BEVERLY HILLS, September 03, (THEWILL) – The President of the Federal Republic of Nigeria was on Twitter Thursday morning to give the men and women of the country a reason to calm down. In this article, Jude Obafemi writes that his words were meant to reassure Nigerians that the government was not aloof about the issues that beset them and to inform them that his government was responding to the situation even as the economy tethers on the brink.
However, it is not a typical Nigerian malaise at the moment.
Economies across the globe are witnessing a downward trend. Though different factors are responsible for the trend in different parts of the world, the single common denominator this year has been the Coronavirus pandemic that broke out in Wuhan, China sometime late last year and gradually crossed borders to reach every corner of the world.
In keeping with the advice of scientists and healthcare professionals, a global shutdown was effected in many countries and almost all economic activities except the most essential services were suspended to keep the spread of the virus in check, flatten the curve of infections and help frontline health workers deal with the infected. This led to unprecedented disruptions to global supply chains, a sharp drop in global crude oil prices, turmoil in international stock and financial markets and abrupt stop to movements of persons within and outside their borders.
Nigeria had to follow in those steps. While the government, at the beginning of the year and pre-Covid-19 was dealing with a weak recovery from the 2014 oil price shock, with GDP growth around the 2.3% metric and a debt profile that hampered growth with debt service-to-revenue ratio at 60%, the common Nigerian on the street was grappling with loss of value of each naira in his or her pocket. Then, the pandemic hit. The government announced an initial two-week lockdown on the 30th of March. More were to follow in consecutive weeks as the situation of the spread of the virus was monitored. It was not a boon for an economy already on the ropes. An already fragile and vulnerable economy prior to the outbreak was dealt a nasty blow when economic activities were suspended in keeping with the lockdown.
All the consequences witnessed across the globe were replicated in Nigeria: severe consequences to livelihoods (especially an economy like Nigeria’s where the majority rely on daily income for sustenance), severe blow to business activities resulting from the drop of local and international demand, declined consumer confidence, layoffs of staff, and general slowdown of production. The 2020 Nigerian budget had to be thoroughly revised with revenue projection slashed by about 40% while the government reached out to the International Monetary Fund, the World Bank and the African Development Bank for aid to execute the items in the budget.
With an unprecedented collapse in commodity prices, capital flight, turmoil in the capital market, supply chain disruptions and destabilisation of commercial and economic activities, daily life in the era of the pandemic has been a debilitating painful experience for the majority of the people. Palliative measures taken by the government to cushion the agony of the experience and interventions by the Central Bank of Nigeria in support of small businesses that took an atrocious hit as they were without cash buffers to withstand the effects of the shock of the shutdowns were not sufficiently distributed to make substantial difference.
This might have informed the series of tweets published Thursday from the verified Twitter account of President Buhari (@MBuhari). In them, he admits the challenges the country has undergone in the face of the pandemic especially with regards to food production and the resultant spike in food prices.
“To ease the current high cost of poultry production,” he began in his tweet; “I have approved the release of 30,000 tons of maize from the national reserves, to animal feed producers.
“We are very mindful of the challenge of high food prices, at a time when the economy is already in a slowdown caused by the global coronavirus situation, and are doing everything in our power to bring down the prices of food items across the country.”
He finished with this post: “Let me assure Nigerians that this situation of spiralling food prices will be a transient one.”
Those who follow the Nigerian trends will be hard to convince with the president’s tweets only. Spike in prices in any form very rarely come down when things improve. Plus, though the president focussed squarely on food prices alone, they are many who believed he lost the opportunity to calm frayed nerves on some other sectors where prices were ratcheting up like the new electricity tariffs and the pump price of petroleum products. The latter was the most important given how the prices of other items and for transportation all depend on the pump price and are directly proportional to increase of pump prices.
Even, economists and financial experts believe more needs to be done. They see the downward spiral as an opportunity for structural reforms and home-grown solutions that will leave the country in a better standing post-Covid-19. They recommend a reform programme that will lead to the long-sought liberalisation of the petroleum downstream sector, exchange rate convergence, securitising of government’s equities in joint ventures, privatising government’s redundant assets across the country, public-private partnership-led infrastructural developments, export diversification, agro-based industrialisation and cuts in governance costs.
It is this process that will ensure that Nigeria does not suffer the agonising experience should global crises scale across borders and force the hand of the Nigerian government to act in like fashion in the immediate or remote future.
