COVID Pandemic: Western Nigeria Economic outlook 2020-2022

COVID Pandemic: Western Nigeria Economic outlook 2020-2022

by Ololade Fatunsin (Ph.D) and Oludele Folarin

DAWN Commission on April 25, 2020 facilitated a virtual meeting in response to the imminent economic challenges that the country, particularly at the sub-national level, is bound to face as a result of the COVID-19 pandemic which has adversely impacted the global economy and specifically for Nigeria, the production and price of crude oil. Besides the effect of the pandemic on crude oil price and its attendant consequences on the federation accounts and by implication, Federal Accounts Allocation Committee (FAAC) allocations to States, the potential impact of lockdown and social distancing policy on businesses will also hamper States’ capacity to generate revenue internally.

Thus, in view of the foregoing, the Commission brought together a team of public governance experts, Commissioners for Economic Planning and Budget and Commissioners for Finance across the six Southwest States to brainstorm and chart the way to sustainable development of the Region post COVID-19.

We had as panel of discussants; Prof. Olu Ajakaiye, the former Director-General of NISER, Dr. Tayo Aduloju of NESG, Mr. Opeyemi Agbaje of RTC Advisory Services and Mr. Seun Onigbinde of BudgIT. The session was moderated by Dr. Olusade Taiwo, formerly of NISER.

The 4-hour session had more than 70 participants which included private sector operators, non-governmental organisations; development partners/donor agencies and of course, people from the academia.

Mr. Seye Oyeleye, the DG of DAWN Commission, kick-started the conversation by welcoming the participants and explained the reason for the virtual meeting. He, thereafter, handed the session over to the moderator, Dr. Olusade Taiwo, who highlighted the factors that necessitated the session.

Mr. Seun Onigbinde, the first discussant, highlighted the dire straits Nigeria has found itself in based on the fiscal performance of the Federal Government. He highlighted the limited fiscal space of most States in the Region, which could ultimately undermine how they respond to the pandemic. He opined that the fundamental legacy of the Southwest States in terms of the size of civil service institutions, public provision of both health and education services is putting the Region’s recurrent expenditure on the high side when compared to other Regions in the country. He thus called for innovative thinking on the part of the Governments of the States of Western Nigeria (SoWN) in raising revenue and improving the productivity of MDAs.

Similarly, Mr. Opeyemi Agbaje, in his presentation, posited that the pandemic is not only a public health problem but also an economic issue. The economic problem arises because of the structure of business activities in the Region, where the size of the informal sector is high and the capacity of the government to provide social protection to the citizen has been incapacitated by the shortfall in government revenue due to the recent drop in the crude oil prices. He forecasted that the economic problem caused by the pandemic will linger except governments respond with appropriate economic policies.

In addressing the cash crunch that States will encounter Post COVID-19, Mr. Agbaje emphasised the need for State Governments to reduce revenue leakage and optimise collection of revenue by replacing cash payment with automated payment system. To boost revenue, he was of the view that assets of the States need to be optimised through partnership with the private sector under a Public-Private Partnership (PPP) arrangement. He also enjoined the State governments to meet with their creditors for loan reschedule while they prioritise upgrading of health facilities.

The under representation of the manufacturing sector in the Region’s economic activities, especially in Ekiti, Osun, Ondo, and Oyo States was the main contention of Prof. Olu Ajakaiye’s presentation. According to Prof. Olu Ajakiaye, the near absence of manufacturing plant in the Region explained the reason the Southwest Region could not think of repurposing manufacturing plant for the production of medical equipment as it is being done in advanced countries to stimulate their response to the Covid-19 induced health challenges. Given this reality, he enjoined the States in the Region to come together to develop a regional development masterplan that will prioritise the establishment of manufacturing plant in the Region. This reality also explained the huge fraction of citizens that live on daily income, which in turn means what lockdown mechanism should not be prolong in the Region. Though, he advised that relaxation of the lockdown policy should be complemented with rapid testing and enforce the usage of facemasks in public.

Since the fiscal space of the State governments in the Region is limited, the needs to optimise alternative source of support in terms of Overseas Development Assistance (ODA) formed the fulcrum of Dr Tayo Aduloju’s presentation. Dr. Aduloju explained the context and dynamics of development assistances flow into the country as well as the strategies to attract such funds. He advised Southwest States’ governments to be more strategic in presenting the developmental needs of the Region as a whole while they also focus on developing regional database. The regional database is important in showing the development indicators at the disaggregated level and thereby makes it easier to make compelling argument for development partners/donor agencies’ support.

Some of the participants in the virtual meeting also shared perspective on how the Region could maximise the benefit associated with the pandemic. Mr. David Awotipe, Mr Olabode Abioye and Mr Adewale Raji, GMD, Odu’a Investment Company Limited, shared different innovative ideas such as the re-introduction of commodity board to support farmers. This initiative has the potential of improving the productivity of the Region agricultural space and the export capacity of firms in the sector. Prof Siyan Malomo and Mr Jubril Gbajabiamila shared insights on how the private sector can lead the development efforts of the Region post Covid-19 if the States are proactive in addressing the challenges confronting the manufacturing sector.

Mr. Femi Ajayi from Ekiti State implored DAWN Commission to take the lead in initiating conversations with developmental Partners in sourcing support for the States of the Region. Dr Gabriel Ojegbile, DFID/PERL Consultant, also asked government representatives at the meeting to optimise various Federal Government’s interventions, most especially those designed to alleviate the harsh consequences of the pandemic. Mrs. Abiola Taylor of Thirteen Scribe Nigeria Limited urged the governments to be more creative in the provision of requisite infrastructure by collaborating with the National Assembly members from their States on constituency projects.

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