…Outlines 9 Point Economic Blueprint

…Wants More Funds Allocated to Health Sector

…Says Citizenry Must be Protected from Food Shortages, High Prices

As the country confronts the spiralling cases of Covid-19 which has now risen to 89, a former Lagos State Governor, Mr Bola Ahmed Tinubu has told the administration of President Muhammadu Buhari to suspend the Value Added Tax (VAT) for between two to four months.  This, he reasons, will help lower import costs and protect against shortages. Tinubu also advise the government to keep the Naira flowing even though the coronavirus pandemic has sharply reduced dollar inflow.

The Leader of the ruling All Progressive Congress (APC) posits that, “We need to protect the people from food shortages and high prices. As such, we must quickly improve farm-to-market delivery of agricultural produce. Also, government should initiate a crash program to decrease spoilage of agricultural produce by construction of storage facilities in local marketplaces in and around major cities and towns throughout the country.

This suggestion may fly in the face of the closure of interstate highways by many state governments which is already stalling the movement of agricultural goods. In fact, the Poultry Association of Nigeria (PAN) says it may lose N3 trillion to these restrictions 

In his 68th birthday message, Tinubu said Nigeria has the sovereign right to issue its currency to stave off economic disaster, just like the U.S. government used its sovereign right to issue $2.2 trillion package to save its economy.

“While individuals, companies and even state governments can go bankrupt during hard times, the federal government cannot become naira insolvent because it has the ability to issue our national currency. He who holds the printing press is never insolvent.

“The most serious concern and limitation on federal naira spending is not insolvency but inflation. Consequently, should circumstances require increased spending, we should not hesitate to do so; but we must keep the watchful eye to ensure inflation does not climb too high.

“However to save both lives and livelihoods during a moment of historic emergency, a touch of extra inflation from enhanced government spending is a small price to pay. In fact, it is a price that must be paid.

“The alternative may be a harmful deflation which historically has proven more difficult to tame and cure than a small inflationary increase”, Tinubu said.

He seems to be on the same page with President Buhari on the idea of not reducing Naira flow amidst the pandemic.

According to Finance Minister, Mrs Zainab Ahmed, President Buhari has ordered that on no account must the salaries of workers, payment of pensioners and payment for critical infrastructure projects suffer during the economic meltdown caused by the coronavirus.

Tinubu, in his message, went further to list a nine-point economic action the Buhari government could take if coronavirus mortally threatens our economy.

*MAINTAIN GOVERNMENT EXPENDITURES: The natural instinct will be to reduce spending. Such reductions may be prudent for individuals and households. For government to move in this direction only feeds economic carnage by amplifying economic hardship. Prudent fiscal policy is generally “countercyclical.” As the private sector shrinks, government does more.

At minimum, the federal government must stick to its naira budgetary expenditures. In fact, government should increase Naira expenditures by at least 10 – 15 percent during an emergency.

Allocations to state and local governments should be included in this addition. If not, we risk subnational recessions in important sections of the country.

*GOVERNMENT PROJECTS: If the virus is largely kept from becoming a widespread public health menace, government should accelerate spending and actual work on key infrastructural projects particularly regarding transportation. This will lower costs while bolstering the economy by generating employment and business activity.

If the virus does become a large-scale public health challenge, more funds should be allocated to the health sector.

* TAX REDUCTIONS: Government should announce a tax credit or partial tax reduction for companies or firms. VAT should be suspended for the next 2-4 months. This will help lower import costs and protect against shortages.

* FOOD SECURITY: We need to protect the people from food shortages and high prices. As such, we must quickly improve farm-to-market delivery of agricultural produce. Also, government should initiate a crash program to decrease spoilage of agricultural produce by construction of storage facilities in local marketplaces in and around major cities and towns throughout the country.

We must establish a strategic grain reserve. Government should help ensure supply by establishing minimum premium price for certain food products.

*LOWER INTEREST RATES: CBN should lower interest rates to spur borrowing and private sector activity.

* QUANTATIVE EASING: CBN and other financial regulators should be alert to signs of fragility in the financial markets and banking sector.

The Central Bank should be prepared to enact extraordinary measures should the financial sector exhibit stress. The CBN should be prepared to give banks liberal access to its loan discount window to ensure adequate liquidity within the banking sector. The Cash Reserve Requirement for banks should be revised downward.

Also to ensure liquidity, the CBN should be willing to expand its balance sheet and improve liquidity by purchasing government bonds and other instruments held by banks and other institutions.

The Nigerian stock market is falling. CBN and others should be planning how they might intervene to prevent a potential run on the stock market. Potential measures include expanding Quantitative Easing to enable the Central Bank to purchase strategically important instruments trading in the stock market and instituting a moratorium on margin calls.

7. EXCHANGE RATE: The Corona crisis will shrink the inflow of dollars. Hopefully, this is temporary, no more than a few months. CBN can allow some downward pressure on the naira without energetically intervening to defend the exchange rate. Only if and when the rate seems that it might dip precipitously should the CBN intervene.

The Bank may want to revisit its decision prohibiting non-institutional Nigerian dollar holders from participation in Open Market Operations. Greater leniency will bring more dollars into the CBN.

*DEBT SUSPENSION: If economic trouble does come, government must be willing to freeze payment of certain consumer-related private debts. Evictions, foreclosure and light and water cut-offs might have to be suspended. Suspension or partial reduction of payment of school fees for our most indigent families must be considered (that is when schools reopen) while government offers temporary support to the schools themselves.

*INCREASE STIPENDS TO THE POOR: We must be ready to increase stipends to the poor. We do this by widening the net, substantially increasing the number of recipients of anti-poverty stipends.

“In conclusion, I proffer these measures not as some comprehensive solution.

” I hope these ideas spark needed dialogue about the ways we may need to employ to protect our nation from assault by the coronavirus.

“I do not know if such a confrontation shall come.

“What I do know is that wise preparation will carry us close to victory.

“Unity, compassion and brave implementation of good policy will take us the rest of the way home”.

“We shall not go down. We shall rise”, he said.

A civil rights advocacy group, Human Rights Writers Association of Nigeria (HURIWA), has also called on the Federal Government and the Governors of the 36 states of the federation and the Minister of Federal Capital Territory to roll out concrete and sustainable economic growth and stimulus package for small and medium scale entrepreneurs to mitigate the effects of the prolonged shut down of economic activities following the sudden spike in the Coronavirus pandemic in the country.

HURIWA said if nothing by way of social welfare reliefs for the poor and elderly are provided immediately for the over 90 million absolutely poor Nigerians, it will mean that the current administration is simply sending the poor population to stay at home and die even before a cure for the Coronavirus pandemic is found in the coming days.

“We condemn the lackadaisical attitudes of state governors to combat the spread of the Coronavirus pandemic and their failure to make life meaningful for their citizens who are expected to stay at home for a long period of time pending the finding of solution to the health emergency currently ravaging Nigeria just like most parts of the world.”

Similarly, HURIWA has charged the President Buhari-led administration to also introduce and pay at least N25,000 per month to all indigent families and the elderly to enable the verifiable beneficiaries to buy and stock essential foodstuffs and other pharmaceutical products such as hand sanitizers; hand gloves and face masks since they have been asked by the government to stay at home for an undetermined period of time pending the end of the spread of the Coronavirus pandemic in Nigeria.

HURIWA argued that by law the poor people of Nigeria are to be cared for by the government of the Federal Republic of Nigeria and the governments of the 36 states of the federation and the Minister of the Federal Capital Territory under the social safety nets provided for in section 16 of the Nigerian constitution.

The rights group also affirmed that “Social safety nets evidentially have played significant roles to augment the sustenance of the very poorest of the poor and help the people to escape extreme poverty. In these times of emergencies such as the Coronavirus, the Nigerian government must activate effective social safety nets for the benefits of actual population of the poor who have lost their means of livelihoods following the sudden shut down of economic activities following the sudden rise in the spread of the disease of Coronavirus.

“As part of the stimulus package the Nigerian Government should pay to poor households specific sums not less than N25,000 per month pending the end of Coronavirus pandemic. The state Governors and the Minister of the Federal Capital Territory are by law supposed to have rolled out series of social safety nets and cash allowances for the poorest of the poor even as the process of distributing these resources and relief materials must be transparent and accountable.”

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“We expect that at this time, the Federal and State Government appointees should take 75percent pay cuts so the proceeds from these savings can be used to combat the Coronavirus pandemic in country and the payment of wages to the civil servants who are on the employment roll call of the Federal Government and the states,” it said.