COVID-19: Chance To Reset Strategy And Economy

FROM downsizing the national budget to shifting emphasis to drug manufacturing and local efforts to make ventilators, the COVID-19 pestilence with its ensuing shutdown of social and economic activities, is compelling the Federal Government to confront the serious need to reset the country’s development strategy. Recent steps such as support for local producers, incentives for businesses and putting money in the hands of the very poor are measures that provide temporary relief, and an opportunity to look inwards for solutions to the challenges of today and the future.

No doubt, pandemic-induced lockdowns are widely expected to throw the economy into a deep recession.

So far, the coronavirus pandemic has been relatively mild in Nigeria compared to its grim toll on the lives and economies of China, other parts of Asia, Europe and North America. By Saturday morning, there were 1,704,565 cases worldwide, 103,357 deaths, while the United States had shot to the lead with 501,615 cases and 18,693 deaths, according to the Johns Hopkins tracker. Nigeria’s 305 cases, seven deaths and 58 recoveries by Friday mean that it has avoided the worst thus far despite its shambolic health facilities. It has been a story of missteps by federal and state officials; some heroic displays by a few public officials and individuals as well as what some see as sheer luck.

But the pandemic, lockdown and consequent economic adversity have exposed the vulnerabilities of the country’s weak public finance, poor infrastructure, shabby healthcare delivery system, oil dependent-economy and unpreparedness to confront challenges – social or economic, without outside help. Nigeria has another opportunity to look inwards, exploit all its advantages in human capital, arable land and abundant minerals to meet current and future challenges.

For instance, there are said to be less than 300 functioning ventilators in the country, critical equipment for treating COVID-19 patients, prompting the embarrassing appeal, later dropped, for donations from billionaire Elon Musk. Even the US is running short of protective equipment, as have Italy and Spain while the United Kingdom is struggling. Over 70 per cent of essential drugs used in Nigeria are imported, mostly from China and India. Even then, says the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria, most of the active ingredients, machinery and parts used by local producers are also imported. But India and other exporting countries are also hard hit and for now, have no surplus to export. China, where the epidemic started, having recovered, will struggle to meet demand from the richer and more affected countries for medical supplies.

Some 54 countries had by late March banned the export of medicines to conserve for national use and the US has been accused of hijacking a shipment of 200,000 face masks meant for Germany, underscoring the fierce competition for medical supplies.

Resetting the economy is crucial. The African Development Bank reckons that Nigeria and other sub-Saharan African countries will see a severe shrinking of their economies, while the IMF forecasts Gross Domestic Product contraction of between -2.1 per cent to -5.1 per cent, especially for the oil-dependent economies that may collectively lose $65 billion. With the International Labour Organisation projecting job losses at 195 million globally and 20 million in Africa, the country’s options are limited.

The lazy approach of accumulating loans for everything, from infrastructure to paying salaries will likely run into a hitch as practically the whole world is also seeking debt forbearance and record level credit. Though the country will benefit from bailouts such as the IMF’s $3.5 billion lifeline, radical policy shifts are needed to wean the country off dependency and develop the capacity to absorb shocks.

The pandemic has laid bare the danger of relying on others for basic medicines. The interventions announced by the Central Bank of Nigeria and the government for the pharmaceutical sector should be vigorously pursued to meet local self-sufficiency and for export. Rising from its adversity, China is investing resources, research and personnel in its industrial clusters, including Wuhan, the source of COVID-19, and is primed to reap heavily as the world recovers. The devastation it suffered in the two world wars spurred Germany to feats of local ingenuity, innovation and self-reliance that enabled it to produce iconic products like the Volkswagen Beetle “people’s car.” The defunct Soviet Union moved from agrarian production to an industrial power from the crucible of war and revolution, while Israel, with over 300 Research and Development centres, public and private, is the world’s highest spender on research as a ratio of GDP.

No effort should be spared therefore to assist the health and agricultural sectors; food dependency is dangerous and unsustainable. Resources should be poured into research into local age-long herbal remedies as Taiwan, China and Cuba have done. Individual efforts that produced the acclaimed Jobelyn formula, a nutritional supplement, can be replicated with government support.

Maximum support should be given to the teams that have developed or reactivated ventilators. This is the time to rehabilitate the vaccine-producing centres to make the country self-sufficient in vaccines and medicines for malaria, Lassa fever, cerebrospinal meningitis and cholera that are endemic here. Lessons learnt from the SARS epidemic of 2003 informed improvements in response systems and drug testing and treatment in Hong Kong, Taiwan and Singapore that prepared them to deal better with the current pandemic.

The scale of the task and the obstacles will be enormous. Nigeria needs a multi-pronged effort to bring the economy back to life. A strong central bank independent of the government, focusing on ingenious monetary policies to keep prices, interest rates and inflation low and stable, is imperative. The Buhari regime should pursue a new fiscal policy to promote heavy investment in prioritised infrastructure projects for rapid economic growth.

Every tier of government should institute large tax cuts to spur spending and investments. Indeed, investment in infrastructure and improvement in the ease of doing business are crucial going forward, to attract investments and move more people into the formal sector of the economy.

Countries with bigger formal sectors, better banking culture and reliable data base found it easier to transfer cash via electronic transfers, while Nigeria could not properly identify eligible poor and has been moving and distributing cash. Job creation, including expanding the plan to engage 774,000 youth to clear drainage as a short-term measure, have been found to be more effective in reviving the economy than borrowing for recurrent spending.

Above all, the President, Major General Muhammadu Buhari (retd.) needs to bring experts, professionals and the organised private sector on board to rejuvenate social and economic infrastructure and set the country on the path to self-reliance and economic greatness

The Punch Editorial

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