There is only one thing on everyone’s minds and lips. The coronavirus.
The Rona arrived relatively late on the shores of sub-Saharan Africa, with new case counts still minuscule in most countries. But we are proud to say that more than a dozen countries have already reduced most international flight routes
or closed borders completely. In Lagos, Nigeria’s premier city and one of the world’s most populated cities, schools have been closed and gatherings restricted. In cities from Cairo
restrictions are being placed on gatherings such as mosques and churches in an effort to curb the spread of the disease.
Social distancing is a concept which will be especially difficult to practice on the African continent due to the relative poverty in many of the countries. Individuals make money for their sustenance on a day-by-day basis. To cut off this source of income/livelihood puts a large percentage of the population in an untenable situation.
CBN responds to the Rona
As the COVID-19 outbreak has begun spreading in Nigeria, the Central Bank of Nigeria (the “CBN”) has decided to take a number of measures
to soften the blow on our already struggling economy. Amongst other things, the Bank has: (i) created a stimulus package worth N1trn
towards local manufacturing and import substitution; (ii) reduced the interest rates from 9 percent to 5 percent to make it cheaper to borrow money; (iii) provided credit support for the healthcare industry; and (iv) provided loans worth N100bn to pharmaceutical companies, hospitals, and healthcare companies. We must say that we are pleased to see these efforts by the Bank and hope for more of the same as COVID-19 continues to spread in Nigeria.
Cancel that Owambe
does a deep dive into what the African response to the 2015 Ebola pandemic can teach the rest of the world.
Shame to Waste a Good Crisis
For the past 5 or so years, the CBN has been running three parallel exchange rates to the US dollar. One for select companies such as petrol importers, Dangote and other businesses (normally N306), a slightly higher rate for foreign portfolio investors bringing much needed foreign exchange into the system (around N350) and then the actual rate which veers from the first states rate by as much as N100-150 (~ N450).
This has given ample opportunity for arbitrage and corruption, created uncertainty in the market and aided in burning through Nigeria’s foreign reserves (16% in a year, but who’s counting?) in order to artificially keep the Naira at a stable and strong exchange rate. With the current ongoing crisis giving the CBN the ability to take unpopular decisions in order to refocus the economy, they have made the right choice,
It is important to note that the Office of the President has more funding for operational vehicles (N253m) than the entire ANNUAL capital expenditure of the Nigerian Centre for Disease Control (NCDC) (N145m). A National Assembly member will earn more in a year than total capital allocation for the NCDC.