The Central Bank of Nigeria (CBN) in alliance with the Bankers’ Committee made a bold move, recently, to ameliorate the imminent economic pains that the novel Covid-19 virus would unleash upon the teeming population of Africa’s largest economy. To achieve the goal, a sum of N3.5trillion was earmarked to help boost the local manufacturing sector, import substitution and support the healthcare sector in anticipation of a possible solution to the ravaging virus. Bamidele Famoofo reports
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria last week Tuesday warned that the outbreak of the corona virus pandemic would lead to massive economic crisis capable of throwing many countries into recession. The committee said the Covid-19 pandemic would not only result in health crises, but also massive economic crises that would force even leading industrialised countries into recession. The CBN Governor, Mr. Godwin Emefiele, announced the position of the committee at the end of its two-day meeting held at the apex bank’s headquarters in Abuja.
Emefiele said the MPC underscored the COVID-19 pandemic as a public health crisis which would continue to undermine any monetary or fiscal stimulus unless appropriate measures were taken to trace, test, isolate and treat infected persons in order to curtail the spread. While calling for a significant reduction in migration across the country, the governor said the committee urged the federal government to take the necessary steps to safeguard the population through close monitoring and emergency measures to identify and care for infected persons in the country. He said the overall medium-term outlook for the global economy remained uncertain with increased deterioration in financial market conditions and weak global output growth.
A Proactive Move
In line with global trends, the Central Bank of Nigeria and the Bankers’ Committee agreed to back a N3.5 trillion (about $9.7billion) stimulus package for the Nigerian economy.
Last week, the Senate of the United States agreed upon bailing out the world’s biggest economy with a whopping $2trillion. The World Bank in conjunction with the International Finance Corporation (IFC) also has announced its plan to help weak economies of the world with $14billion while the United Nations is advocating a release of $2billion for the same purpose.
According to a communiqué issued by the Bankers’ Committee after a meeting it held recently in Abuja, the association of top chief executives of banks said it has given its full support to the policy measures of the apex bank, noting that over N3.5trillion would be made available in response to the economic impact of the COVID-19 on Nigeria.
Governor of the Central Bank of Nigeria, Godwin Emefiele, specifically stated it would support critical sectors of the economy with N1.1 trillion intervention funds.
Emefiele said about N1trillion would be used to support the local manufacturing sector as well as boost import substitution. The CBN boss who is known to be an advocate of development finance, noted that a sum of N100 billion would be deployed to support the local health sector in order to ensure laboratories, researchers and innovators work with global scientists to patent and produce vaccines and test kits in Nigeria.
The CBN’s N1.1trillion intervention fund which will be distributed through commercial banks (in Naira and foreign exchange) to pharmaceutical companies in the country to enable them to procure raw materials and equipment to boost local drug production in Nigeria.
On the other hand, the balance N2.4 trillion which sources close to the deal said might have to come from commercial banks is expected to be injected into the economy in the form of loans to small businesses and the manufacturing sector.
Some of the pharmaceutical companies listed by the CBN Governor are Fidson Healthcare Plc, May and Baker Plc, Neimeth International Plc, Unique Pharma, Swiss Pharma, Dana Pharma, Orange Drugs, Sagar, GSK, Emzor Pharmaceuticals. Mr Emefiele also mentioned that the list was not exhaustive as more companies could also benefit.
According to Emefiele “the Bankers’ Committee took the decision to support the pharmaceutical companies given the fact that the present pandemic was of grave public health concern, coupled with the fact that many drug-manufacturing countries planned or had already banned the export of drugs and medical supplies from their respective countries, thereby leaving Nigeria no choice but to produce the drugs locally.”
Not for Profit
Governor Emefiele disclosed that engagements will be held with correspondent banks, trade creditors, trading partners regarding existing letters of credit and trade commitments. The CBN Governor said that profit would not be the primary motive at this time “rather, preserving confidence, financial stability and support for the economy will be the overriding objectives.”
In line with his drive for supporting locally made goods and services, the CBN Governor and the Bankers’ Committee advised Nigerians and companies to prioritise their import needs and focus more on sourcing raw materials and input locally.
Emefiele pointed out that in the course of the meeting, the Minister for Finance, Budget and National Planning, Zainab Ahmed, called and specifically requested that the CBN and the Bankers Committee pay particular attention to the health sector.
Ahmed assured of federal government’s intention from the fiscal side, to provide waivers and incentives to encourage the pharmaceutical industry to come back again alive in Nigeria.
In a record time, the House of Representatives has passed the Emergency Economic Stimulus Bill, 2020, which, among other things, aims at providing temporary relief to companies and individuals from the economic consequences of the COVID-19 pandemic. The bill especially seeks to maintain the general financial wellbeing of Nigerians pending the eradication of the pandemic and return to economic stability. It was titled, ‘A Bill for an Act to Provide for Relief on Corporate Tax Liability, Suspension of Import Duty on Selected Goods and Deferral of Residential Mortgage Obligations to the Federal Mortgage Bank of Nigeria for fixed term to protect jobs and alleviate the financial burden on citizens in Response to the Economic Downturn Occasioned by the Outbreak of COVID–19 Disease.’ The bill, at the plenary last week Tuesday, passed the first, second and third readings in just over one hour.
It was jointly sponsored by the leadership of the House, including the Speaker, Femi Gbajabiamila, and the Deputy Speaker, Ahmed Wase. The Senate, which is required to concur with the legislation before onward transmission to the president for assent, had, however, adjourned for two weeks before the House concluded work on it.