By Bronson Jayamanna
NIGERIA (CWBN)_ In the light of the re-emergence of COVID-19, the Lagos Chambers of Commerce and Industry (LCCI) currently projects that Nigeria will face a further continuation of the current recession if the pandemic continues during the Q1 of 2021.
LCCI, Africa’s second chamber of commerce with more than 2,500 registered members, further stated that the federal government had begun long-standing policy changes in response to socio-economic realities. However, it challenged their capacity to enforce these reforms. This was disclosed in LCCI’s Economic and Business 2020 and Outlook 2021, which its Director-General, Dr Muda Yusuf, released to the press in the early hours of Sunday.
Nigeria officially plunged into its deepest economic recession in more than 30 years back in November, for the second time in five years as per the National Bureau of Statistics (NBS).
The nation registered a decline of 3.62 per cent in the third quarter of 2020. The total GDP during the first nine months of 2020 was 2.48 per cent. The last time Nigeria registered such GDP had been in 1987 when GDP declined by 10.8 per cent.
LCCI reported that the global and domestic economic debate would concentrate on recovery in the upcoming year in its latest outlook. However, it noted that the return of the pandemic is a challenge to global economic recovery. Also, it pointed out that the Nigerian economy “risks a further perpetuation of the current recession if the pandemic persists into the first quarter of 2021”. In the pre-pandemic period, the study noted that the Nigerian economy was already weak and vulnerable. It claimed it was exacerbated by the outbreaks and re-emergence of COVID-19. It acknowledged that the Nigerian economy was confronted with many challenges, including suppressed economic activity, dropping per capita incomes, increasing inflation, external vulnerabilities, rising debt profiles, insecurity, massive unemployment and low investor confidence. It observed that these problems were compounded by the disruption caused by COVID-19, as the economy lacked ample safeguards to mitigate the impact. As a result, the study noted that many governments worldwide issued stimulus measures to help households, small companies, and their economies in general, while central banks relaxed fiscal policy conditions through large-scale purchases of financial assets and interest rate cut to salvage their respective economies.
In Nigeria, however, it noted that the federal government developed the Nigerian Economic Sustainability Plan (NESP) with a cumulative stimulus package of N2.3 trillion to resolve the liquidity issues of small and medium-sized enterprises primarily affected by the pandemic, offer financial assistance to distressed segments of the population, and create employment, among others.
Likewise, as per the report, the Central Bank of Nigeria changed its policy emphasis from price stability to stimulus for economic recovery and development in 2020 to support the federal government’s fiscal policies to promote economic continuity and financial viability. It acknowledged that the pandemic’s detrimental effect on the nation’s financial assets compelled the federal government to implement long-standing policy reforms.
And according to study, the changes include the partial elimination of fuel subsidies, the implementation of a service-reflective tariff model, the transfer of the Petroleum Industry Bill (PIB) to the National Assembly and the reduced reliance of CBN on budget deficit financing.
However, it noted that the federal government’s dedication to the successful implementation of these reforms has yet to be demonstrated. “Towards the end of the year 2020, there was strong momentum towards the discovery of covid-19 vaccine and this positive development is expected to strengthen global economic rebound in 2021 in the absence of any major shocks,” the findings suggested.
It also proposed the accelerated introduction of structural reforms, including revising the foreign exchange management system and significant investment-critical infrastructure development projects to promote economic resilience in 2021.
It also projected the re-emergence of COVID-19, African Continental Free Trade Region, Power Sector Reform, Finance Bill 2020, the Petroleum Industry Bill’s passage, trends in the external sector, and new national economic developments would largely shape the government’s policy path in 2021.
