Analysis of the COVID-19 impact: Need to harness opportunities in the resilient sectors for sustainable growth in Nigeria

Abstract

There is an urgent need to implement critical macroeconomic policies which will directly support Nigeria's economic landscape, protect its vulnerable population, and set its economy on a pathway towards economic recovery. There should be a focus on sectors with the highest growth potential that showed remarkable resilience through the peak of the Covid-19 pandemic in 2020. In line with the focus of this policy paper, we recommend that the Federal Government carry out the following actions to achieve stable markets, promote economic prosperity through diversification, ensure business development, and reduce poverty in Nigeria.

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  Agricultural policies should aim at supporting the development and availability of high yield seeds in Nigeria. In addition, measures should be taken to boost the availability of irrigation facilities to aid all-year-round farming in Nigeria. These two measures would increase crop production in Nigeria and help curtail low agricultural productivity, a significant reason for the high prevalence and persistence of high food inflation, by keeping the rural population trapped in a vicious cycle of poverty.

  
  


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  Strong focus to leverage Information and Communication Technology to address socio-economic issues and utilize its positive macroeconomic potential. A report by World Economic Forum shows that a 10 percent digitization increase of a country would result in a 0.75 percent increase in GDP per capita with a 1.02 percent drop in the unemployment rate. The pandemic has accelerated the pace of digitization globally. Better enabling conditions for remote work to support activities in other parts of the globe could help enable skills transfer, job creation, and improved forex inflows from exporting services from Nigeria.

  
  


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  The monetary authority should review and maintain policies to boost access to credit. These measures include providing credit bureaus with more data to assess the creditworthiness of borrowers and driving financial inclusion to enable financial institutions to mobilize more deposits. This would increase the availability of funds available for lending, and banks will be more aware of borrowers likely to default. It would also reduce the cost of borrowing by manufacturers in the country. Currently, Nigeria has one of the highest lending rates in sub-Saharan Africa, pegged at a double-digit of 11.5 percent, compared to Kenya, Ethiopia, Namibia, whose MPR is pegged at a single digit.

  
  


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  The apex bank should support policy measures that would increase the supply of forex into the country. Accessing new channels such as diaspora remittances and export of services from Nigeria could help in addressing the challenge around accessibility and affordability of forex. This would facilitate the importation of raw materials and other vital resources not locally available.

  
  


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  The federal government should address the insecurity challenges in the northern and eastern parts of the country, endowed with natural minerals. This would attract both domestic and foreign investors to leverage the underutilized mining and quarrying sector.