Nigeria needs government initiatives worth at least N10.1 trillion to tackle the Coronavirus pandemic fallout.
During the virtual dialog organized by the Ministry of Finance, Budget and National Planning and the Department for Internal Development (DFID), the chief executive of the Nigerian Economic Summit Group (NESG), Jaiyeola Laoye, reported this.
Nigeria ‘s involvement has been measured at N4.5 trillion (3.1 per cent of GDP) since the start of the pandemic, Laoye said. This includes contributions from the Nigerian Central Bank (CBN), fiscal authorities and donations.
According to the NESG chief, in view of the sluggish and fragile development with over 100 million people living in poverty, Nigeria needs N10.1 trillion (seven per cent of GDP) of investments to boost the economy.
According to him, other reasons for the measures are to revamp the economy, tackle the high rate of unemployment / underemployment at 43.3%; the extent of decline in the health sector and the dominance of informal micro , small and medium-sized enterprises, which are in desperate need of help.
However, he cautioned that “the substantial rise in domestic debt also results in higher payments of domestic interest, which is harmful to the private sector.”
Another choice to close the gap, he pointed out, is for the government to “secure loans from multilateral institutions such as the World Bank, IMF, IFC and AfDB (external borrowing).” In this case, he noted: “Nigeria will have to pursue some conditionality that may have unpalatable consequences for socio-economic stability, especially at this time.”
Another step to close the gap is for the government to “consider buying government securities (Quantitative Easing, QE), Laoye said. The assumption is that quantitative easing will also deteriorate the stability of the exchange rate and raise inflation pressure.
He said the structured private sector, which includes households and enterprises, has some government perceptions of how the intervention is handled. These include “transparency of programs and activities by governments. We will ensure that the programs of the federal and state governments meet the businesses and households impacted across the country.
“The need for government to provide the private sector and people with regular reports on how much has been disbursed, the number of beneficiaries, their industries, the position and the amount of interventions provided,” Laoye said.
“The private sector is also demanding that the government ensure that ‘business support in targeted sectors leverages technology and includes informal players. In particular, government initiatives will include loan guarantee programs to promote development as well as subsidies for income security to employees whose employers are unable to pay their salaries.
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