Okey Umeano, CFA. Ag., Acting Chief Economist of the Nigeria Securities & Exchange Commission, speaks to COVID-19 Africa Watch about Nigeria’s economic policy responses to the COVID-19 pandemic.
The following are a few of the main takeaways from COVID-19 Africa Watch‘s conversation with Okey Umeano, CFA. Ag., Acting Chief Economist of the Nigeria Securities & Exchange Commission:
- The Nigerian government has been proactive in terms of fiscal and monetary policy responses to the crisis, including expanding the social safety net and supporting local manufacturing capabilities.
- COVID-19 has underscored the importance of adequately financing the healthcare sector and retaining local talent, such as doctors and nurses who otherwise seek better-paying jobs abroad.
- Looking ahead, policy priorities will include improving health and infrastructure services across the continent, as the pandemic has increased the extent to which all segments of the population (including the wealthy) are brought to rely on these services.
- COVID-19 has also provided an impetus for African countries to start producing more goods themselves and becoming less economically dependent on other regions.
The interview was conducted by Obiageri Christiana Ndukwe, an IFC-Milken Institute Capital Market Scholar from the Central Bank of Nigeria. A transcript is available below.
Hello, I am Christiana Ndukwe, IFC-Milken Institute Capital Markets Scholar from the Central Bank of Nigeria. Today I’m speaking with Okey Umeano, acting Chief Economist of the Nigeria Securities & Exchange Commission. Okey, it’s good to have you here.
I’d like to start by discussing the economic implications of the pandemic. The IMF reckons that Africa will need an estimated $114 billion to plan for the medium- and long-term impact of the crisis. What is the Nigerian government doing in terms of fiscal policy to mitigate the impact of the crisis, especially relating to the poor and vulnerable in society?
In Nigeria on the fiscal side, the government has really come up with a lot of measures to ensure that people are not as hard-hit as they would expect. The social register has been expanded to include 3.6 million people. Not that that is enough, but that’s a big increase from 1 million to 3.6 million Nigerians who now get direct cash transfers, thanks to the government. The government has also provided lots of money – I would say about 6 billion Naira to efforts at fighting the disease.
Thanks for the update on the fiscal transfer. How about the measures taken in terms of monetary policy?
From the monetary side it becomes more interesting. The central bank has reduced rates unto SMEs and other organizations. Loans that emanated from the various interventions they’ve had (in education, aviation, agriculture) were at 9%. Now they have been reduced to 5% for the next year. There has also been a moratorium of about three months on some of those loans.
The central bank has also earmarked a 50 billion Naira intervention amount for loans to households and SMEs, and have made it easier for these households and SMEs to access this 50 billion. From the information I have, about the 10,000 households and SMEs have already accessed this.
“A loan of 2 trillion naira was provided for the manufacturing sector so that they can step up and provide what Nigerians need.”
There is also a hundred billion naira loan package available for the health sector to support manufacturing of medicines and PPEs. As you are aware, many countries are no longer exporting medicines and PPEs to Africa as they are essential items; so this loan is for local companies who can manufacture them. And in addition, there is a 2 trillion naira package for the manufacturing sector in Nigeria, because at the beginning of this pandemic, a lot of countries closed their borders. Of course, you know that we import a lot of things where we are. We depend on many of our neighbors and the world generally for a lot of things, but we had to replace them. We had to substitute them. The 2 trillion was provided for the manufacturing sector so that they can step up and provide what Nigerians need.
And then we had another 1.5 trillion for the real sector in general. These are all injections into the economy.
That’s good to hear. Now looking ahead, what would you say are some of the main lessons that we can draw from COVID-19 so far, to shape policy direction in the near term?
“In Nigeria and across the rest of Africa, healthcare has not been given the kind of attention it merits. Healthcare budgets have been dismal, but this pandemic has shown us our folly.”
In terms of policy direction, now we know that it’s important that we invest in our health care sector. In Nigeria and across the rest of Africa, healthcare has not really been given the kind of attention it merits. Healthcare budgets have been dismal, but this pandemic has shown us our folly. The African governments have to increase the spending on healthcare. Before COVID, anytime they had any problem, African leaders could just get on the plane and go abroad for healthcare. But this pandemic has showed that that’s not going to be possible all the time. In Nigeria, we have lost a lot of doctors to Europe, to America, to even to Dubai, to the UAE. It’s high time we really spend money in this sector, build up the infrastructure, make the environment good so that doctors stay are home, our nurses our health workers stay at home.
A second policy priority is infrastructure. We need to really improve our electricity and telecommunications. Right now that’s what all of us are depending on to get our work done. The pandemic has shown how important it is.
And third, we are now seeing the gig service economy. Companies are making deliveries of food, of things that were not being delivered before. We are now getting more used to sitting back at home and ordering goods and services. So these are the areas that government policy has to look at.
Besides digitization, do you think anything else needs to change in terms of how we produce things in Africa?
“Africa has to begin to make things for Africa, Africans have to consume African things. We have to really begin to look at what produce for ourselves, consume what we produce, and depend less on the world out there.”
Another area where African policy has to go to is we have to have a policy of making things ourselves. At the beginning of this pandemic, many countries locked up their borders and that meant that we couldn’t get the imports we needed. And yes, we are beginning to fill up those spaces in the stores with Nigerian goods, with African goods, but that tells us something: this can happen again and again, and again. So Africa has to begin to produce for Africa. Africa has to begin to make things for Africa, Africans have to consume African things. We have to really begin to look at what produce for ourselves, consume what we produce, and depend less on the world out there.
Okey, thank you so much for participating in our COVID-19 Africa Watch interview series. You leave us with important guiding words as we look to policy priorities for the future. Thank you and stay safe.
COVID-19 Africa Watch tracks major developments and policy announcements from across the continent and also offers a curated selection of analysis on how the pandemic will impact African economies and development efforts. The site is a project of the Milken Institute’s Global Market Development Practice.