Against the backdrop of COVID-19 pandemic that has crippled economic activities in the country, economists and industry chieftains across key sectors of the economy want Nigerian government to drive an economic stimulus process to prevent the collapse of businesses. They maintained that injection of liquidity and introduction of policy measures that facilitate economic recovery are key. To save the economy from collapse, the experts stated the need for government to salvage investments across all levels – micro, small, medium, and large enterprises.
They told Sunday Vanguard that without investment, Nigerians cannot have jobs, aggregate demand would remain weak, government revenue would be in jeopardy as tax revenue plummets and economic sustainability will be at risk. In the light of the foregoing, they urged policymakers and the organised private sector to come together to rescue the economy from collapse at this critical time.
They added that in recognising the role of business and investment in the economy, it is imperative to have an urgent rescue package that would enable businesses to navigate the storms as well as preserve employments. Speaking on measures to be taken, Director-General, Lagos Chamber of Commerce and Industry, LCCI, Dr. Muda Yusuf said: “There should be a suspension of all forms of taxes for health sector investors, agriculture and agro-processing, aviation and hospitality sectors for at least one year.
CBN should review the cash reserve ratio downwards to 20 percent from the current 27.5 percent, to enable commercial banks to have more liquidity to support businesses. There should be an extension of filing of annual returns, including payment of due amounts to June 30, 2020, unconditional waiver of penalties and interests of all outstanding tax payments, temporary suspension of recently introduced 50 percent increase in VAT till year-end, 50 percent reduction in all taxes currently being paid by companies in manufacturing for one year. For employees, Pay As You Earn, PAYE should be suspended for six months.
This would put some money back in the hands of the employees during this period to strengthen the purchasing power of citizens and stimulate output within the economy. Health workers PAYE should be suspended for one year in recognition of their role as front liners in the battle against the COVID-19 pandemic.”
Speaking as well, Professor of Finance and Capital Market, Nasarawa State University, Lafia, and former Commissioner of Finance, Imo State, Prof. Uche Uwaleke, said: “The fact is that a budget is supposed to be guided by the principle of conservatism which means those saddled with the responsibility of its preparation are expected to err on the side of caution. “If at the end of the day, oil price appreciates above the budget reference price, then it presents an opportunity to build buffer or earmark any excess for critical infrastructure.
“Having noted that, the implication of this development is grave not only for the federal government but also for state governments whose budget assumptions are also predicated on that of the former. “So in the post-COVID-19 era, it calls for cost-cutting measures and prioritisation of spending. Borrowing to finance the deficit should only be made after a thorough cost and benefit analysis.”
While commenting on what government should do for businesses to stay afloat, Chairman, Manufacturers Association of Nigeria, MAN, Apapa Branch, Frank Onyebu, said: “The first thing government should do is to cut interest rates. There is no doubt that the interest rate regime before the crisis was not business-friendly, to say the least. “With the advent of coronavirus, government, through the CBN and Bank of Industry, BoI, introduced some measures to help struggling businesses.
“While these measures are welcome, more needs to be done to further assist businesses to remain afloat. Commercial banks, particularly, need to be encouraged to cut interest rates to single digits. This is critical since most businesses do not have access to CBN or BoI facilities. “Government should also consider some form of tax holiday/deferral while the pandemic lasts. This is to keep businesses from downsizing their workforce, which would be the natural recourse if there is no government intervention.
Government should also prevail on utility companies to provide some form of concession to businesses going through turbulent times. “In the same vein, port operators should be encouraged to provide concessions in the form of demurrage-free days. These operators should be made to understand that, in the long run, they stand to gain more if businesses survive than if businesses fail.”
On the part of private sector businesses must strive to cut inefficiencies in their operations to remain afloat. Unfortunately, this would most likely lead to some form of downsizing and loss of employment. However, this would be minimised if government played its part. “Businesses should also, as much as practicable, reduce reliance on foreign inputs.
This is because owing to the drastic fall in the price of crude oil, it is going to be more difficult to access foreign exchange going forward.’’ Meanwhile, the National President, Association of Small Business Owners of Nigeria (ASBON) Dr. Femi Egbesola, said: “The key to managing any crisis is preparation. “Corporate bodies need to start working on strategies to adapt to cope with the COVID-19 crisis if they want to survive. The earlier the planning starts, the more positive results will be achieved.
Access to forex
They also need to find out various government palliative measures that are being rolled out to cushion the effect of the pandemic and take full advantage of them. “Some of them include but not limited to tax reliefs, easy access to forex, single-digit interest rate loans with long period moratorium, and liberalization of various government policies that are business-oriented among others. “Organizations should embrace more of technology in their business. More companies’ budget should now be channeled towards various forms of online marketing, sales, ability to book, purchase and address customers’ issues online.’’