Welcome to SBL023 (Sycamore Business Lab): our periodic blog post where we address issues affecting you and your business.
The advent of COVID-19 has brought about a myriad of impacts. Ranging from how people have begun to live to how businesses are being run (many adopting the concept of teleworking) to how economies are beginning to function. It is largely estimated that the “noise” around the spread of the virus and search for a vaccine may linger at least another three to eighteen months. The effects, however, are envisaged to last even longer. Hence, the primary goal for economies, Nigeria inclusive should be to soften the “blow” dealt by the pandemic and put in place factors to enable economies (locally and globally) bounce back following the prevailing crippled economic activities.
Globally, economies are responding to the economic impact of the virus in various ways. Case in point the UK regulators granting listed companies an extra two months to publish their annual accounts and also delay about £30 billion VAT payments till June 30, Canada responding with a $107 billion (Canadian dollars) relief package allowing the government to spend up to that amount on emergency aid and economic stimulus to assist those struggling financially and the US making provision to issue stimulus checks to support its citizens.
Nigeria not left out in the battle against COVID-19 in a bid to ensure economic continuity and sustainability has rolled out some economic initiatives (reliefs one might be tempted to call it) through various government agencies: the announcement of a new price regime for Premium Motor Spirit (PMS) by the Petroleum Products Pricing Regulatory Agency (PPPRA), the adjustment of the 2020 budget by the Federal Government as COVID-19 threatens global crude oil revenues, stimulus package by the Banker’s committee and the Central Bank of Nigeria, reliefs announced by the FIRS and the “Emergency Economic Stimulus Bill” introduced by the National Assembly.
a. New PMS Price Regime:
Reacting to the grief of the nation, the pump price of petrol was adjusted from N145 to N125. In addition to that, from the 1st of April, 2020 PPPRA will be modulating a monthly price of petroleum products based on the market fundamentals. What this means is whatever wave hits the international market, would reflect on the local price. The international market now dictates how much we pay for petrol, and this could vary at different months. Once upon a time, crude oil price determined the product price we pay.
b. 2020 Budget Adjustment:
In response to the recent the plunge in oil price and the outbreak of COVID-19 the Federal government, working with the National Assembly have had no choice but to carry out a mid-term review of the N10.59tn 2020 budget signed into law by President Muhammadu Buhari as at last year December. The adjustment revealed a reduction of the budget size by N1.5trillion and a downward review of the benchmark price of crude oil from $57 to $30.
c. Healthcare support:
To support the healthcare centres and aggressively eradicate the spread of COVID-19, President Muhammadu Buhari further approved an immediate release of N10 billion grant to Lagos state, as it is currently the epicentre of the COVID-19 outbreak. A N5 billion intervention fund was also made to the Nigeria Center for Disease Control (NCDC) to fully equip and provide qualified personnel to its existing facilities and laboratories across the country.
d. Banker’s Committee and CBN Stimulus Package:
The Central Bank of Nigeria also announced a credit relief of 136.6million to businesses that may have been affected by the outbreak of COVID-19. It was further stated by the CBN Governor Godwin Emefiele that households, small and medium-sized enterprises, airline service providers, hotels, and healthcare centres, will benefit from the funds. More recently again, the Bankers’ Committee agreed to grant funding facilities to pharmaceutical companies to enable them to produce drugs locally.
e. Economic Stimulus Bill:
An economic stimulus bill was recently introduced by the speaker Mr Femi Gbajabiamila, to the National Assembly. The Economic Stimulus bill 2020, is meant to provide temporary tax exemptions to companies and protect jobs in the civil service and public sector. The bill also seeks to eliminate additional fiscal jam on the importation of medical equipment’s, medicine and other medical necessities that may be required for the treatment and curbing of COVID-19.
f. Currency Devaluation (currency control):
The Central Bank of Nigeria due to the effects of COIVD-19 sought to regulate the Naira by weakening the parallel market rate for the currency to N380 per dollar from N365 while the official exchange rate was allowed to depreciate by 15% to N360 per dollar from N307 per dollar.
Your role as a Nigerian
We are now aware of how the Nigerian government is responding to the Covid-19 pandemic. As citizens and patriots of this nation Nigeria, now is the time to best “arise and obey the clarions call”, to be our fellow citizen’s keeper, support each other in every way possible, obey the government’s safety policies as regards Covid-19, observe quarantine/self-isolation for 14days if symptoms of the virus have been detected personally, report cases of suspected neighbours experiencing the symptoms, observe social distancing if you must commute.
This is only a phase, and we would all get through it.