How to deal with economic fallout of Coronavirus
…Roles of CBN, Ministry of Finance
Apart from being a health challenge, Coronavirus is taking its toll on the economy of many countries, including Nigeria. For instance, capital markets have been plummeting, with a huge loss as high as 10 per cent, in the last few weeks. Many economies are not functioning effectively, as supply chains from China have slowed down due to the effects of the virus on industries in China. Nigerian businessmen who have placed orders for goods from China, or those who are supposed to have travelled to China on business deals, cannot do so due to travel restrictions. Indian pharmaceutical manufacturing companies as shutting down production lines due to the lack of raw materials which are obtained from China. It is, therefore, a very difficult period for the world economy, including Nigeria’s. In order to deal with the situation, Creon Butler, Research Director at Chattam House, London, has written a piece on how Central Banks and Finance Ministries should respond to the impact of Coronavirus, to ensure that it does not do too much damage to their countries’ economies. Below are some of his suggestions:
1. Carryout best economic evaluation of strict containment measures:
Because Central Banks and Ministries of Finance devise monetary and fiscal policies for their countries, they must be actively involved in efforts to contain the virus, protect the most vulnerable, treat the sick, and ensure that the majority of the people get on with their daily life. The CBN and Finance Ministry must take interest in how the ministry of health is carrying out its activities and provide whatever support that is required to ensure it does not slack. If any of the measures fail and cause the spread of the disease, the cost would be greater for the economy. Therefore, CBN and Ministry of Finance must keep track of what other government departments are doing to contain Coronavirus in Nigeria.
2. Ensure financial market and economy continue to function:
The CBN and Ministry of Finance must not leave vulnerable financial market and industries on the own under this kind of emergency. They must keep tabs with what happens in these sectors and find a way to help them out, through informed counsel, liaising with government agencies who could be of help, or providing necessary support to keep the economy in good shape.
3. Safeguard the most vulnerable companies, especially SMEs:
It may be necessary to defer tax payment by SMEs at a time like this, especially for those who cannot receive supplies from their business partners in other parts of the world. The tourism, hospitality and aviation industries could be given a measure of support through, say, loan extension, because of the lull in these sectors. Commercial banks could be given liquidity support, now that businesses have slowed down and cash is scarce.
4. Attract international support:
The World Bank and other multilateral organisations are providing support for vulnerable countries, especially Third World countries. For instance, the World Bank has promised to support the fight against Coronavirus with $12 billion. The CBN and Ministry of Finance could tap into this initiative and ensure that Nigeria accesses the support. They should also look out for bilateral supports which they could tap into, like aid in the form of vaccines, medical equipment, training, etc in combating Coronavirus.
5. Ensure adequate funding for public health:
The CBN and Ministry of Finance should take interest in the availability of testing kits and protective equipment, and should release funds for them. They should also show interest in surveillance, and helping medical officers to strengthen their capacity in these. Necessary funds should be sourced and released for these activities.
6. Combat fake news:
Fear and tension spread where fake news is unchallenged. Tension can affect the economy in diverse ways. Therefore, the CBN and Ministry of Finance should monitor the kinds of false information in circulation about Coronavirus and counter them in social and traditional media. These institutions should respond to fake stories by providing detailed information on the support and contingency measures put in place to avoid the spread of the virus. They can forecast economic impacts of Coronavirus, to avoid exaggeration and unfounded fears among the people.
7. Facilitate importation of kits and equipment:
The CBN and Ministry of Finance should work hand-in-hand with the Nigerian Customs Service and Nigerian Immigration Service to remove bottlenecks in the importation of medical equipment, drugs, vaccines, and kits that could help in containing the spread of the virus. They should work with local and international agencies to ensure protection for vulnerable groups like refugees in camps, Internally Displaced Persons (IDPs), prisons and the like.
8. Long-term measures:
Epidemics have serious implications on every economy. To curtail them, the CBN and Ministry of Finance should ensure funding of research on their prevention and in strengthening of public health systems. The right lessons should be drawn from previous experiences. It is also necessary to engage health and medical research organisations to ensure focus on how to prevent and treat similar viruses and diseases in future. For instance, it is imperative for Nigeria to find a solution to recurring Lassa Fever, either by producing preventive vaccines and/or treatment drugs, instead of waiting for the virus to attack and kill Nigerians every year.
From the above, it is clear that the CBN and Ministry of Finance, not only the Ministry of Health, have crucial roles to play in dealing with the negative impacts of Coronavirus on the Nigerian economy.
Read also: https://www.chathamhouse.org/expert/comment/how-fight-economic-fallout-coronavirus