By Oluchi Chibuzor
The past one year has been tough for countries that depend heavily on primary products as their major source of revenue. This is because of the impact of the COVID-19 pandemic.
Indeed, beyond the health crisis which as at yesterday had resulted to the death of 1.6 million persons and 68 million cases globally, the pathogen also saw many countries face turmoil linked to commodity dependence as commodity prices reacted negatively to the crisis, reflecting changes in supply and demand due to measures to limit contagion.
Among those that were worst hit were West African countries because of their heavy dependence on primary products.
Therefore, in order to build resilience against external shocks and work towards repositioning their respective economies, member states of the West African Monetary Zone (WAMZ) recently held a policy dialogue session.
The gathering provided the forum to discuss respective responses to the COVID-19 pandemic and draw lessons from experiences in the sub-region for better intra-regional collaboration and coordination.
This was more so, given the common drive to achieving regional economic integration and monetary union.
The participants acknowledged that the pandemic precipitated an economic emergency of unparalleled magnitude to national and global economies. Consequently, it posed difficult challenges to policy-makers and central bankers in the maintenance of price and financial system stability, while keeping an eye on growth performance.
Unfortunately, no economy, including those of the WAMZ, was spared from the fall-out of the COVID-19 outbreak.
In his keynote address on the theme: “Monetary Policy Responses of the Member States of WAMZ: Emerging Lessons from Covid-19 Pandemic,” held in Lagos, recently, Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, pointed out that central banks across the advanced, emerging and developing economies assumed a leading role in fashioning sets of policy responses to both the demand and supply-side shocks that the pandemic had exerted on their economies.
In most cases, the responses stretched monetary policy beyond its conventional boundaries, in order to prop up the many activities affected by lockdowns and the associated curtailment measures.
The CBN Governor noted that responses of central banks across the WAMZ was timely, proactive and very commendable, with a focus at ensuring price and financial system stability, while also mitigating financial fallout on both corporates and households.
“Broadly, responses of monetary policy across the zone were diverse and tailored to meet the peculiar shocks the pandemic had exposed our individual economies,” he said.
According to him, monetary policy responses within the zone could be characterised, amongst others, to include reductions in policy rates, ostensibly aimed at reinvigorating growth in response to the sudden economic contraction caused by COVID-19.
“Central banks have also implemented various forms of liquidity measures to support the government’s short-term budgetary needs as well as other liquidity assistance frameworks to ensure market liquidity. There were in addition measures aimed at stabilising the foreign exchange market in the face of supply shocks precipitated by the pandemic.
“Also, spates of interventions to support and strengthen health institutions and medical support services to mitigate the impact of the pandemic were undertaken. There is no denying the fact that this gamut of measures had been very helpful in navigating our respective economies through this difficult time.
“The need, however, remains imperative for monetary policy responses to the pandemic in the WAMZ to be synergized and coordinated in order to preserve the gains already achieved towards regional integration, particularly given evidences of interdependencies and likely spillover of the respective macroeconomic responses across the economies of the zone,” he explained.
To achieve this, he said, “it becomes imperative to create a forum like this to facilitate sharing of country experiences on monetary policy responses in the management of the adverse socio and macroeconomic effects of the pandemic. This will go a long way to improve respective country performance in meeting the WAMZ convergence criteria.
On his part, the Commissioner for Economic Policy and Economic Research at the ECOWAS Commission, Dr Kofi Konadu Apraku, noted that global concerns about the pandemic revolved around its overall impact on the economy, health and humanitarian impacts, with particular emphasis on the sectors of the economies that are most vulnerable.
He stressed that the outbreak generated demand and supply shocks across the global economy and with economic slowdown and significant negative impacts on the financial markets.
“The devastating economic and financial impacts are still ongoing. The extent of the damage would untimely depend on how quickly the virus is contained and how governments respond in terms of the steps taken to contain it, as well as economic support governments are able to deploy to mitigate the epidemic’s impacts.
“ECOWAS, like all Regional Economic Communities is very concerned about the unprecedented negative public health, economic and humanitarian impacts brought of COVID-19,” Apraku noted.
To activate a regional response to the pandemic, and based on the assessment of its effects, the ECOWAS Head of States and Government at their Extraordinary Summit held in April, 2020, expressed deep concern about the spread of COVID-19 and its negative social, economic, financial and human security impact on all ECOWAS Member States.
The Summit further acknowledged the immense efforts of Member States in terms of the various response measures put in place to mitigate the negative impacts of the pandemic to regenerate economic growth and to reduce negative social, humanitarian and public health impacts of the pandemic.
The Summit set up three Ministerial Coordinating Committees, namely, a Ministerial Coordinating Committee on Health, Ministerial Coordinating Committee on Finance (including ECOWAS Central Bank Governors), and the Coordinating Committee of Ministers for transport, logistics free movement and trade with the broad responsibility to establish coherence between national and regional strategies and ensure that all the economic and financial impacts linked to COVID-19 are addressed effectively.
The Summit had also appointed President Muhammadu Buhari, as the “champion” for the cause.
Consequently, then the Summit took some far reaching decisions, including: deploying, through the Central Banks, tools, means and significant liquidity to support SMEs and Microfinance Institutions in all Member States.
“The Central Banks of the WAMZ have taken the bull by the horn and with this program today to examine and share country experiences on monetary policy responses in managing COVID-19 pandemic. “As the pandemic and the related containment measures undertaken by Member States of WAMZ have significant and widespread impact on economic activities, the WAMZ Central Banks have the responsibility to carry out in-depth assessment of the macroeconomic environment and outlook that would enable it set monetary policies that would ensure price stability, an essential foundation for sustainable economic growth and job creation.
“ECOWAS Commission wishes to reaffirm its commitment to strengthen its cooperation with all Central Banks, Regional Institutions and Member States in the diligent implementation of the conclusions emanating from this symposium.
“The ECOWAS Commission remains grateful to you, Governors for your various monetary policy interventions that have at least for now, stemmed the worst impacts “that the pandemic could have had on our regional economy.
I wish to encourage you to do more by working with all stakeholders in your respective countries to galvanise renewed interest and commitment in ensuring rapid economic recovery in your various countries. On this note let me thank you once again for inviting ECOWAS to participate in this important event,” he added.
Analysts stressed that the pandemic has shown that there is greater role for governments and policymakers in the sub-region to play whether it be health, education, in order to ensure that economies in the sub-region fully diversify their sources of revenue away from primary products.
This is to ensure that that they are not always susceptible to external shocks.