COVID-19 Pandemic and the likely consequences on the oil and gas sector on Nigeria: Any feasible options?

Nnaemeka Ezeani

Summary
The World Health Organization (WHO) declared Covid-19 a Pandemic late January 2020 since its initial outbreak in China a month or so. In trying to contain the spread of the virus, various governments have implemented lockdowns in all or parts of their countries almost grinding economies to a halt. The oil price has dipped into record lows and the supply glut made worse by a row between Saudi Arabia and Russia over production output. Many producers in the US have closed shop while some countries like Nigeria are struggling to find buyers of their crude oil products. Attempts by OPEC and some countries (OPEC+) to lift the price with unprecedented production cuts has necessitated a revision of the 2020 budget calculations to 1,700,000 million barrels per day and benchmark price of US$30 per barrel. So far this has not yielded much change in the price as most analysts believe the effects of the Covid-19 will last a long time.

This paper does a non-exhaustive review of the Pandemic’s effects on government revenues, and provides immediate and long term options to manage some of the consequences. For instance, apart from the production cuts resulting from the OPEC+ agreement, we make suggestions such as government providing clear guidelines on downstream deregulation and fast tracking development of natural gas sector and use of bilateral trade instruments.

1. Introduction
Since the Novel Coronavirus was discovered in Wuhan, China less than 6 months ago, Covid-19 (as called) has infected more than 3 million people, killed over 200,000 with 1,000,000+ recovered world-wide according to the John Hopkins COVID-19 dashboard (JHU, 2020). Attempts to contain the spread of the pandemic has resulted in nearly 50% lockdown of the world population including many states in Nigeria (Euronews, 2020). Industries are closed, airplanes grounded and transportation in many cities virtually at a standstill. Added to this tough effect of the pandemic on the crude oil supply chain was the spat between Saudi Arabia and Russia on production volumes.

While China claims that her businesses and industries are re-starting, many business sectors and factories have remained closed for nearly 2 months. This continues to push down world oil demand by roughly 30% and the Brent price to roughly US$29 per barrel as at April 13, 2020. This is despite OPEC+ (that is OPEC and some major producers like Russia) deal to reduce crude oil production to 9.7 million barrels per day (bpd) from May 1 and well into 2021 (Reuters, 2020). The deal also expects several other countries to reduce output as well, to achieve a total estimated cut of 19.5 million bpd. The Nigerian government has reacted by revising the 2020 budget estimates to 1.7 million barrels per day of production at US$30 per barrel in line with the proposed OPEC+ production cut proposal. Last week, key officers of the government announced a total withdrawal of government subsidies on petroleum products. Government is also providing palliatives to alleviate the economic effects of the lockdown on the citizens one of which is a N50 billion intervention fund for small and medium scale business loans.

This paper gives a non-exhaustive review of the effects of the lockdown, the crashing oil price and their consequences on the Nigerian oil and gas industry. It will also attempt to provide some suggestions to the Nigerian government on policy decisions to help the sector in the short and longer term.
2. Consequences of the pandemic and crashing oil prices
a) Supply glut and dwindling government revenues
World oil demand averaged a growth of about 1 million barrels of oil equivalent per day (MBOE/day) between 1971 and 2019 with various sharp rises and falls in oil price, the latest before now being between 2014 and 2016. Oil is Nigeria’s top foreign exchange earner and contributes nearly 90% in revenues to the government. As one of the leading producers (number 4 within the OPEC group and 11th in the world), Nigeria has both benefited and felt the adverse effects of these oil price cycles. Substantial savings where made into the Excess Crude Account (ECA) during surplus which stands at only about US$71 million today (Daily Trust Newspaper, 2020). The country now faces not just a direct loss of revenue from oil that will lead the country into a recession, it may also be forced to another devaluation of the Naira as it runs out of foreign cash reserves. The lockdown will also impact negatively in the projected earnings from local taxes set for the Federal Inland Revenue Service (FIRS) as businesses citizens will be on lockdown for most of March and April.

Figure 1: Oil price fluctuation since 1970 (Kumar & Bello, 2020)
Nigeria and the rest of the world are yet to fully recover from the effects of the 2014 fall in prices. With the advent of this current downfall, the world is facing a supply glut of about 2.5 MBOE/day due also to disagreements between Saudi Arabia and Russia driving prices to nearly as low as US$20. The intended price gains from the OPEC+ production cuts (with effect from May 1, 2020) have at best, so far, sent prices to US$34 appx. only for a short span. The Nigerian Minister of State for Petroleum expects prices will appreciate by US$15 in the short term potentially yielding US2.8 billion additional revenues (Punch Newspaper, 2020). However analysts suggest a price in the sub US$20s is more likely, if inventories eventually surpass 12 MBOE/day as refineries, plants remain shut; world runs out of excess storage capacity; and world economies take a long time to restart. Many analysts say the OPEC+ cut is late in coming and not deep enough and are skeptical of the discipline of the countries to adhere to the production cuts. Industry veterans such as Andrew Gould (former Chairman of Schlumberger and BG) feels this period will see the end of the influence of OPEC as a central bank of oil and prices reaching to much higher levels as seen in the past decades, gone (Financial Times, 2020).

Figure 2: World Fuels Production and Consumption (EIA, 2020)

Figure 3: World Oil demand growth by Region 2020 (OPEC, 2020)
The Nigerian oil & gas sector has had its own fair share of challenges and seen a few reforms though not as many nor as deep as been clamored for. The Nigeria government’s expectations of a US$2.8 billion export surplus may not be realistic given the situation and trend. As of March, NNPC reported that Nigeria had 50 cargoes of crude oil yet to find off-takers due to the pandemic. On April 16, referring to the glut, World Oil magazine reported that “…It’s a similar picture in West Africa, where about 20 million barrels of April-loading crude remain unsold, according to traders” (World Oil, 2020).

b) Job losses
Finally, a fallout of most oil price crashes for many producing countries are the associated job losses mainly due to cut back of projects. However, the Finance Minister stated that the federal government intends to keep most jobs in place till year end 2020 and is looking to merge the duplicated functions across its many agencies. This is laudable though it will be interesting to see how they can manage retentions given the high cost of governance and public administration in the country. On the private sector side, majority of the headcount particularly in the oil field services fall within the fast-disappearing middle class. This is a group already adversely affected by mass migration to foreign lands. The global effect stands to impact the level of remittances into the country as the migrants in different countries will struggle to stay on their feet before thinking of what to send home. In recent times, foreign remittances have almost been at the same levels of the revenue from crude oil export.

c) The unlikely positives of Covid-19 thus far
The lockdown restrictions announced by various countries in trying to either contain or suppress the effects of the spread of Covid-19 has resulted in reduced movements of people and closedown of factories. Charts show that Covid-19 has made the world quiet, not only by social distancing but also seismically. Scientists are now studying these charts of world’s “quietest” period to see if they can help to predict and manage movements of people in future crises (National Geographic, 2020).

Another positive consequence is that many parts of the world have recorded drastic falls in air pollution including lower carbon and nitrogen oxide emission levels. Carbon emission in China was down by an estimated 18% between March and April 2020 while the total drop in the EU by year end may reach 400 million metric tons, about 9% of its 2020 cumulative target (National Geographic, 2020). Many residents of Lagos have even jokingly commented they never realized it was home to as many birds as they now hear at dawn. However experts have warned that the benefits of these drops in air pollution may add little to the long term solution for climate change. Other experts argue that less pollution is always good for the environment. The situation does offer government the opportunity for more urgent reviews of workday patterns in some of our crowded cities to reduce pollution. There are now many alternatives for remote engagements offered by new digital technologies.
3. What are government’s feasible options for the oil & gas sector?
In addition to the actions taken by government, below are some immediate and longer term suggestions that it may pursue to protect the sector and maintain its contributions to the country’s economic development.

a) Pragmatism, consistency and transparency in intentions and actions
Many Presidents and countries have likened this pandemic to a war. If indeed it is to be treated as a war, the need for discipline, frugality and transparency in actions and spending is now more apparent and urgently called for. Messages going out from government at these times must be consistent and sincere to reaffirm public trust. In one news report, the NNPC GMD said they are working to increase crude oil production to 3 million barrels per day, reducing the cost per barrel to US$17 yet said there were still 50 cargoes of crude stock looking for landing (The Guardian Newspaper, 2020). Plans to increase production, if indeed they exist, must be reviewed cautiously. The economic slowdown will last not a short time hence efforts into growing production should be channeled into other areas. Government, her agencies including the legislature must avoid hasty yet unnecessarily delayed and unclear directives. The intent to promote made-in-Nigeria goods must be exemplified by the same people in government who advocate for it. This is a time for practicing what you preach. There is still a lot of waste in process hurdles and bureaucracy in the oil & gas sector which create room for corruption. It is worth noting that there have been positive changes in recent years, however, in extraordinary circumstances as we are currently experiencing, are opportunities for few people to unlawfully enrich themselves. This must be avoided.

b) Deregulation of the downstream and removal of petroleum subsidies
Two pronouncements made by the NNPC Group Management Director and the Hon. Minister of Finance respectively stated that all subsidies towards the pump price of fuel have been removed. About 99% of petroleum products are imported by the NNPC and consumer price determined by the Petroleum Product Pricing Regulatory Authority (PPPRA). In March, government reduced the petrol prices as a fallout of the oil price crash, first to N125 then to N123.50 from N145. The PPPRA pricing template released in March 2020 showed the Landing Cost was N115.52 while the Expected Open Market Price (EOMP) was N134.89 after adding Total Distribution Margins of N19.37 (PPPRA, 2020). The PPPRA reconfirmed N123.50 and N125 as the petrol pricing range for April (PPPRA, 2020). So far government has not made clear if the subsidy removal is a policy change. Comparing the prices in the released pricing template with the recommended pump prices, there is difference of N9.89 between the EOMP and the N125 upper boundary price. It is unclear who is incurring this cost. Does this imply the existence of a subsidy for the month of April? While subsidy removal is a welcome move by the government, it is better if clarity is provided on the details and how it intends to reallocate or redirect the savings (if any). As at today, only 1 of the 27 active approved licenses for refineries is operational (DPR, 2018). In addition, the proposed start date of early 2021 for the Dangote Refinery may be at risk given the current state of things. This is a good opportunity to begin the much needed deregulation of this section of the downstream to improve the local refining capacity in Nigeria. It will speed up investment and commitments by investors once they know the ready local market for their products is available to compete for. And there is still the regional market to expand into for them. A clear policy direction on the subsidy and deregulation is required.

c) Reviewing costs of oil production
A 2016 analysis of costs of production per barrel estimates Nigeria’s average cost of production at about US$29 barrel of oil equivalent with a huge component being the capital spend. The NNPC Managing Director in a Central Bank round table said the organization is putting actions in place to bring down the production costs from US$15-17 per barrel (The Guardian Newspaper, 2020). He did not reveal what those actions are. The Finance Minister in another interview mentioned US$25 as the average cost per barrel for Nigeria currently. Putting aside the contradiction between the two statements there is still a challenge towards achieving a reduction in production costs that will yield an immediate export surplus. Need for huge security expenditure and unclear taxation structure at various stages and levels drive the production costs up. Some of these were intended to be addressed by the Petroleum Industry Governance Bill (PIGB) now at a stalemate between the presidency and the legislature. There are unconfirmed reports that operating companies had been hastily directed to cut their 2020 budgets by 40% as far back as early March 2020. While a 100% compliance may be not be easily achieved but any reasonable reductions will help. Hasty decisions often hurt. A downside will be cuts affecting operating expenditure leading to loss of jobs and of course taxes. Companies, regulators (NAPIMS, DPR) and investors must be pragmatic in the technical and business selection of projects they will chose to execute and assume near zero margins for error. Targeting low cost producing fields and those wells that require minimal intervention to flow and with minimal security risk is advised. Use of highly competent skills and tight governance systems to reduce error margins in decisions and protect leakages is a must at this time. Many of the indigenous producers are already quite leveraged and this is also an opportunity to encourage them into forms of consolidation by the government.

Figure 4: Cost of BOE of Countries (Knoema, 2016)
d) Economic diversification and improved GDP contribution from oil & gas
The present government has made expansion and diversification of the economy from oil production one of its top priorities. Nigeria’s contribution of oil to gross domestic product (GDP) is much lower compared to other OPEC members and is only less than 10% (NBS, Q1 2019). While attempts to diversify the economy must be encouraged, the oil and gas sector can still be the catalyst for the growth of other sectors particularly industrial manufacturing and power generation. GDP contribution from oil remain low for many reasons but mostly due to the fact that most of the oil is exported while only 15-20% is traded and used locally. In addition majority of the top producers are all International Oil Companies (IOCs) hence an average of 40% of the revenues and proceeds from sales is external based. Between the local producers total daily production may not be not more than 200,000 barrels per day, another challenge going forward with tightening of budgets and disappearing access to the levels of cash investments the oil industry demands. Domestic cooking gas utilization is reported to be less than 40% across the country. The local content act of 2010 encouraged domestication of some services but there is still a long way to go. The Nigerian Gas Policy of 2017 was another welcome development and has seen the progress of some projects such as the Assa North-Ohaji South (ANOH) joint venture between the Nigerian Gas Company and Seplat. The NNPC must push the drive towards increased domestic gas market expansion and utilization. This will also reduce gas flaring and promote use of cleaner energy resource. If possible, NNPC should seek to progress the 614km Ajaokuta-Kaduna-Kano gas pipeline (part of the Trans Sahara Gas Pipeline Project) without additional burden on the country. This is a good time for the presidency to get all other stakeholders including the legislative houses to collectively review their concerns on the PIGB with a view towards passing it into law. Post Covid-19, access to investment capital from both internal and foreign sources will be very limited and more selective than before. Carrying on the uncertainty created by the PIGB impasse will not be to Nigeria’s benefit.

e) Review of existing bilateral trade agreements and opportunities for new ones:
While many of the trade agreements signed by Nigeria with other countries had been intended to promote export of other products other than oil, the truth is that crude oil continued to dominate exports to these countries and regions (Business Day, 2020). Now is the time to effectively use these agreements for the purposes of promoting the sale of Nigeria’s oil till the other sectors are ready. Trade of much needed medical equipment and medicines in exchange of crude oil should be explored. Unless government is able to secure agreements through bilateral discussions with its top trading partners, the challenge of finding ready off-takers of export crude cargoes may continue. Interestingly most of Nigeria’s top trading countries are some of the countries heavily affected by the Covid-19 pandemic and its economic consequences. These include China, India, United States of America, Spain, Netherlands, Belgium, Germany, United Kingdom and Italy. Nigeria’s core oil & gas sector activities may still be in a better position than most if the suppression strategies to “flatten the infection curve” remain successful by the time economic activities in these countries restart, overstock conditions notwithstanding.

f) Secure current production and facilities we have
At the moment it is difficult to estimate how much world market share Nigeria is able to secure for the rest of 2020. However adequate arrangements must be in place to contain the effects of Covid-19 and potential security challenges to avoid unplanned interruptions in production. More sincere efforts have to be made to curb the illegal bunkering and refining in the country as well as reduce the occasions of oil spills. Production facilities are prone to security attacks when oil communities become restive due to prolonged economic discomforts as these times. There should be Covid-19 testing centers well equipped with kits and PPEs as close as possible to the oil terminals and clear logistic agreements for evacuations with all stakeholders involved.
4. Conclusion
Covid-19 pandemic continues to ravage the health and welfare of countries and their citizens. The slowdown in economic life has affected all sectors including a drastic fall in the world price of Nigeria’s primary export, crude oil. The government has adjusted it 2020 budgets with the hope that a deal between OPEC and other producing countries to cut production will sure up the price. However prices have not reacted as expected. Oil stock inventories continue to grow due to lockdowns across major buying countries.

This paper has reviewed direct consequences of the pandemic and the oil price crash and provided additional strategies to those steps taken by government to withstand the impact on the sector. It makes suggestions for policy reviews on topics like petrol subsidies and pursuit for focused bilateral discussions with trade partners.

Nigeria like the rest of the world is in a war with an unseen enemy. It is also in a race, with the rest of the world. A race that her antecedents have made her badly equipped to run. However, history has proven that necessity is the mother of many good inventions.

5. References
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Daily Trust Newspaper. (2020, March 10). How Excess Crude Account was depleted to $71.8m in 2020 – Accountant General. Retrieved from https://www.dailytrust.com.ng/how-excess-crude-account-was-depleted-to-71-8m-in-2020-accountant-general.html#
DPR. (2018, April). REFINERY-STATUS-UPDATE. Retrieved from DPR Portal: https://www.dpr.gov.ng/wp-content/uploads/2018/04/REFINERY-STATUS-UPDATE-APRIL-23-2018.pdf
EIA. (2020, April 7). SHORT-TERM ENERGY OUTLOOK. Retrieved from https://www.eia.gov/outlooks/steo/report/global_oil.php
Euronews. (2020, April). Coronavirus: Half of humanity now on lockdown as 90 countries call for confinement. Retrieved from https://www.euronews.com/2020/04/02/coronavirus-in-europe-spain-s-death-toll-hits-10-000-after-record-950-new-deaths-in-24-hou
Financial Times. (2020, April). Opec has ‘disappeared’, says oil veteran Andrew Gould. Retrieved from https://www.ft.com/content/2c62e879-6093-482a-9d0d-e18edb45ab9d
JHU. (2020, April). Retrieved from John Hopkins Coronavirus Resource Center: https://coronavirus.jhu.edu/map.html
Knoema. (2016, October). Cost of Crude Oil Production by Country and Crude Oil Prices. Retrieved from https://knoema.com/nolsgce/cost-of-crude-oil-production-by-country-and-crude-oil-prices
Kumar, H., & Bello, R. (2020, April). Oil Price Plunge 2020: 50-year context, current state and expectations. USA.
National Geographic. (2020, April). Coronavirus-causing-carbon-emissions-to-fall-but-not-for-long. Retrieved from https://www.nationalgeographic.com/science/2020/04/coronavirus-causing-carbon-emissions-to-fall-but-not-for-long/
National Geographic. (2020, April). Coronavirus-is-quieting-the-world-seismic-data-shows. Retrieved from https://www.nationalgeographic.com/science/2020/04/coronavirus-is-quieting-the-world-seismic-data-shows/
NBS. (Q1 2019). Nigerian Gross Domestic Product Report. Abuja: National Bureau of Statistics. Retrieved from https://nigerianstat.gov.ng/download/937
OPEC. (2020). OPEC Monthly Oil Market Report – March 2020. Vienna: OPEC MOMR.
PPPRA. (2020, April 1). Clarification on Premium Motor Spirit (PMS) Guiding Price Band for the month of April 2020. Retrieved from http://pppra.gov.ng/clarification-on-premium-motor-spirit-pms-guiding-price-band-for-the-month-of-april-2020/
PPRA. (2020, March 10). Petroleum Products Pricing Template for 6th March, 2020 PMS. Retrieved from http://pppra.gov.ng/petroleum-products-pricing-template-for-6th-march-2020-pms/
Punch Newspaper. (2020, April` 10). UPDATED: breaking-nigeria-joins-opec-to-cut-crude-oil-production. Retrieved from https://punchng.com/breaking-nigeria-joins-opec-to-cut-crude-oil-production/
Reuters. (2020, April). Explainer: Big cuts in oil production from OPEC and others. Retrieved from https://www.reuters.com/article/us-global-oil-opec-cuts-explainer/explainer-big-cuts-in-oil-production-from-opec-and-others-idUSKCN21V1I0
The Guardian Newspaper. (2020, March 12). NNPC to reduce cost of crude oil production from $17. Retrieved from https://guardian.ng/business-services/nnpc-to-reduce-cost-of-crude-oil-production-from-17/
The Guardian Newspaper. (2020, March 12). NNPC to reduce cost of crude oil production from $17. Retrieved from https://guardian.ng/business-services/nnpc-to-reduce-cost-of-crude-oil-production-from-17/
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Image Source:Worldbank Group

Managing the Nigerian Economy Post COVID-19

A Policy Brief written by Professor Osita Ogbu

Abstract
The Nigerian economy was in dire straits before COVID-19. The pandemic could tip it over if the right policies and structural reforms are not urgently and diligently implemented. The pandemic has exposed the weaknesses in our health system, from the primary to the tertiary, requiring a needs assessment on both the physical and human infrastructure for addressing the gaps. To address these gaps, a novel and inward-looking approaches would be appropriate given the inevitable contraction of public expenditures, across board, going forward. Such novel approaches would rely on our research institutions and NAFDAC to accelerate pharmaceutical research and innovation towards creating a vibrant pharmaceutical manufacturing sub-sector. This has job-creation implications and would, importantly, stem self-doubt and knowledge dependence and could easily spill over to other sectors. The Federal government must work collaboratively with the state governments to urgently address primary health care issues, but the onus is on the state governments to address the gaps that have hindered their access to the Basic Health Fund. Development partners support can be coordinated towards improving the health system in Nigeria. The huge question for the economy is how to engineer reasonable inclusive growth under uncertainty, given both supply and demand shocks and the absence of fiscal space. To address the twin shocks, Nigeria has to switch expenditure to domestic produced goods and direct its lean resources to infrastructure for production. In this respect, two productive sectors are critical: agriculture and manufacturing. Agriculture requires commercialization and scaling up to allow for the infusion of technology that would raise productivity. This requires a clear understanding that agriculture is science-led. Nigeria needs to restore a private sector-led Marketing Boards. The manufacturing gap in Nigeria has been the major source of her increasing poverty profile. Both agriculture and manufacturing in Nigeria and in any developing country, face constraints in the demand for and supply of technology, requiring creative government intervention. Such interventions would include a focused and strategic use of prominent economic and financial institutions of government. The governments at both levels have a role in encouraging foreign and domestic investments in the manufacturing sector that links strongly to the agricultural sector and to institute a regime that monitors and enforces local content, job creation, skills and technology transfer. Economic resilience will occur when Nigeria engineers a competitive federation where state governments recognize that they have a responsibility for generating and distributing prosperity. A post COVID-19 economy is an economy without oil. This will require a mindset shift in both governance and politics; a lean, intelligent, and efficient government and responsible citizenship that is acknowledge and ready to play her role.


1. Introduction
The Nigerian economy was already facing serious economic and developmental challenges before COVID-19. Coming out of recession and growing at 2.1% against the population growth rate of 2.6 %, the situation was dire with implications for a lower per capita income and reduced average standard of living. Inclusive growth has eluded Nigeria even when growth rates were in the range of 6-7% largely due to the sources of growth. The oil sector being dominant. The absence of intelligent, robust programs and plans of government (at all levels) which align public expenditures to effective delivery of infrastructure and social services, and provide direction to the private sector is a major contributor. A focus on short-term and partial measures meant that critical foundations for improving productivity across all the productive sectors were neglected and job-focused industrialization was not prioritized. With low productivity, real incomes were declining, and poverty was worsening. Nigeria’s output per worker according to a 2014 Mckinsey report is 57% less than the average of seven large developing countries. The government agricultural policy of putting more people and more land under cultivation, the policy of extensification instead of intensification, underscores the absence of basic understanding that what is required is how to improve yield per acre and per capita food production. In the words of the former Prime Minister of Israel, Shimon Peres, “Agriculture is 95% science and 5% labor”. This fact is often lost on our policymakers who are often not problem-solving oriented. This low productivity across sectors especially in agriculture will become a defining issue in the management of a post COVID-19 economy.
Nigeria’s urbanization has been somewhat a-typical because rather than contribute to raising productivity, it has contributed to its low productivity trajectory because urbanization has not followed industrialization. Most of the urban dwellers in Nigeria are underemployed and many eke out a living in the informal sector. There is a huge cost to informality. Increasing informality has negative consequences for GDP per capita growth. With this informality increasing and encouraged through programs like Trader-moni, the likelihood of the emergence of a structured small and medium business outfits with access to capital and potential for innovation, job creation, productivity and tax revenue diminishes. The absence of an urban-based manufacturing sector is a major factor contributing to Nigeria’s increasing poverty. The strategy for formalizing the informal sector into medium enterprises and in supporting the emergence of a more robust manufacturing sector would be critical for a prosperous and resilient post COVID-19 Nigerian economy.
The government sector was already undergoing serious stress before COVID-19. The over-reliance on oil revenue often makes both national and states budgets precarious and unimplementable. Yet, the budget is ordinarily a major instrument for managing the economy and serves as a signpost to the private sector and international business as to the direction of government policies. There is very little fiscal space because debt service is now over 60% of total revenue and the Excess Crude Account – savings for the rainy day- has been drawn down. The Federal Inland Revenue Service projected tax revenue of over 8.5trillion Naira is now but a mirage. The crash of oil price from about $65 a barrel to under $30 has invalidated the budgets of Federal and State governments. This is also coming at a time the government has implemented the minimum wage act. With very little room for borrowing, now is the time for a truly homegrown structural adjustment and an opportunity to construct an economy without oil. It would require institutional and policy coordination, rationalization of public assets and strict accountability, all of which Nigeria is not practiced at. This is no time for partial solutions or partisanship. But this will require discipline, capacity, political will, transparency and the bridging of the existing trust-deficit.

2. Managing the Post Pandemic Economy and the Opportunities

Two major areas of immediate and long-term concern:
1. Health
2. Economy
2a. Health
COVID-19 has exposed how fragile and weak our health institutions and systems are both at the national and sub-national levels. The reliance on foreign treatment by the elite has shielded them from the true picture of things. President Buhari missed an opportunity to be a champion of homegrown robust health infrastructure when he returned from a 100-day treatment abroad. He could have tapped into the national sentiment and sympathy to engineer a public-private sector partnership that would have given Nigeria one or two world class hospitals. This Pandemic has provided another opportunity for the President to initiate and engineer this, tapping into domestic philanthropy, the newfound interest of high net worth individuals in providing health care facilities, the business community and Nigeria’s medical Diaspora. But more importantly, the States must be incentivized by the Federal government to come up with plans to revitalize the public health sector within their domains. These plans will of necessity place great emphasis on public health, public health education, nutrition and the management of infectious diseases with the appropriate expertise and infrastructure. The same PPP arrangements can be replicated in the States given that the economy would not able to support huge public expenditures at this time. COVID-19 pandemic and the ensuing economic crisis present State governments an opportunity to initiate state health insurance programs, especially for the poor and elderly. This would require that the Primary Healthcare Centers in the states are re-engineered and supported to meet the criteria for accessing the fund under the Basic Health Care Provision Fund established under section 11 of the National Health Act of 2014. A number of the States are currently ill-prepared to access the funds under the provision of the act. It must be recognized that before COVID-19, Nigeria has had serious Hygiene and sanitation challenges and internal epidemics of Malaria, TB, malnutrition, maternal mortality, Lassa fever still rage. Other challenges include limited access to quality care, poor service delivery and the ongoing brain drain. These challenges would remain and could get worse post COVID-19, requiring a multi-sectoral strategic approach and significant State-level efforts in coordinating both Federal, private sector and Donor assistance.
The Federal government should adopt a strategic approach with international development partners, given that donor resources would also decline. This is the time when donor coordination will have greater utility. The Federal government, the Ministry of National Planning, should produce a plan for the health sector across the states or regions that donors can key into. Donors want to be coordinated. But they want to be coordinated intelligently, purposefully, and transparently. This is the time to guide and focus their contribution and an opportunity to re-engineer Nigeria’s donor relationships. It would make sense if this is led at the highest level of government.
One critical area that Nigeria should exploit and invest in post COVID-19 is in pharmaceutical research and innovation with emphasis in translating inventions to innovations. This brokerage role of translating the products of research into products in the market can be played by government institutions such as the Ministry of Science and Technology in the absence of venture capital. There are pharmaceutical research centers and faculties of pharmacy in Nigerian universities. But they lack research support. But more importantly, they don’t get the stimulus that comes from political leadership. Yet, this leadership is critical in promoting innovation in any developing country. Some of the COVID-19 resources should be directed to some selected institutions and coordinated to work collaboratively towards producing drugs that could address COVID-19 and other diseases that are prevalent in our society. Our dependence on foreign importation of drugs limits access and cannot be sustained over the long run. There are many drugs produced from our herbs in the market with NAFDAC numbers but with a disclaimer that the efficacy of these drugs has not been verified. This is the time to equip NAFDAC and the universities to begin to verify and authenticate the safety and efficacy of these drugs. This is a worthwhile investment that would go a long way in breaking down self-doubt and knowledge dependence.

2b. Economy
Here are some of the challenges Nigeria must contend with:
(1) Pronounced Economic Nationalism around the globe– my nation and my people first.
(2) Pandemic and its aftermath
(3) Limited fiscal space and economic uncertainty
(4) Absence of Sympathy Credit – this is a Pandemic and not a national or regional epidemic
(5) Significant reduction in foreign direct investment (especially in Nigeria’s oil and gas sector)
(6) Significant reduction in immigrant remittances (now at over $15 billion per annum) due to unemployment. This could worsen Nigeria’s poverty profile, especially in the South.
(7) Both demand and supply shocks. Demand shock will reduce domestic and foreign consumption. The supply shock will affect Nigeria’s supply chain especially that of critical imports from China and other sources – especially capital goods and raw materials.
(8) No growth or recession

The countries that would rebound and prosper post COVID-19 are countries that are creating and producing things. We are describing a transforming economy; an innovation economy. The dominance of the service sector in our economy weakens the resilience of the Nigerian economy. It has made Nigeria import dependent with a huge wholesale and retail sector that contributes significantly to this import dependence. We need to switch the expenditure of the significant middle class from foreign made goods to locally produced goods. But we must produce the goods at home first. How can we engineer inclusive growth under economic uncertainty? Two sectors are critical in this respect: Agriculture and Manufacturing. Both the Federal and state governments must be entrepreneurial in their intervention in the sectors and should use the academia and the private sector to meet capacity gaps.
Agriculture:
There have been some significant steps taken with respect to the transformation of the Agricultural sector and in reducing food imports. The fertilizer policy of reaching the farmers directly is well thought-out. But to transform Agriculture is to raise agricultural productivity significantly. That has not happened. It will not happen for as long as Nigeria’s agricultural policy has not recognized nor invested in the knowledge and technology required to raise productivity in agriculture. The Universities of Agriculture are not seen as centers of solutions and the Agricultural Research Institutes play very little role in the agricultural policy landscape. Nigeria needs to alter the current knowledge generation-knowledge transfer infrastructure in the agricultural sector. But science-led agriculture would require specialization, scaling-up and commercialization, treating agriculture as business. Currently, 70% of Nigeria’s cultivated land is in the form of small holding with less than 2 hectares per farmer. This is a major constraint with respect to the scaling-up of technological adoption. But both technology supply and demand face significant non-technological constraints that affect access and profitability. The resolution of these constraints would require the intervention and critical thinking on the part of government. A focused and strategic use of government’s economic and financial institutions such as Bank of Industry, NEXIM, Bank of Agriculture, Raw Material Research and Development Council and others will be critical here. In order to take agriculture to the next level and produce at an internationally competitive level, the following should happen:
 Organize knowledge generating and knowledge transfer institutions regionally around key crops of the regions. The Universities of Agriculture and agricultural research institutes should be mandated to lead in knowledge generation and transfer in their catchment areas. States need to retrain and deploy knowledge extension workers.
 Scale-up and Commercialize agriculture by providing incentives and inviting both local and international businessmen/ women to participate (key crops can be identified). Scaling-up and commercialization are important in reducing rural unemployment and improving rural income, hence improved demand for domestic manufactured goods.
 States and Regions should have Agricultural rejuvenation plans with appropriate incentives.
 Federal and State Governments should bring back the Marketing Boards. These new Boards constructed under the PPP must be private sector led. The traditional roles of the Board -quality control, knowledge transfer, price stability etc. are critical now.
 Investment in Post-harvest technology and cold storage facilities and linking them to the export processing zones and the Marketing Boards. Again, the Private sector can become active players here.
 There should be a major plan to link agriculture to manufacturing more aggressively

Manufacturing
To build resilience, address unemployment and poverty, Nigeria must take advantage of a Post COVID-19 economy to increase manufacturing sector contribution to GDP, from about 10 % to 30-40 %. No country has ever taking millions out of poverty without a robust manufacturing sector. The Asian economic transformation bears this out . The technological dynamism in the sector raises productivity, raises wages and income and hence leads to poverty reduction. But there cannot be robust manufacturing sector that is innovative without active government support and intermediation. I would like to suggest the following:
 The Ministry of Industry must be at par with the Ministry of Agriculture in terms of budget allocation and status. Some of the budget allocation would come in handy in the resolution of first-mover disadvantages, for bridging infrastructural gaps and aggressive acquisition of “settled” technology – those mostly in the public domain that requires licensing etc. China’s rapid industrialization came with the exploitation of these “settled” technology.
 These technologies if appropriately appropriated can spur rapid industrial output in the industrial clusters of Aba, Nnewi, Lagos, Ogun state and those incipient all across Nigeria yearning for government support.
 Coordination failure is a major issue in the conduct of the public sector in Nigeria -Given limited resources, institutions such as the Bank of Industry, NEXIM Bank, Bank of Agriculture, Nigerian Export Promotion Council (NEPC), Raw Material Research and Development Council must bring their assets and resources to promote selected key import substitution products. The mandate of the institutions must be coordinated and synergized towards identified industrial production goals. The Central Bank of Nigeria would be required to invest its surplus in the manufacturing plan of the Federal government.
 The Export processing zones needs to be reactivated and made to play a pivotal role in boosting the manufacturing sector. They can serve as enclaves and islands of infrastructure sufficiency for production of goods with huge domestic demand and export potential. Their leadership must be appropriate and accountable.
 Nigeria must take advantage of the supply disruption in China and encourage Chinese investors to invest here with a program of incentives. But these investments must be on agreed terms that include a strict enforcement of technology transfer, skills-upgrading and domestic job-creation with timelines. The idea is that Nigeria must move from made in Nigeria to made by Nigerians over a specified period. This can only happen with a disciplined, committed and capable government. This attitude of government would be the same for any other foreign investor attracted to boost the manufacturing sector. The effort of the government must be supplemented by a carefully selected committee of knowledgeable individuals from both the academy and the private sector to monitor implementation and delivery.
 Increasing domestic demand for locally produced goods will require strict enforcement of local content in contracting at all levels of governments. And governments must lead in patronizing made in Nigeria goods.
 The government must work with the private sector and state governments to invest in the technical and vocational skills and in some instances, industry specific skills. This is where the polytechnics and engineering schools can become useful in training skilled factory hands. As a matter of State Policy, technical and vocational schools and selected manufacturing engineering disciplines should be offered with full scholarship.
 Post COVID-19, the National Economic Council must be a council for how to generate jobs, raise productivity, create wealth and prosperity. States must be seen as centers of prosperity – with plans on how to transform the many natural resources of the states into manufactured goods. States can act alone but they can also present regional plans that the Federal government can incentivize.
 Some of our High Net Worth Individuals (HNWI) should be encouraged to shift some of their resources from the service sector to the manufacturing sector with the Federal Government as the major partner and broker. There is currently a preponderance of investments in education and financial institutions by the HNWI.
 Government must maintain policy consistency and use smart subsidies such as insurance and guarantees to promote manufacturing provided it is not done in a reckless manner.

Conclusion: Governance and the People
These two sectors will lead Nigeria’s structural change if these appropriate policies are implemented diligently. But a lot more would be required from the government sector in terms of a lean and efficient state going forward; policy and institutional coordination that addresses deep-rooted coordination failure; non-partisan capacity augmentation from the academia, research institutes and the private sector; and an acknowledgement that State governments must be held responsible for creating and spreading prosperity in their domain which makes a competitive federation an imperative. A post COVID-19 Nigerian economy is an economy without oil. It will require a major shift in mindset at the level of political leadership and citizenry to adjust to the new reality. The quality of governance and management of the economy at the State level will be key to resilience. A major re-orientation is required to instill accountability and shift politics/governance away from personal gains, corruption and wastage, and to inculcate citizen responsibility across board, including payment of taxes, community effort in support of social service provision and an acceptance of a new national ethos of meritocracy.

Perspectives on the Socioeconomic Implications of the COVID-19 Pandemic on Nigerians

Calistus Korinjoh


1 Introduction

On the recommendation of WHO, China and western nations, Nigeria has adopted the suppression strategy, as opposed to the containment strategy, towards managing the health challenge posed by the Covid-19 pandemic. The resulting nationwide or partial lock-downs and social distancing as the main thrust, aim to flatten the curve of infection (reducing the rate of infections), prevent the health system from being overwhelmed, buy time for the expansion of health system facilities and extend the expected period for the discovery of a vaccine. This is clearly a time-buying arrangement. However, going forward, how this time bought is expended will lay bare the capacity of the government to reposition its citizens for a future less forgiving of poor governance.

Aside from the initial supply shock triggered by Covid-19 and the expected slump in demand which will most probably snowball into a recession, suppression as a strategy typically accelerates the externalities of its choice for health management: isolation has positive externalities for health, while for the economy, isolation has negative externalities –generally prolonging the time that the economy is not at capacity.

The strategy however appears skewed in favor of mitigating the health risks and fallout (as a dominant strategy, and compared to the alternative strategy of containment, barring the discovery of a vaccine, it essentially back-loads fatalities). Understandably, perhaps a more moral choice –socially and politically. Thus, from a health point of view the strategy is best suited for Nigeria under the circumstances, given its dismal health system which is now embarrassingly obvious to even the government. However it imposes massive socioeconomic costs on the nation, particularly given that the suppression strategy requires a well-structured welfare system and a government fiscal capacity to mitigate economic impact through welfare support programs for individuals, households and businesses. Covid-19 presents a classic policy choice dilemma.

This paper seeks to highlight some of the socioeconomic impact the Covid-19 pandemic and the adopted management strategy choice brings to bare on Nigeria.

2 THE RISK OF FURTHER LOSS OF BADLY NEEDED HEALTHCARE PERSONNEL.
The healthcare system has always been very poor and inadequate in Nigeria (poor facilities, inadequate funding, personnel shortage, etc.). However, the Covid-19 pandemic presents an urgent work environment safety problem which could lead to further reduction in personnel. Given an exponentially hazardous work environment, large numbers of health personnel could leave the sector, either switching to other occupations or where the opportunity presents its self, move offshore to climes that offer safer work environments, insurance and better remuneration. Covid-19 has informed a huge demand for medical personnel globally, with nations jostling to attract more and the best. For example the recent offer of ease of migration to medical personnel from developing countries by the US government.
Successive governments in Nigeria need to appreciate that the health of its citizens (and by extension the efficiency of its health system) is its single most important asset and this requires investing in and protection. Thus, in the immediate circumstance, a national health sector emergency needs to be declared. This would allow the government to take extraordinary steps towards the total overhaul of the sector including legislative amendments where necessary. The current structure which leaves the responsibility of primary healthcare service delivery on sub-national governments simply wouldn’t suffice. Aside from improved government funding, a framework that would encourage private sector participation is critical. For instance, the Federal Government working with the Nigerian Stock Exchange, Securities and Exchange Commission could guide a structured intervention by companies into the sector as part of the social corporate responsibility –at least during the period of the state of emergency- against the current haphazard whimsical practice.
The recent initiative in 2011 by the Nigerian government, Primary Health Care Under One Roof’ (PHCUOR) which aims to improve the performance of key PHC system functions and enable increased coverage of essential quality health series clearly holds the promise of addressing some of the challenges in the sub-sector, however, its effective implementation is bogged down by executive lethargy.

3 Suppression strategy has triggered a supply shock of produce from the farms to urban markets
Thus far, the agricultural sector has been impacted more due to the disruption of the haulage of produce from farm to urban markets as a result of lock-down measures placed on the major urban markets of Abuja, Lagos, Kano and Rivers. This supply shock though a challenge to overcome given an unstructured produce haulage system in Nigeria, can be better managed by exempting haulers from movement restriction. This exemption would eliminate (or at least reduce) the movement costs imposed at check points which eventually translate to higher prices.
Furthermore, for shorter time turn over sub-sectors like animal husbandry, aquaculture, this exemption in movement is critical for their survival.

4 Covid-19 triggered recession threatens to wipe out Nigeria’s minuscule struggling middle class

The expected recession and economic difficulties could lead to an erosion in the value of disposable incomes. As a direct effect, in the face of negative income shocks, one of the first and strongest responses of households with high marginal propensity to consume is to postpone purchase of consumer durables like cars, electronics, etc. Increase in uncertainty is also likely to have a similar effect that works via constraining demand.

Thus, the challenge here is how to preserve the value of disposable incomes. One option to consider is, key economic operators and markets need to be mobilized (particularly those that produce goods that constitute the basic demand basket of consumers) with the aim of supporting incomes through price reductions. For example, telecommunication companies (data and call costs), building construction product produces (e.g. cement), commercial banks (reduction of loan payment totals, charges, etc), can consider this kind of subsidy as against direct cash support to government. Price suppression within a basket of tangible consumables (not simply cash transfers) is perhaps a more effective way of keeping the Nigerian consumer sector alive. But, the initiative needs to come from government and not from suppliers who could then be partners in the enterprise. Also, how this interventions are structured is critical –this is why it has become difficult for the government to see through its (copycat) promise of free electricity to citizens, as Ghana has done.

Federal government loan moratorium package which includes loans extended by Federal Mortgage Bank of Nigeria (FMBN) would offer some relief, but most of the loans extended by FMBN are towards low income housing. Avast majority of middle income housing loans are by commercial banks who are yet to be mobilized to come up with an ameliorative packages.

5 Further pressure to Nigeria’s informal extended family and community based social welfare system.
Social distancing, particularly for the elderly more vulnerable possess a very challenging proposition. Fatality rate of persons aged 70 and over is 3-4 times larger than the average. Nationwide, elderly people live and are cared for by their younger relations. Care homes for the elderly is virtually nonexistent and even taboo. Thus, while Covid-19 suggests the need for specialized care facilities for the elderly, the economics and societal frame simply wouldn’t be able to accommodate it. Nigeria’s healthcare sector needs to begin to evolve towards developing an alternative: more formal structure for support of the elderly especially in urban centers. This can begin as part of the nation’s pension offering. The pension funds are large enough to support the development of this kind of structure.

6 Short to medium term occupation in Nigeria is not likely to be significantly impacted.
Given that a vast majority of the population is engaged in small holder farming activity, and the Covid-19 pandemic is coming up at the beginning of the rainy season –with infection rates and suppression measures mostly impacting the urban areas- farming activity is not likely to be significantly impacted. However, if access to urban markets continue to be a challenge, this could intensify the initial supply shock and dampen subsequent farming activities like dry season farming (Fadama) and eventually the following rainy season farming. This needs to be carefully thought through and perhaps modeled.
Seasonal occupation and occasional occupations, those engaged in sectors like construction, hospitality & catering services, whole & retail trade, and manufacturing are more direct recipients of the Covid-19 shock –given the lock-down. Aside from agriculture, which contributed about 22.12 per cent to nominal GDP in 2019, the trade and manufacturing sectors contributed 15.61 and 11.64 per cent respectively together over a quarter of the nation’s GDP .
Furthermore, aside from Agriculture, Forestry, and Fishing activities, females dominate in the top three sectors where a bulk of the population is engaged (these are, wholesale & Retail trade, repair of motor vehicles & motor cycles, manufacturing, Accommodation and food services). Though, these activities are at an informal level, robust support schemes aimed at supporting these activities would be critical in supporting the workforce and sustaining improvements recorded in female economic independence.

7 School closures will reinforce inequality among individuals, societies and nations:
The closures could disproportionately affect children from poor and low-income societies/families, and given the school feeding programme introduced in Nigeria, this could also have nutrition consequences for kids –considering that many kids receive their daily breakfast and lunch in school. The United Nations estimates, that more than 770 million learners are now being affected by school and university closures. One way to kick-start a home based e Learning program given limited resources is to utilize unspent funds of the school feeding program during the lock-down to support households to access devices. The e Learning scheme should ordinarily run simultaneously with traditional learning when normality is restored. They will still lack computers and electricity.

8 Improvements in telecommunication access and improved teledensity, positions Nigeria to reposition her economy for the now accentuated knowledge economy.
Total number of mobile phone service subscribers approximately 173.7m (active subscribes). Teledensity stands at 91% (meaning for every 10 Nigerians there are 9 active lines) . Nonetheless, bandwidth usage owing majorly to limited access to smart devices (computers, tablets, etc) remains very low. Thus, persuasive consumer finance schemes are required to bridge this gap which can potentially launch Nigeria’s domestic economy towards a knowledge driven paradigm.
Additionally, the major telcos MTN, Glo, Airtel, Etisalat, so far benefiting from improved online and communication activities, have all so far remained conspicuously silent. Given that spending on telecom services is a major component of expenditure for many Nigerians, a relief on costs would go a long way to support individuals, households and businesses.
It is encouraging to note the Federal Government’s decision to incorporate science and information technology as part of the economic recovery effort. This indicates recognition of the importance of science and technology for economic competitiveness and growth post covid-19 and a shift in development thinking.

9 Global recession will reduce inflow of ODA towards providing social intervention in critical sectors.
National planning estimates that, between 1999 and 2007, an estimated 70% of ODA intervention went to the north of Nigeria . A region that records the highest poverty incidence and pummeled by insurgency, banditry, herdsmen assaults and general insecurity. With this inflow now uncertain, the implication on human infrastructure development is expected to be massive. Nevertheless, it is also critical that Nigeria’s National Authorizing Officer (the Minister of National Planning) reviews and greatly enhances the coordination of ODA interventions to improve their effectiveness. It is noteworthy that over 50% ODA over the same period (1999-2007) went towards supporting the health sector, though the actual quality of intervention is doubtful.

10 The global economic recession triggered by Covid-19 will have adverse effects on diaspora remittances, with adverse socioeconomic effect on individuals, families and businesses in Nigeria.
Over 83% remittance inflow comes from Europe and America. A chunk of remittance receipts goes towards subsidizing living cost, supporting education, helping meet health needs. Additionally, remittances support small business start-ups. These are all now shrouded in uncertainty.
Prior to the Covid19 pandemic the CBN has pushed a policy that will ensure that all remittances are converted at official exchange rates before transmission to beneficiaries. This policy has met with stiff resistance; with diaspora individuals seeking alternative ways to send money –taking up more cost and losing money in the process. This has inhibited the flow of remittances. Under the current circumstances, the CBN may need to reconsider this policy stance vis-à-vis the cost on the economy of stifling the flow.

11 The Covid-19 triggered recession will also negatively impact Nigeria’s narrow, commodity based non-oil export trade sector.
An estimated 50% of our non-oil export goes to Europe and North America. Italy alone accounts for and estimated 18% of non-oil export –mainly hides & skin . With Italy, much of Europe and America greatly impacted by the pandemic and likely to go into recession, it is only expected that Nigeria’s non-oil export –and indeed the agricultural sector- will be negatively impacted. As an initial response the Federal Government, with strong private sector involvement could reintroduce commodity marketing boards to protect farmers from the negative impact of price and demand decline and also ensure more effective international marketing of produce. Subsequently though, at least semi processing should be the focus to enhance the value of commodities before export.

12 Conclusion
Without doubt Nigeria is headed for a recession and it could very well be relatively deeper than that of 2015. Save for smart policy choices and a more focused management of the economy by governments, the economic challenge posed by covid could snowball into much worse –a depression. Having barely emerged from a recession triggered by a collapse of crude oil prices in 2015, the emergence from a covid triggered recession wouldn’t be anytime soon.
Conceivably, the key challenge being retooling government development operations and initiatives to stimulate economic recovery and growth, without the effortless healthy streams of oil revenues. This will prove especially problematic given decades of over reliance on oil, which has engendered highly inefficient spending in both the public and private sectors. It would be like learning how to walk. Thus, Ngeria is about to be tested in ways like never before; informal social welfare systems, business models/platforms, social organisation, political arrangements. Basically Covid19 heralds a moment of truth for Nigeria.
Appendix
Summary of core message to policy makers:
• There must be appreciation that the adopted suppression strategy towards managing Covid19, is essentially a time-buying arrangement. How this time is expended is crucial and will determine who Nigeria emerges post the pandemic.

• Human infrastructure health (and education) are key pillars of socioeconomic development and growth. There must be genuine appreciation that, the health of citizens (and by extension the efficiency of the nation’s health system) is its single most important asset and requires investing in and protection –both in terms of physical infrastructure as well as in training, attracting and maintaining personnel. Galvanizing private sector involvement is key.

• There is a critical need for follow-through in organizing (markets/supply chains) and developing other aspects (Agro processing/storage) of the agricultural value chain to help trigger manufacturing as a key means by which significant numbers of people can be lifted out of poverty.

• Its crucial to work with key economic operators and markets to preserve the value of the disposable incomes of segments of society with the highest marginal propensity to consume. This is key to maintaining economic performance, but also, vital towards preserving Nigeria’s informal social welfare system.

• Science and technology (essentially a knowledge driven economy) will be crucial for economic growth and national development. Nigeria can no longer hope to avoid this fact. Nigeria’s favorable teledencity needs to be harnessed and positioned; to infuse knowledge based strategy into socioeconomic interactions – on a national basis and internationally.

• Alternative external inflows (Overseas development assistance, FDI and Diaspora Remmitances) have come under intense pressure and have diminished. Government needs to more strenuously work towards attracting and channeling these funds and other support through more favorable policies and creating a favorable environment.

AERC-CPPA Outreach & Policy Stakeholder Engagement Series 2

 

Health and Education are the Peace Makers, says CPPA Research on Aggregate Wealth and Income Inequality
CPPA Visiting Senior Fellow-in-residence, Professor Melvin Ayogu explains the role of health and education (HaE and mnemonically pronounced hi) in bridging the poverty and inequality gap. Through its composite role in promoting intergenerational mobility (IM), social investment in health and education raises the prospects of IM. Thus, as transducers, improvements in health and education convert potential social flashpoints into a changing landscape of inclusive opportunities. Instead of the tune, “burn, baby burn,” the mantra then becomes “sooner or later it will be my turn or that of my offspring to enjoy a good life. So, let’s not burn down the house yet.” These insightful comments were delivered Wednesday 30 October 2019 at a workshop in Abuja, organized by the Center for Public Policy Alternatives (CPPA) and moderated by the Chairman, Senate Committee on Primary Healthcare and Communicable Diseases, Distinguished Senator Chukwuka Utazi.
With a professional grant from the African Economic Research Consortium (AERC) Nairobi Kenya, a donor consortium supporting the largest network of African economists in the world, CPPA organized a colloquium to search for more effective ways of engaging the public and government on HaE imperatives. Says the presenter and keynote speaker Professor Ayogu, “we talk the talk, but do we walk the talk? Clearly not, based on the abundant evidence on the state of numeracy and literacy as well as basic healthcare, reproductive health and maternal care; the deplorable state of higher education, research and development funding, even with the benefit of TET Fund and so forth.”
He warns that our current condition of living together but growing apart in prosperity and diminished hopes of better life for future generations is bad for everyone. No one is safe when the future is bleak. Widespread poverty and extreme inequality weaken the social fabric and make it difficult to hold governments accountable.

Another aspect of the social problem, Professor Ayogu notes is the widespread tendency to externalize social issues by always blaming the government while shirking our civic responsibilities. Such self-delusion needs to be acknowledged and corrected. Barring a few human rights activists and journalists who risk their lives and freedom daily to push the citizen agenda and argument, the nation has remained largely either complicit or delusional about holding themselves and the government to account. On this score, Professor Ayogu alludes to another development economist, Professor Osita Ogbu who in a recent op-ed posed pretty much the same question differently by asking, “where are the citizens?”

Ayogu reminds us that good governance is not self-implementing or on autopilot. It is co-created through shared responsibilities. We get what we deserve and unfortunately, mostly the undesirables, if things are left to chance. So, he concludes by asking, “Which is it going to be, trick or treat, prosperity or catastrophe?” The nature of our investment, i.e. the type of seeds we sow in health and education provide those answers loudly and clearly.

AERC-CPPA Stakeholder Engagement with Foundations & Development Partners on Public Policy Implications

On January 31, 2019, the Centre for Public Policy Alternatives (CPPA) supported by a dissemination grant from the African Economic Research Consortium (AERC) held a dissemination seminar on the “Public Policy Implications of Wealth and Income Inequality in Nigeria. The aim of the seminar was to drill down the importance of health and education as a peaceful alternative to addressing the despondency from widening wealth inequality in a growing economy. These were research findings of a study funded by the Ford foundation as part of a dialogue series on the 21st century challenges of African economies. Other themes within the wider conversation on 21st century challenges in Nigeria include population, education, youth and institutions. This event, however, focused on the implications of rising inequality and the search for an active response from the government through public policy.

The findings were presented by Professor Melvin Ayogu, Senior Fellow-in-Residence at CPPA. He emphasized that investment in health and education was essential in raising productivity and enhancing intergenerational mobility, both of which are the means to reducing the growing inequality gap.  This view was reiterated by Jim Yong Kim, President of the World Bank, at the International Monetary Fund (IMF) and World Bank Group annual meeting that held in Bali, Indonesia in October 2018. Mr. Kim had encouraged Nigeria and other African countries to prioritize investment in human capital as opposed to the traditional approach which prioritized investment in hard infrastructure.  Central to the discussion was the linking of the quality of governance to welfare standing of citizens across peer African countries while challenging the audience to suggest ways to get government to take notice and act in a manner that provides widespread benefit particularly to the less wealthy segments of the polity.

In attendance were representatives from non-governmental organizations, foundations and development partners such as T.Y.Danjuma foundation, Bassey Andah Foundation, The Tony Elumelu Foundation, Aspire Coronation Trust Foundation and a host of others.

 

Are You Being Served? Governance and Deprivation in Nigeria.

CPPA Studies on Inequality Human Development and Economic Transformation.
This study argues that of the varieties of inequality, deprivation through poor governance is the most disconcerting because of its pervasive role in perpetuating wealth inequality. Health is wealth. Using standardized UNDP data on education and health—two strategic factors for growth and human development—we benchmark Nigeria’s long-term governance record on citizen-care. Africa’s largest oil producer, having the largest market potential, the largest GDP and a generous endowment of natural-resource diversity ranks 36 out of 46 countries in the sample, locating at the cusp of the lowest quintile of the quality of governance rank ordering, above Gabon but below Chad, Cameroon and very far below Togo. Why?

Please click the link below to read the full paper.

the-full-paper_are-you-being-served

“Its that time again: Reap What You Sow and Keep What You Reap”, CPPA Discussion Paper

The use of new techniques in order to reduce post-harvest loss have been adopted in many countries around the world. These new techniques offer solutions that can improve food security in Nigeria and other African countries. 

This discussion paper is based on a desk study conducted by CPPA Research Associate, Olaide Abdul-hameed Bankole. It argues that post-harvest management in Nigeria needs to improve by trialing and adopting innovative methods of reducing post-harvest loss through incentive-based policies encouraging private sector-led research and development.

Follow the link below to read and download the paper:

its-that-time-again-reap-what-you-sow-and-keep-what-you-reap

 

Image source: Henan Kingman M&E Complete Plant Co.,Ltd

Project Symposium: Making Economic Growth Work for Women in Developing Countries

The Centre for Public Policy Alternatives (CPPA) in conjunction with the Ghana Center for Democratic Development (CDD) as part of its output for the IDRC-GrOW Project, organised a symposium attended by a broad range of participants, ranging from government officials, researchers, academics, civil society leaders and entrepreneurs. The symposium was held at the Lagos Court of Arbitration , 2nd floor, 1A Remi Olowude Street, 2nd roundabout, Lekki-Epe Expressway, Okunde Bluewater Scheme, Lekki Peninsula Phase 1 on March 29, 2018.

The symposium’s welcome address was delivered by Hajiya Hadiza El-Rufai (First Lady, Kaduna State) on the importance of evidence based research for women’s empowerment. Mr. Michael Falade (Independent Consultant) introduced the research project, briefly discussing methodology and some preliminary findings. The keynote address on whether empowering the woman raises economic growth was delivered by Mrs. Amina Oyagbola (Chief Executive Officer, AKMS Consulting Ltd.)

Please click the link below to get a full report of the event:

productivity-safetynets-and-women-economic-empowerment-in-nigeria-and-ghana-rapporteur-symposium-report