featured Op-Ed

Seeking The Light At The End Of The Tunnel

Seeking The Light At The End Of The Tunnel
  • PublishedMarch 31, 2020

By Olowogboyega Oyebade

Are you aware that we are in a near-war situation?  Do you know that as a result of the border closure by the Federal Government to curb the spread of coronavirus, the Osun returnees from the countries of the West African coasts were stranded in Ogun State as they were prevented from crossing to the State of Osun?  Do you know that as soon as the attention of Mr Adegboyega Oyetola, the Governor of the State of Osun was drawn to it, he deployed necessary logistics to get them safely back home? Do you know that various committees inaugurated by the Governor are engaging the residents in campaigning for social distancing, stay-at-home, constant hand-washing and other protocols to curb the spread of the pandemic? Do you know that the index case in the State is medically stable?  As the workers of the State join others to observe the protocols by staying at home, do you know that their full salaries and allowances are paid?   As we observe the protocol imposed as a doctrine of necessity to curb the spread of coronavirus, do you know that this struggle is not just a race but a marathon? Why? Come along.

Are you aware that the Olympic Games were due to run from 24 July to 9 August, 2020? Do you know that the Tokyo 2020 Olympic and Paralympic Games have been postponed until 2021?  Do you know that the Olympics had never been delayed since 124 years ago when it was resuscitated, though they were cancelled altogether in 1916, 1940 and 1944 during World War 1 and War 11?  The Tokyo 2020-IOC statement cuts in:  “The leaders agreed that the Olympic Games in Tokyo could stand as a beacon of hope to the world during these troubled times and that the Olympic flame could become the light at the end of the tunnel in which the world finds itself at present.”

Do you know that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria met on the 23rd and 24th March 2020, amidst heightened uncertainty in the global macroeconomic environment arising from major disruptions associated with the outbreak of the Coronavirus Disease (COVID-19) and the oil price war between Saudi Arabia and Russia?  To cushion the economic effects, do you know that the Committee approved  provision of extended moratorium on loans by an additional 1 year beginning from March 2020, reduction of interest rates from 9% to 5% on its existing intervention programmes over the next one year; creating  a N50 billion fund to support households and Small and Medium Enterprises (SMEs) affected by COVID-19; introducing credit support for the healthcare sector; introducing regulatory forbearance to consider temporary and time-limited restructuring of loan terms  and strengthening  the loan-to-deposit ratio (LDR) policy?  Do you know that the Bank also announced an intervention fund of N1.1 trillion to cushion the adverse effects of the  outbreak on the economy to support local manufacturing to boost import substitution while the balance of N100 billion will be used to support the health services sector and products through the provision of loans to the pharmaceutical companies, hospitals and other health practitioners to build new hospitals and health facilities or expand existing ones to first class health centres? Do you know that at the end of the day, this will save the huge foreign exchange Nigerians expend on medical tourism abroad?  Is this not light at the end of this tunnel?

Whaooh! Nigeria needs  #120 billion to fight Coronavirus?  Do you know that on Friday, 27thMarch, 2020, Central Bank Governor Godwin Emefiele on behalf of Nigeria appealed to private companies to make voluntary contributions towards the #120 billion  the government says it needs to fight the epidemic? Are you aware that Funding Committee will be responsible for the initial funding of the effort and the membership comprises, the CBN Governor, Aliko Dangote, Herbert Wigwe, Jim Ovia, Tony Elumelu, Segun  Agbaje, Abdulsamad Rabiu and Femi Otedola? Do you know that each member of the committee is to ensure that their institutions contribute at least N1b to this effort and more members are allowed as long as they are willing to contribute at least N1b to assist Nigeria? Do you know that no amount is too small to assist Nigeria? Do you know that some Ministers of the Federal Government have donated half of their salaries to the Government to fight the pandemic?  Do you know that some non governmental organisations are donating materials and equipment?  Do you know that we all need to give light to Nigeria in this seeming dark tunnel? Why is Nigeria seeking for donations?  Come along.

Are you aware that the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, in an interview on Friday, March 27, 2020,  hinted that the current global epidemic may have a negative impact on the Nigerian economy, and hence might again go into recession?  What does that mean?  Do you know that recession may throw us back to half salary or no salary at all or moves us to the tipping edge of down-sizing particularly in the private sector?   The statement of the Finance Minister cuts in:  We are hopeful that this pandemic will be limited in time. If it is an average of three months, we should be able to close the year with positive growth. Bu“t if it goes longer than that – six months, one year – we will go into recession.”

          Can you believe that the oil market continues to be hammered by falling demand as a result of the coronavirus outbreak and as Saudi Arabia continues to flood the market with crude at deep discounts, following the collapse of the coalition of the Organization of Petroleum Exporting Countries and allies including Russia, the hope of oil-dollar-denominated economies, including Nigeria and Venezuela are already prostrate?  Do you know that the world’s largest importer, China, has hinted that it has  run  out of space and can probably only sustain daily additions of 300,000 b/day  for the rest of this year? Do you know that this is a dark tunnel for Nigeria?

Are you aware that the UNations Secretary-General Antonio Guterres says solidarity and global action are ‘crucial’ at this time? Do you know that  Guterres warned that unless the world came  together to curb the spread, millions of people could die?  Do you know that as a fact that developing nations cannot handle the COVID-19 pandemic? Are you aware that as a fact, they are carrying enough loads of debts on their necks and are too vulnerable to win the war of COVID 19 without any assistance? Who are these developing low income countries?  Do you know that a developing country has a less developed industrial base and a low Human Development Index (HDI) relative to other countries? Do you know that they have common denominators such as limited  access to safe drinking water, sanitation and hygiene; low energy consumption, poverty; high levels of pollution; high proportion of people with tropical and infectious diseases; high number of road traffic accidents; generally poor infrastructure, widespread poverty, low education levels, inadequate access to family planning services, corruption at all government levels and a preponderance of weak institutions? Are you aware that in the 2016 edition of its World Development Indicators, the World Bank made a decision to classify countries into four groups, based on Gross National Income per capita? Do you know that in 2018, a high-income economy is defined by the World Bank as a country with a gross national income per capita of US$12,376 or more?  According to the World Bank, 80 countries are classified as “high-income economies” and as of the 2019 fiscal year, high-income economies are those that had a GNI per capita of $12,376 or more?

        Do you know that Nigeria is a middle income country? According to the World Bank, do you know that the middle-income countries (MICs) are defined as economies with a Gross National Income (GNI) per capita between $1,026 and $12,475? Do you know that MICs are broken up into lower-middle income and upper-middle income economies with lower-middle-income economies having per capita GNIs between $1,026 and $3,955, while upper-middle economies have per capita GNIs between $3,956 and $12,475?  Do you know that there are 109 Middle Income Countries, 53 lower-middle income economies and 56 upper-middle economies?  Do you know that for nations in the lower-middle-income category, the biggest issue might be providing its citizens with essential services, such as water and electricity while for the economies in the upper-middle-income category, the greatest challenges could be curbing corruption and improving governance? Do you know that MICs have a combined population of five billion, or over 70% of the world’s seven billion people, hosting 73% of the world’s economically disadvantaged and representing about one-third of global GDP?  

         Do you know that the poor countries formed a cartel called the Heavily Indebted Poor Countries for the sole purpose of pressing  for Debt Relief and  Poverty Reduction?  Do you know that it was in 1996 that the initiative that multilateral, Paris Club, and other official bilateral and commercial creditors united in a joint effort to reduce the external debt of the world’s most debt-laden poor countries to “sustainable levels” that allow these countries to service their debt through export earnings, aid, and private capital inflows without compromising long-term, poverty-reducing growth?  Do you know that further assistance is not automatic?  Do you know that assistance under the HIPC Initiative is limited to countries that have per capita incomes low enough to qualify for World Bank and IMF concessional lending facilities, and that face unsustainable debt burdens even after traditional debt relief provided under the Paris Club’s terms?  Are you aware that the vast majority of beneficiary countries are in Africa? Can you believe that unsustainable debt is one of the factors causing wars, poverty, diseases and weak institutions?  Do you know that more than half of the 600 million people living in the 40 poorest, debt-ridden countries in the world only live on less than one dollar a day?    Do you know that creditor countries called the Paris Club, a group of official bilateral creditors mostly from developed countries, work together to further ease repayment terms by devising new and  concessional mechanisms for debt relief for these countries?  Do you know that in 1995 the Paris Club offered to low-income countries “Naples terms” for rescheduling, under which up to two-thirds of the eligible debt was canceled?  Do you know that history wants to repeat itself?

Are you aware that Finance Ministers of several African countries met in Addis Ababa on Monday, 23rd March, 2020 and called for a coordinated response to mitigate the economic impact of the COVID-19 pandemic?  Do you know that they resolved that Africa needs an immediate emergency economic stimulus to the tune of US$100 billion?  Do you know that they called for waiver of all interest payments, estimated at US$44 billion for 2020, and the possible extension of the waiver to the medium term, would provide immediate fiscal space and liquidity to the Governments, in their efforts to respond to the COVID-19 pandemic? Can you belief that Nigeria spent #2.2 trillion on servicing outstanding loans in 2018 compared to #1.68 trillion expended on infrastructure as revealed by the Central Bank of Nigeria? Do you know that Nigeria spent $1.31 billion to service external debt in 2019? Can you now see why these Ministers  agreed on the need to consider waiving principal and interest and encourage the use of existing facilities in the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions?  Do you know that  Ethiopia’s Prime Minister used the occasion to put forward a three-point proposal on behalf of the Heavily Indebted Countries how G20 countries can help African countries cope with the coronavirus pandemic? Do you know that the first point of the plan proposed by Abiy Ahmed calls for a $150 billion aid package called  Africa Global COVID-19 Emergency Financing Package in the form of supplementary budgetary support and private sector financing? Do you know that the second proposal is that G20 nations should provide support to the World Health Organization (WHO) and Africa Centres for Disease Control and Prevention (CDC) to strengthen public health delivery and emergency preparedness on the continent?  Do you know that Ahmed’s proposal requests G20 countries to implement debt reduction and restructuring plans, reminding world leaders that a global approach and strategy” is needed to stop the coronavirus pandemic?  

Can you believe that Guterres, the UN Secretary General has alarmed that the coronavirus pandemic could lead to rampant outbreaks of other diseases such as cholera and other terrible tropical diseases? Are you aware that on Monday, 23rd March,  2020,  in a letter to the G20 group of leading economic powers, he pushed for a “war-time” stimulus bill “in the trillions of dollars” to help poor countries to fight the virus and address the needs of the most vulnerable people, especially women and children, older people, and those with disabilities or chronic illness? Do you know that from the tone of the letter, the UN plan is designed to last from April to December – suggesting the world body does not see the health crisis abating any time soon before December, 2020? Can you fathom how dark this tunnel is as at now?

Are you aware that the International Monetary Fund (IMF) chief,  Kristalina Georgieva  on Friday 27th March, 2020, addressing the press after a meeting of governing body of the IMF and Financial Committee representing 189 members on the challenges  posed to the world by COVID-19, declared that the world is in the face of a devastating impact and has clearly entered a recession? Do you know that she used the occasion to inform that the US is already in  recession? Are you aware that  President Donald Trump signed into law on Friday 27th March, 2020, a historic $2 trillion stimulus package as the American public and the US economy fight the devastating spread of Covid-19?  Do you know that this far-reaching legislation stands as the largest emergency aid package in US history and represents a massive financial injection into a struggling economy with provisions aimed at helping American workers, small businesses and industries grappling with the economic disruption occasioned by coronavirus? Do you know that  the rest of the advanced economies of the world are doing the same the same stimulus package with the United States offering $58 billion in aid to Airlines  while Singapore Airlines obtained $13 billion rescue package amid coronavirus shock? Do you know that all these packages are to save thousands of workers on unpaid leave to keep afloat? Do you know that the secretary general, Zurab Pololikashvili of UNWTO  hinted that international tourism has plunged up to 30% due to virus, leading to an estimated loss of $300-450 billion in international tourism receipts, almost one third of the $1.5 trillion generated in 2019?    

And one more warning.  Do you know that the International Monetary Fund (IMF) chief,  Kristalina Georgieva warned all countries that total  containment of the virus is the only panacea to bring back the economy, without which  it would be very difficult to go to the lives we love? The voice of the IMF Managing Director Kristalina Georgieva cuts in:

“We have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad or worse than in 2009. We do project recovery in 2021. The key to recovery in 2021  is only if the international community succeeds in containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.  A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery. But can erode the fabric of our societies. We do expect it to be quite deep and we are very much urging countries to step up containment measures aggressively so we can shorten the duration of this period of time when the economy is in  standstill. And also to apply well-targeted measures, primarily focusing on the health system to absorb that enormous stress that comes from coronavirus on people, businesses and the financial system,”

Do you know that studies of the 41 Heavily Indebted Countries showed that no matter how generous, debt relief is, it is only a short-term step towards economic recovery for heavily indebted poor countries and that these countries can achieve long-term debt sustainability only if they directly address the underlying causes that triggered the debt problem in the first place?  Do you know that in order to escape perpetual debt-burden, these countries must use the debt relief proceeds to create the basis for sustained growth and poverty reduction? Do you know that the debt relief is to f free up more funds more quickly to be reallocated to poverty reduction while  the World Bank, the IMF, and others are providing technical and other assistance to help these countries develop and strengthen their national public spending management systems to ensure that budgetary savings from HIPC assistance are properly accounted for and are effectively used for their intended purposes?  

Do you know that in the UN plan, 20 nations were specifically mentioned as deserving top priority for aid, including Afghanistan, Libya, Syria, the Central African Republic, South Sudan, Yemen, Venezuela and Ukraine? Do you know that the UN puts two scenarios on the table, which under the first, the pandemic is brought under control relatively quickly as its rate of spread slows over the course of three or four months, a situation that would allow for a relatively swift recovery in terms of public health and the economy? Do you know that under the second model, the pandemic is hypothetically assumed to  spread quickly in countries that are poor or developing, mainly in Africa, Asia and parts of the Americas and might get out of hand if not arrested with collective efforts? Do you know that despite the fact that Nigeria is at war with various terror groups, it is not listed as part of the priority nations to receive aids? The statement of the UN cuts in: “This leads to longer periods of closed borders and limited freedom of movement, further contributing to a global slowdown that is already under way,”

Hurray! Are you aware that China and US promise to cooperate in fighting against coronavirus? Are you aware that the  G20 Summit on Thursday 26th March, 2020, nominally hosted by Saudi Arabia as this year’s G20 chair, agreed to fresh practical measures aimed at preventing a repeat of the disjointed approach to Covid-19 with a call for a coordinated large-scale monetary and fiscal stimulus to boost the campaigns?   Do you know that the proposal of the World Bank and International Monetary Fund to the G20 to agree immediate bilateral debt relief to any of the world’s 76 poorest countries that make such a request was not given definite answers?

Do you know that many world leaders are overwhelmed by the financial cost of responding to their individual national crises, and a few are even questioning how long they can tolerate the damage inflicted on their economies by lockdown measures? Do you know that Donald Trump and the Brazilian President, Jair Bolsonaro, have broken ranks from the global consensus to warn they will not allow their economies to be “closed down”?  Do you know that the US President said he wants America’s restrictions eased by Easter coming up in the next two weeks?  Do you know that the  World Bank Group and IMF used the Summit to call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance to  help with immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country? Do you know that the World Bank and the IMF said suspending debt payments, consistent with national laws of the creditor countries, would provide “a global sense of relief for developing countries” and send a strong signal to financial markets?

 According to the World Bank and IMF, there are 81 emergency financing requests, including 50 from lower-income countries with the financial institutions totalling about $ 2.5 trillion dollars?  Do you know that she confessed that this request is on the lower end as the  reserves and domestic resources of these countries will not be sufficient to prosecute the campaigns against coronavirus?  Do you know that by resolving the poor countries’ debt crisis through these various initiatives, governments in wealthy countries have implicitly acknowledged a significant transfer of resources they have provided in the past to some of the poorest countries?  Do you know that the G20 communique said members were united in their response and they would use all available policy tools to minimise the economic and social damage, restore global growth, maintain market stability and strengthen resilience? The G20 communique cuts in:

“We are gravely concerned with the serious risks posed to all countries, particularly developing and least developed countries, and notably in Africa and small island states. We are injecting over US$5 trillion into the global economy, as part of targeted fiscal policy, economic measures, and guarantee schemes to counteract the social, economic and financial impacts of the pandemic.”

Can you see that from the evasive gestures of the G20, the poor countries of the world have to think out of the box to design ways to finance the war campaigns against COVID 19? Can you now see that the Emefele Initiative to assemble billionaires in Nigeria together to raise the needed #120 billion for the campaigns against COVID 19 is well-thought out?

 Hurray! Have you heard the news that the Central Bank of Nigeria and the Bankers Committee have thrown their collective weights behind  the popular #3.5 trillion stimulus package for Nigerians? Do you know that about #1 trillion would be used to support the local manufacturing sector as well as boost import substitution?  Do you know that #100 billion would be used to support the health sector and produce vaccines?  Do you know that the communique of the meeting did not explain how the funds will be disbursed to States and Local Governments as part of the architecture of this federation?  Do you know that the Central Bank did not reveal where it plans to raise the #3.5 trillion it plans to inject into the economy as a stimulus? Do you know that the current stay-at-home order makes this option of stimulus package a doctrine of necessity? Do you know that by the tone of this generous stimulus package, our country, like most countries of the world is already in recession? Do you know that there will be prospect of light at the end of the tunnel, possibly in 2021, if only by gazing through the body languages of the international communities? The voice of the IMF chief,  Kristalina Georgieva warned again:

“We have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad or worse than in 2009. We do project recovery in 2021. The key to recovery in 2021  is only if the international community succeeds in containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.  A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery. But can erode the fabric of our societies. We do expect it to be quite deep and we are very much urging countries to step up containment measures aggressively so we can shorten the duration of this period of time when the economy is in  standstill. And also to apply well-targeted measures, primarily focusing on the health system to absorb that enormous stress that comes from coronavirus on people, businesses and the financial system.”

Comrades! Do you know that like Boy Scout we have to “be prepared”  to cooperate with government? God bless the State of Osun.  God bless Nigeria!

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