A SHORT HISTORICAL BACKGROUND:
No aspect of human existence is static. Everything is dynamic. That is the reason world is not strange to the history of pandemics and recessions/ depressions. As a brief account, the COVID19 pandemic of 2020 is similar to those of 1720, 1820 and 1918-1920. Then, there was the World War I (WWI) between 1914 and 1918 followed by World War of 1939-1945. That war was a follow-up to the great depression of the 1930s. That war did not leave the world the same. Let us go down the memory lane for the purpose of this discourse. It could be recalled that WWII broke out following the large scale unemployment observed in the USA that spread to Europe in the 1930s. In the light of other national cum global political issues at play then, the war became inevitable by 1939. By the end of the war in 1945, over six million Jews were killed not to mention other races. Infrastructures in roads, bridges, hospitals, schools e.t.c. were destroyed.
The reconstruction of Europe was inevitable. The Marshall plan of action came to the rescue in order to finance the rebuilding efforts. Earlier in the decades, there was the human capital that was accumulated over time waiting for the opportunity to manifest, in all areas of human endeavours.
The events after the war provided ready outlets, and a great opportunity, for these all-important factors of production to manifest their hidden potentials. In science and technology, great changes were exploited and became useful to mankind.
One of these major breakthroughs was the computer. Others were in engineering, medical sciences, aeronautics among many others.
THE COVID-19 PANDEMIC: A REVIEW
As a matter of fact, The spread of ”COVID-19 disease provides a unique set-up to understand and study the diffusion of a global production shock along the global value chains”.
The COVID-19 pandemic was a health crisis with economic implications. The stringent measures put in place by the government to curtail the spread of the virus such as lockdowns, affected businesses and economic growth. This impacted on economies and livelihoods. In order to minimize the economic impact of the pandemic, the Federal Government of Nigeria provided a stimulus package that includes ₦500 billion COVID-19 Crisis Intervention Fund, ₦50 billion CBN Intervention Fund (for households and business), and conditional cash transfer to most affected vulnerable individuals, among others. Africa’s average GDP growth is estimated to slowdown in Africa from 3.2 per cent to as low as -2.6 per cent (ECA, 2020). In Nigeria, the pandemic worsened the economic situation with the subsequent collapse of international oil prices, thus destabilizing the country’s macroeconomic balances. A recovery plan is essential to build back the economy following the impact of the pandemic. This is necessary as a World Bank report indicated that apart from the loss of lives, the macroeconomic implications of the pandemic could be severe in 2020 and 2021 with the possibility of five million more Nigerians pushed into poverty (World Bank, 2020). Thus, the pandemic has three main features. First, the COVID-19 shock is not originated by economic fundamentals but health crisis. Second, it is different from other non-economic shock experienced in the past. It is a global phenomenon. Third, it has been established that the spread of COVID-19 disease is the largest pandemic ever experienced in the globalised world resulting into what is termed the biggest production disruption in recent world history.
ECONOMIC AND SOCIAL IMPACTS OF COVID-19:
The spread of the virus has generated economic and social costs for many economies, even though the magnitude of impact may vary across countries based on the size of the economy. The economic costs of COVID-19 results from the preventive measures initiated by the government as a way of curbing its spread. Such measures include border and airport closures, complete or partial lockdowns, restriction of movement, and closure of workplaces and businesses, among others. This invariably led to economic decline such as fall in the volume of trade, disruptions to supply chain, loss of productivity, reduction in revenue, increased government expenditure, high debt, deteriorating exchange rate, among others. This impact may be more severe for Africa as exports are mainly primary commodity exports which are most affected by the trade restrictions. This combined with the loss of revenue from taxes, which affects government’s capacity to fund critical services and their existing high debt-to-GDP ratio, all exacerbate the macroeconomic impact of the pandemic.
Another area of economic impact is low investment and capital inflow due to the uncertainty in the global economy generated by the spread of the virus (Ozili, 2020). Nigeria’s dependence on crude oil made it vulnerable to the pandemic as the slowdown in the global demand for oil led to low oil prices, thus, affecting government revenue where oil revenue forms a significant percentage. There was also the fall of both nominal and real household income, volatility in commodity prices and unstable exchange rate. In addition, there was an increase in electricity tariff, while the pump price of fuel continues its upward movement since the time of the deregulation of the sector. Things became more challenging when the World Bank classified Nigeria as the world capital of poverty in August 2020. That indicated the economic waste of human resources.
In addition to the economic impact, the pandemic also presents social impacts. It increased the number of people that were pushed into poverty thereby negatively affecting the achievement of the Sustainable Development Goals (SDGs). Between 5 to 29 million people are estimated to be pushed into poverty and about 19 million jobs will be lost with a significant impact on the tourism and hospitality industry (UNECA 2020).
REBUILDING THE NIGERIAN ECONOMY IN THE MIDST OF COVID-19 PANDEMIC:
My first question is this: have we built the economy we are hoping to rebuild? Largely, my response is no. So what should we be doing? In this respect, I will look at the immediate/short-run measures and then what may be considered as long-run policy measures. We are in a complex world and it is no longer possible to say ”one policy per time”. The multiplicity of problems confronting us require simultaneous solutions: it is a general equilibrium situation. To start with, I observe over the decades that we are long in words and short in actions. That is why when you listen to great speeches from government officials, private business owners, organised private sector, labour unions, the media practitioners, even researchers and others, you will tend to say that yes Nigeria has arrived at the destination. Some examples will suffice here: In a globalised world economy, how do you intend to move forward with mono-cultural economy? We are ridiculing ourselves with the talks on economic diversification. The truth of the matter is that we cannot survive going forward without being genuine with this policy. We must expand our production base in as many as the number of our consumables. The multiplier effects of vertical and horizontal diversification on the economy are immense.
My second example has to do with the fact that Nigeria has no effective trade policy. Consequently, our country has become a major dumping ground for foreign goods. The trade policy should back the diversification efforts. We spend billions of dollars importing basic food commodities that can be grown locally. We must grow what we eat. We need to reverse this with a robust trade policy in all its ramifications.
A better way to stimulate the Nigerian economy at this time would be to have specific and measurable objectives that can unleash the potential of Nigerians. For example, the government should focus on creating an enabling environment for businesses to thrive. This would include:
investing in the provision of consistent power supply and reducing the current cost of power for businesses;
providing easily accessible business loans to small scale businesses at reasonable interest rates;
investing in education and reskilling of the populace;
reducing bottlenecks at Nigerian ports for small scale businesses; and
Improving the transportation infrastructure and helping businesses with a long-term mortgage scheme.
The COVID-19 pandemic has presented challenges and opportunities for Nigeria and indeed African economies to leapfrog into the 4th Industrial Revolution and for the long run, that is into the future. The global health crisis has helped us to understand the extent of the structural weaknesses of our economies. Besides the current efforts to embark on strategies including ”in-depth approaches to human development, regional integration, digitalization, industrialization, economic diversification, fiscal and monetary policies, and international solidarity”, we need long run approaches to solving the underdevelopment of Nigeria. In my humble opinion, these should include the following:
a) Educational reforms: There is an urgent need for a holistic review of our educational curriculum from primary to tertiary institutions. This should respond to our environment and current needs. We must borrow a leaf from countries like Singapore, South Korea, Japan and China. We must move from education for ‘Certificates” to education for “skill development’. The quality of education available now will inform the world of how we would attain the projected future, every other thing being equal.
b) Industrialization: Nigeria should move away from being a raw material producer and exporter for the world community and become transformer of those raw materials into finished industrial goods, having passed through all the stages in the value chain. This means we can generate more employment for the youth, earn foreign exchange through export of value-added goods, provoke the rise of the standard of living, and thus eliminate poverty. This level of poverty was obvious to us all during this pandemic and the ‘END-SARS’ protest.
Let us consider another example as it relates to industrialization. The most intriguing areas, in this respect, include the pharmaceuticals where Nigeria and indeed Africa could not meet their demand aggravated by the lockdown of the producing industries following excess demand in other continents. These include drugs, beds and beddings, personal protecting equipment (PPE), medical and non-medical face-mask and other related items. It was observed that Africa was only able to meet 10 per cent of her total demand for medicines. That is worrisome!!!.
c) Technology: The world is at the beginning of the 4th Industrial revolution and technological breakthrough is the key. It is characterized by robotics, artificial intelligence, machine learning, virtual reality and augmented reality among others. These technologies will shape the world of production and employment and all other human and economic activities. These are already manifesting in the educational, health, communications, transport and other sectors. This brings about once again the imperative of quality education. There is no alternative to developing a viable educational curriculum, in this respect.
d) Social-political reforms: If we are talking about rebuilding our economy, we need a holistic review of our society: the history, culture, demography etc. Remember, economy does not thrive in a chaotic environment. Our political actors do not show understanding of running a modern state. They appear to live in a different world. For instance, the ENDSARS protest across the country is a manifestation of a deep-rooted social crisis. The following are my views on the path towards rebuilding the economy of Nigeria:
i. There is power in engaging citizens for good governance and to support economic and social development;
ii. To scale up the economy is to develop the human capacity. No nation can be better than the quality of its human beings. There are examples to buttress this across the world. Many of the industrialized countries do not have mineral resources as we do in Nigeria; the developed human capital factor midwifes their transformation from the third world to the first world. The case where our Public Tertiary institutions are under lock and key for almost a year is not acceptable;
iii. We must realize that education is a viable, veritable and useful tool to scale up economic development;
iv. Our curriculum must be geared towards developing skills and capacity which will eventually contribute to economic development. For example, the curriculum must facilitate and develop the competencies of our youth so that they can actively contribute to sustainable development;
v. Encourage civic participation to support macroeconomic policy reforms that engender growth and reduce poverty;
vi. Government should note that the economy does not thrive in an unsecured and volatile social and political environment;
vii. There must be concerted efforts by government, ministries, departments and agencies (MDAs) and the people to work out a strategic plan for the nation;
viii. It is time to build trust in our polity. The level of mistrust is unmeasurable. No macroeconomic policy works without belief in the system. A situation of ”self-fulfilling prophecy” leads to nowhere;
ix. Improve our capacity to unlearn old ways of doing things, learn, and relearn better ways of doing things based on the implementation of technology in this era of change. Here, we must deploy the phenomenon of ”learning by doing”;
x. The 4th Industrial Revolution waits for nobody. We must deploy it in full scale in the production of goods and services and not just for entertainment. This is closely linked to the design of a new curriculum in all facets of our public life
These are some of the steps we must embark upon in ensuring that we rebuild the Nigerian economy.
There is an urgent need to curtail our population growth rate. A situation where the growth rate of the GDP is trailing behind the population growth rate is not a good omen for economic development. Currently, the Nigerian population is estimated at over 200 million and it is projected to be about 400 million by the year 2050. After 60 years of independence, we can no longer fold our arms. The future begins now and rebuilding the economy starts this hour.
EXCERPT FROM THE KEYNOTE ADDRESS BY
PROF. PROF. PHILIP O. ALEGE
OF OTA, OGUN STATE
COVENANT UNIVERSITY OTA AT THE 5TH NATIONAL LEADERSHIP DEVELOPMENT CONFERENCE, HELD ON
SUNDAY NOVEMBER 29, 2020 IN LAGOS, NIGERIA
TO BE CONTINUED