heavily in the health sector to see how we can support the efforts of government to see to it that we develop specialist hospitals and to handle ailments that would have taken our people out of the country and constitute a drain on our FX resources”.
Le’s mobilize domestic capital for infrastructure – Uche Orji
The Managing Director of the Nigeria Sovereign Wealth Investment Agency (NSIA), Mr. Uche Orji, called for massive domestic capital mobilisation to fund infrastructure. He said that has been the strategy in India which has worked and could be a success in Nigeria.
He said, “There is a lot of capital locally. The real advantage of having 190 million people in a country is that if we pull our resources together, we can solve these problems.
“In India, they don’t go about looking for who will help them build roads because out of 1.1 billion people, they can mobilize that capital locally. They are not very rich people but they can mobilize the required resources for development
“So there’s need for financial inclusion in making sure that we get everybody into the sector to allow us structure the local market. We are part of the committee that is working on how to see to it that the pension fund can work with government and with the NSIA to fund infrastructure.”
On partnership between NSIA and others investors to improve infrastructure across the country, he said that the Lagos-Ibadan Expressway had advanced and making steady progress. He however cautioned against hasty transfer of public assets to private operators.
“There is a Lagos-Ibadan Expressway Development Company owned by the NSIA to which the road can then be transferred. Part of the whole collaboration is NSRA funding it and, as we go through a number of these, then the project can be transferred.
“Let us be a little bit careful about transferring assets from ministries and there are two reasons for that: first of all, some of these projects have legacy debts that, over the years, have not been paid and so, when you look through the process of transferring them, you have to resolve some of these debts and these are some of the challenges we are facing today.
“So you have the certificate that was completed, say in 1980, 1985 or may be in 1999 or 2005. If you transfer the assets now and you have a certificate going back then that is outstanding, how will it be paid for? This is a challenge.
“The second aspect of the challenge is that some of these contracts are not suited for private sector taking over. That is because, when the private sector comes to do infrastructure project, it does what is called silver book that transfers the risks to cost content of the projects but the ministry will not do that of its own.
“But I think it is a lot easier for the NSIA because the NSIA is an entity owned by government but it has private sector characteristics, it provides a lot of comfort in making this transition happen.
“Capital raised will come from the private sector later. Private capital will come, the element of de-risking has been down.
“On Lagos-Ibadan, there is a discussion we are having now on how do we accelerate Lagos-Shagamu segment so that they can see Lagos-Shagamu completed and then they can put in capital for Shagamu-Ibadan, Abuja –Kano or the Second Niger Bridge?.”
Fashola advocates immunity to attract Nigerians’ money back home
The Minister of Works and Housing, Mr. Babatunde Fashola, suggested the window of opportunities for funds that left the country in the past to return home.
According to him, at a difficult time such as the nation now faces, with a crashed oil price, necessary waivers should be provided for Nigerians who hold funds offshore to return them for such funds to work for Nigeria, without jeopardizing the Federal Government anti-corruption war.
His words, “Irrespective of the legal and regulatory regimes that were in place when these monies were taken away, I think this is a time to rethink our strategy.
“I believe the Central Bank, and those who know it, will be my enormous privilege to be able to see that we come through this.
“We must find something that is more attractive for that capital to head back home. And I think there’s a lot that can be done about that. There are jurisdictions in South America that have moved in this realm and opening windows of no questions asked, immunity from prosecutions remains a window.
“Let the money come back home and come and work in the place from where it was taken. There are ways that things can be done and it has been done before.
“There are enormous opportunities that exist, in my view, at this time that we have a crisis. There are issues that have to be balanced in the polity, so it shouldn’t be seen as government abandoning its anti-corruption stance”.
Budget cut coming- Finance Minister
In her address, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, described oil price crash as a shock but a wake-up call to a life without oil and indicated that there would be a cut in the 2020 federal budget.
She called for the collaboration of fiscal and monetary authorities, as well as private sector operators in order to weather the harsh realities of the oil price crash.
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Her words, “The sudden and unexpected drop in crude prices to just over $30 comes as a shock and great surprise. These strong headwinds would reinforce the wake-up call to a life without oil. But that should not spread panic and speculation in our economy.
“We need to put our hands together to weather the storm. We need to work together to take the opportunities provided by this very harsh reality.
“We are working as government to strengthen our macroeconomic fundamentals, which today are far stronger and more robust than in 2014-2016.
Drastic reduction
“There is no doubt that the combination of crude oil price crash and corona virus will put severe strain on our budget revenue, forex and many sectors. We are drastically reviewing the budget as well as redoubling our effort to raise revenue and plug the leakages and intensify engagement and support of sub-national entities and the private sector in our economic recovery and growth programs
Initiatives
“Notably, the Presidential Initiatives on the 10 Agri-value chains and sustaining the momentum on infrastructure investments and major capital projects for which we are in the process of accessing external concessionary loans.
“Enhancing the Nigerian Customs Service to strengthen its Trade Facilitation function through automation of its function and putting up the National Single Trading Platform to enhance customs trade facilitation role and improve Import and export businesses
“When you look at the economy of Asia it’s mainly focused on export, but we have a large domestic market of about 200 million people, apart from the rest of the ECOWAS market where our imports last year was almost $ 47 billion.
“We cannot have over 200million people going at an average population growth of about 2.7% and then we are importing of the thinks we are consuming here. I think we need to be more serious, so that we stop just talking about diversification.
“I don’t know why but it is possible people are not really committed to it. Since I came to Lagos in 1979 people have been talking of diversification and up till today we are still talking about diversification. I think we need to really need to look at, how do we handle this? I’m sure we will find solutions on how we would make our country a producing country.
“If you look at it today, with the kind of project that we are doing, we are importing almost every single thing, apart few iron rods.
“But we also need to mobilize local savings, even before the crash of the crude oil price the Ministry of FBNP has reached out to the private sector and formed a committee to fashion out a National Savings Policy. This will enable us infuse into the Capital Market various instruments to suite several investors need. This will include long term instruments that will be suitable for investor groups that have patient capital such as Pension Funds.”
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