On Monday, 11th June, the chairman of the Economic Sustainability Committee (ESC), Vice President Yemi Osinbajo presented the much awaited Nigeria Economic Sustainability Plan (ESP) to President Muhammadu Buhari.
As part of the highlights of the report, it is noted that Nigeria will be facing an economic recession whichever way the fallout of the COVID-19 pandemic results in nationally.
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The Osinbajo committee came up with a couple of recommendations split into about four optional directions for the Federal Government to take.
What It Means: In view of the possible outcomes of the stimulus plan, the VP’s committee projected four scenarios as follows:
- If no stimulus is applied to the economy, there will be a decline by minus 4.40% at best
- If a stimulus of N500 billion is injected into the economy, the economy will decline by just minus 1.94%
- A stimulus of N2.3 trillion will stabilize economic decline to about minus 0.59%”
- A N3.6 trillion stimulus will imply that there will only be a negative growth of only -0.42%.
In all four scenarios, recession was projected to be inevitable, albeit in varying degrees of stimulus applied.
The VP’s team recommended to the president that scenario three be adopted, with funds “from N500bn from Special Accounts, N1.11 trillion of CBN structured lending and N302.9bn from other funding sources”
As the third option in the plan – involving a N3.6 trillion stimulus fund – appears to have been adopted, some of the target milestones which are expected to be reached within the next 3 to 12 months are highlighted below;
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- Create 10.12 million jobs in one year;
- N50bn Survival Fund For SMEs;
- ‘Nigeria Air’ and Aviation Bailout;
- Expand NHIS To Cover The Poorest; and
- Zero Interest Loans and Debt Relief.
The Implications: It appears that consequent upon the heavy blows which the COVID-19 pandemic has dealt the entire world economy and particularly the Nigerian economy, Nigeria may not be getting a breather anytime soon has it was just recovering from the effects of 2016 recession.
Except the suggested revival of a wasteful National Carrier, as noted above, all of the other action points should bring about a rejuvenation of the economy right from the grassroots.
Also, with the massive Quantitative Easing (QE) which involves the massive printing of up to N1.11 trillion in Naira notes to stimulate the economy, economists are already sounding the alarm that this may spur inflation as the money in circulation will be more than what the country produces per capita.
Worst of all would be that the funds for the stimulus plan be embezzled by corrupt officials in government who seem not to be having any holiday – and never reach the intended targets.
Conclusion: A lot, the safety and livelihoods, depends on the feasibility of this stimulus plan working out; else the entire nation might be dealing with a huge crisis at hand soon.
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