Turning Covid Tragedy into Opportunity for New Nigeria


As many people are now aware, the outbreak of the Novel Coronavirus Disease (COVID-19) in C h i n a r a p i d l y p e r m e a t e d a n d profoundly changed the world. While this crisis isfirst and foremost a public health issue, which hasclaimed the lives of over 123,600 peopleworldwide, and counting, the economic damagesare unprecedented on several fronts: Crude oilprices declined dramatically to as low as US$17per barrel by the end of March, evenbefore applying the discounts many oil exportersare offering; Stock valuations for the NSE-ASI,Nikkei, Dow Jones and FTSE-100 declined by anaverage of 23.8 percent between January andMarch 2020; Global airlines have lost aboutUS$252 billion in revenues and across the broad

range of industries from hospitality to services, thepain is growing. These outcomes have expectedlythrown the global economy into a recession, thedepth and duration of which is currently difficult tofathom. In fact, the International Monetary Fund(IMF) predicts that the global economy woulddecline by 3 percent this year.

Around the world, countries have moved awayfrom multilateralism and responded by fighting forthemselves with several measures to protect theirown people and economies, regardless of thespillover effects on the rest of the world. Accordingto the World Customs Organization, a total of 32countries and territories, adopted stringent andimmediate export restrictions on critical medicalsupplies and drugs that were specifically meant torespond to COVID-19. As of 10 April 2020, anupdated count of total export restrictions by the

Global Trade Alert Team at the University of St.Gallen, Switzerland suggest a total of 102restrictions by 75 countries.

On 4 March 2020, Germany announced an exportban that applied to all sorts of medical protectiongear including breathing masks, medical glovesand protective suits. Around the same time,President Macron announced that France willrequisition all face masks produced in the country,a de facto export ban. Between 8 February 2020and 6 April 2020, India released eight (8) differentexport notifications banning several drugs andmedical supplies including hydroxychloroquine,ventilators, personal protections masks, oxygentherapy apparatus, and breathing devices. On 3April 2020, the Trump Administration invoked thewar-era US Defense Production Act to stop major

US mask manufacturer, 3M, from exporting N95respirator masks to Canada and Latin America.

Fears of a long global recession have also led toworries about unprecedented global foodinsecurity, with concerns that agriculturalproduction may be dislocated by containmentmeasures that constrain workers from planting,managing and harvesting critical crops. Ratherthan seek cooperative and global solutions,several countries have resorted to exportrestrictions of critical agricultural produce.According to the International Food PolicyResearch Institute (IFPRI), about 37 countrieshave enacted various forms of food exportrestrictions in response to COVID-19, even incountries where average production exceedsdomestic consumption.

For example, Viet Nam, the world’s third largestexporter of rice, suspended granting rice exportcertificates until the country “reviews domesticinventories”. Russia, the world’s largest wheatexporter, announced a ten-day ban on the exportof buckwheat and rice due to concerns over panicbuying in local supermarkets.

What if these restrictions become the new normal?What if the COVID-19 pandemic continues in asecond wave or another pandemic occurs in whichall borders are shut and food imports aresignificantly restricted? What if we cannot seekmedical care outside Nigeria and must rely onlocal hospitals and medical professionals? Forhow long shall we continue to rely on the world foranything and everything at every time?

Although these developments are troubling, theypresent a clear opportunity to re-echo a persistentmessage the Central Bank of Nigeria (CBN) hasbeen sending for a long time, and at this time evenmore urgently so: We must look inwards as anation and guarantee food security, high qualityand affordable healthcare, and cutting-edgeeducation for our people. For a country of over 200million people, and projected to be about 450million in a few decades, we can no longer ignorerepeated warnings about the dangers that lieahead if we do not begin to depend largely on

what we produce locally. The security and well-being of our nation is contingent on building a well-diversified and inclusive productive economy.

When I became Governor of the Central Bank inJune 2014, imports of rice, fish, wheat and sugaralone consumed about N1.3 trillion worth of

foreign exchange from the Bank. My immediatequestion was: can we not produce theseourselves? After all, only a few decades ago,Nigeria was one of the world’s largest producersand exporters of many agricultural products likepalm oil, cocoa and groundnuts. Today, we importnearly 600,000 metric tonnes of palm oil, whilstIndonesia and Malaysia, two countries that werefar behind us in this crop, now combine to exportover 90 percent of global demand. In 2017,Indonesia earned US$12.6 billion from its oil andgas sector but US$18.4 billion in from palm oil. Ibelieve that this pandemic and the immediateresponse of many of our trading partners suggestit is now more critical than ever that we take backcontrol; not just control over our economy, but alsoof our destiny and our future.

In line with the vision of President MuhammaduBuhari, the CBN has indeed created severallending programmes and provided hundreds ofbillions to smallholder farmers and industrialprocessors in several key agricultural produce.These policies are aimed at positioning Nigeria tobecome a self-sufficient food producer, creatingmillions of jobs, supplying key markets across thecountry and dampening the effects of exchangerate movements on local prices.

This philosophy has been a consistent theme ofthe CBN’s policies over the last few years. At the2016 Annual Bankers’ Dinner, I challenged thebankers that we needed to take decisive actions tofundamentally transform the structure of oureconomy. Throughout that speech, I talked aboutthe damaging effects of Nigeria’s unsustainablepropensity to import, and opined that it was high

time we looked inwards and stopped using hard-earned foreign exchange (FX) to import items that

we should produce locally. This determination,therefore, formed the bedrock of the Bank’s policy,which restricts access to FX for importers of manyitems. These sentiments were re-echoed at the2017 edition of the same Bankers’ Dinner withspecific examples of several companies that have

benefited significantly from this policy of self-sufficiency. With President Buhari’s full support, we

have continued to refine this policy to ensure thatthe best interest of Nigeria is served.

Many times, the Bank has been accused ofpromoting protectionist policies. My answer hasalways been that leaders are first andforemost accountable to their own citizens. If thevagaries of international trade threaten theirwellbeing, leaders have to react by compelling

some change in patterns of trade to the greatergood of their citizens.

That is why in response to COVID-19, we arestrengthening the Nigerian economy by providinga combined stimulus package of about N3.5 trillionin targeted measures to households, businesses,manufacturers and healthcare providers. Thesemeasures are deliberately designed to bothsupport the Federal Government's immediate fightagainst COVID-19, but also to build a moreresilient, more self-reliant Nigerian economy.

We do not know what the world will look like afterthis pandemic. Countries may continue to lookinwards and globalization as we know it today maybe dead for a generation. Therefore, as a nation,we cannot afford to continue relying on the worldfor our food, education and healthcare. The time

has come to fully transform Nigeria into a modern,

sophisticated and inclusive economy that is self-sufficient, rewards the hardworking, protects the

poor and vulnerable, and can competeinternationally across a range of strategic sectors.

In order to achieve this goal, we must beginimmediately to support the Federal Governmentto:1) Build a base of high quality infrastructure,including reliable power that can engenderindustrial activity;2) Support both smallholder and large scaleagriculture production in select staple and cashcrops;3) Create an ecosystem of factories, storages, andlogistics companies that move raw materials forvalue-added production, and finished goods tomarkets;

4) Use our fiscal priorities to create a robusteducational system that enables critical thinkingand creativity, which would better prepare ourchildren for the world of tomorrow;5) Develop a healthcare system that is trusted tokeep all Nigerians healthy, irrespective of socialclass;6) Facilitate access to cheap and long-term creditfor Small and Medium-Scale Enterprises (SMEs)and large corporates;7) Develop and strengthen pro-poor policies thatbring financial services and security to the poorand the vulnerable; and8) Expedite the development of venture capitalistsfor nurturing new ideas and engendering Nigerianbusinesses to compete globally.

India is in a position to ban exports because it isproducing critical drugs and medical supplies that

the rest of the world needs. It also hascompanies that are global champions, and evenmerging with or acquiring peers in advancednations. Why should this be out of our reach? Wehave the companies and the manpower. Some ofthe best brains in the world from the Americas toEurope and from Asia to Africa are Nigerians;driving global innovations in all fields. Nigeriansare successful everywhere, and are already one ofthe most sought after immigrant groups in theUnited States. Now is the time to seize thisopportunity and create an environment thatempowers our people to thrive within our ownshores.

To this end, the Central Bank has developed aPolicy Response Timeline to guide our crisesmanagement and the orderly reboot of theNigerian economy.

Immediate-Term Policies (0-3 Months)In light of the fact that this crisis is an exogenousone thrust upon us without much warning, thisphase reflects the government’s efforts atcontainment and mitigation. Although global casesare heading towards two million with over 123, 600deaths as of 14 April 2020, we now have 343cases, of which there have been 91 recoveriesand sadly 10 deaths. With President Buhari’scontinuing strong leadership, Nigeria can now test1,500 persons per day in twelve (12) MolecularTest Laboratories. We believe that his strongleadership to impose early travel restrictions,lockdown, social distancing, and other measureshave been greatly effective in curbing the spreadof the disease. More so, the Presidential TaskForce on COVID-19 and the Nigeria Centre forDisease Control (NCDC) have helped the country

stay ahead of the curve with increased testingcapacity, provision of better-equipped isolationcentres, and effective contact tracing. Within thismilieu, the CBN has responded in several ways,first by supporting hospitals and pharmaceuticalindustry with low interest loans to immediately dealwith the public health crises; then by working withthe private sector Coalition Against COVID(CACOVID) to support the Presidential Task Forceo n C O V I D - 1 9 a c r o s s i t s r e s p o n s e ,while mobilizing palliatives for the poorand vulnerable. Under this Immediate-TermResponse, we have activated the following: 1)Ensure financial system stability by grantingregulatory forbearance to banks to restructureterms of facilities in affected sectors; 2) Triggerbanks and other financial institutions to roll-outbusiness continuity processes to ensure thatbanking services are delivered in a safe social-

distance regime for all customers and bankers; 3)Grant additional moratorium of 1 year on CBNintervention facilities; 4) Reduce interest rates onintervention facilities from 9 percent to 5 percent;5) Create N50 billion targeted credit facility foraffected households and SMEs; 6) Strengthen theLoan-Deposit Ratio (LDR) policy, which isencouraging significant extra lending from banks;7) Improve FX supply to the CBN by directing alloil companies (international and domestic) and allrelated companies (oil service) to sell FX to CBNand no longer to the NNPC; 8) Provide additionalN100b intervention in healthcare loans topharmaceutical companies, healthcarepractitioners intending to expand/build capacity; 9)Provide N1 trillion in loans to boost localmanufacturing and production across criticalsectors; and 10) Engender financial inclusion byensuring the poor and vulnerable are able, by all

means necessary, through banks, microfinance,community and non-bank financial institutions, toaccess financial services to meet their basicneeds.

Short-Term Policy Priorities (0 - 12 months)As soon as President Muhammadu Buhari and theHealth authorities determine our CoronavirusTransmission Curve is flattening and many of theongoing restrictions are eased, this will be thephase for repositioning the Nigerian economicspace. As part of the lessons from the current

pandemic, we must ensure that that our value-added sector, the manufacturing industry is

strengthened. Accordingly, the CBN will pursue thefollowing policies in this phase: 1) Reinvigorate ourfinancial support for the manufacturing sector by

expanding the intervention all through its value-chain. In most cases, we will ensure that primary

products sourced locally provide essential rawmaterial for the manufacturing sector except wherethey are only available overseas; 2) With thesupport of the Federal Government, the CBN willembark on a project to get banks and privateequity firms to finance homegrown and sustainablehealthcare services that will help to reverse

medical tourism out of Nigeria. By offering long-term financing for the entire healthcare value-chain

(including medicine, pharmaceuticals, and criticalcare), banks will work with healthcare providers toconsolidate on the current efforts to rebuild ourmedical facilities in order to ensure Nigeria hasworld class affordable hospitals for the people ofNigeria and those wishing to visit Nigeria fortreatment; 3) The CBN will promote theestablishment of InfraCo PLC, a world classinfrastructure development vehicle, wholly focusedon Nigeria, with combined debt and equity take-off

capital of N15 trillion, and managed by anindependent infrastructure fund manager. Thisfund will be utilized to support the FederalGovernment in building the transport infrastructurerequired to move agriculture products toprocessors, raw materials to factories, and finishedgoods to markets, as envisaged at the CBN Goingfor Growth Roundtable in March 2020; and4) Continue to prioritize the provision of FX for theimportation of machinery and critical raw materialsneeded to drive a self-sufficient Nigerian economy.

Medium-Term Policy Priorities (0 -3 Years):Once the world returns to some new normalhaving tamed COVID-19 by a combinationof vaccines and social distancing, and the Nigerianeconomy reopens fully for business, we will actquickly to enable faster recovery of the economyby targeted measures towards particular sectors

that are able to support mass employment andwealth creation in the country. We will do so byfocusing on four main areas, namely, lightmanufacturing, affordable housing, renewableenergy, and cutting-edge research.In manufacturing, for example, it is pertinent tonote that Nigeria’s gross fixed capital formation iscurrently estimated at N24.55 trillion made upresidential and non-residential properties,machinery and equipment, transport equipment,land improvement, research and development,and breeding stocks. Of this estimated value,machinery and equipment, which are the maininputs into economic production, are currentlyvalued at only N2.61 trillion. In order to pursue asubstantial economic renewal, includingreplacement of at least 25 percent of the existingmachinery and equipment for enhanced localproduction, we estimate at least N662 billion worth

of investments to acquire hi-tech machinery andequipment. Therefore, the CBN will consider aninitial intervention of N500 billion over the mediumterm, specifically targeted at manufacturing firmsto procure state-of-the-art machinery andequipment and automated manufacturing modelsthat would fast-track local production andeconomic rejuvenation, as well as supportincreased patronage of locally processed productssuch as cement, steel, iron rods, and doors,amongst several other products. The recentprivate sector investments in cement productionusing enhanced technology and automatedmanufacturing models is a good example of thekind of economic renewal we will be pursuing inthis phase. We will develop a thorough screeningprocess and stringent criteria for equipment typesthat would qualify for funding under this phase.

In order to boost job creation, household incomesand economic growth, we will focus our attentionon bridging the housing deficit in the country byfacilitating government intervention in three criticalareas: housing development, mortgage finance,and institutional capacity. We will pursue thecreation of a fund that will target housingconstruction for developers that provide evidenceof profiled off-takers with financial capacity torepay. The current identification framework in thebanking sector using the bank verification number(BVN) will be used to verify the informationprovided by the off-takers before the developercan access the funds. We will consider ways toassist the Mortgage Finance sub-sector as well asbuild capacity at the State levels for their landadministration agencies to process and issue landtitles promptly, implement investment friendlyforeclosure laws and reduce the cost of land

documentation, as these have remained majorinhibiting factors in the provision of affordablehousing in the country.Over the next 3 years, we will also support thefinancing of environmentally friendly energyproduction, as this has a tangential long-termhealth benefits. We will look at efforts to driveinnovation and research in every sector, throughour universities, research institutions, creativeindustry initiatives, and all other media of noveltyand inventions.In conclusion, I believe we must now envision andwork toward a Nigeria with the cutting edgemedical facilities to provide world class care to thesick and vulnerable, enable our universities andresearch institutions to provide the requisiteeducation and training that is required to keepthese ecosystems functioning sustainably andefficiently, and millions of Nigerians employed in

meaningful and well-paying jobs. This is theNigeria that we must aspire to build.

COVID-19 may have plunged us into a crisis ofunprecedented proportions. But, as WinstonChurchill once admonished, we must never let acrisis go to waste.