FCT, Lagos, Ogun, may Lose N1.6trn to lockdown

With seven out of the 14-day lockdown imposed by the Federal Government already gone, residents, and workers in Lagos and Ogun states as well as the Federal Capital Territory have continued to recount the sore test of the calamity that has befallen them since last Monday.

Both from the standpoint of individuals, households and organisations, it has been tales of woes and losses which cost appears too significant to be quantified.

For Lagos and Ogun States and the Federal Capital Territory, experts predict the loss would be in excess of over N1.6trillion by the end of the two -week lockdown order of the Federal Government aimed at stemming the spread of COVID -19.

The lockdown order which took off in Lagos and Abuja last week Monday commenced fully in Ogun state on Friday night.

The two States and the FCT are home to over 30 million Nigerians and contribute about three quarter of Nigeria’s total GDP.

But in analysing the implications of the socioeconomic lockdown the nation’s Organised Private Sector (OPS) noted that based on inferences from GDP figures, Lagos, Ogun and the FCT have a combined nominal GDP of about N37.68trillion.

According to the Nigeria Employers Consultative Association (NECA), a breakdown of the figure shows that Lagos with N27.6trillion has the highest nominal GDP followed by FCT with N10.56trillion.

Director General of NECA, Timothy Olawale, said the amount was arrived at from the analysis of the nominal Gross Domestic Product of Lagos and the FCT.

From the analysis, the NECA Director General said businesses in Lagos with a nominal GDP of N27.12trillion are expected to lose daily output of N108.05billion and for the ten working days the lockdown is expected to last, about N1.08trillion is projected to be lost by businesses and firms in the state.

“For the FCT, with nominal GDP estimated at N10.56trillion for the ten working days that the lockdown is expected to last, the projected losses in productivity are estimated at N420.7billion”he stated.

Olawale said the cities, especially Lagos are Nigeria’s financial hub while Abuja remains the political capital, hence the lockdown means that business/economic activities are suspended totally.

He said, “According to the World Bank, the virus that triggered a supply shock in China has now caused a global shock that is making countries recovering from trade tensions and contending with COVID-19, to face possible global financial recession.

“Government is not generating revenue at this time and oil which is main source of revenue is affected with $57 benchmark for 2020 budget not in reckoning as the product is currently selling in the international markets below $30 per barrel. The 2020 budget has been impacted by at least 50percent as government would find more difficult to fund its capital projects . Oil still constitutes 92percent of Nigerian government’s forex earnings. It’s however regrettable that in spite of government’s diversification efforts, Nigeria has remained an import dependent economy and without forex we would be unable to fund our imports.

“With rapidly dwindling oil prices Nigeria was already feeling the pinch before the lockdown, but shutting down the country’s financial capital, Lagos, further adds to our economic predicaments. Certainly there will be a slowdown in the country’s GDP for the first quarter of the year.” The NECA boss asserted.

He opined that the lockdown may cause a speedy return to recession as anticipated as all the growth indices point to the negative zone.

According to him, Nigeria’s real sector and other critical sectors were still struggling to come out of 2016 recession before the Pandemic and the global economic lockdown, coupled with dwindling oil prices .

“With the shut down; manufacturing and other sectors would join the already affected sectors of Aviation, Hospitality, Tourism, to record dwindling growth which might lead the country to another round of recession.

According to him, the lockdown means additional financial losses for millions of informal sector workers who rely on daily earnings to survive.

The NECA Director General pointed out that one likely negative impact of the crisis is the likely upsurge in fake products, considering that critical supplies have become scarce, and criminal elements could leverage the scarcity to produce fake and substandard drugs to further compound the Covid 19 crisis.

“Likely spike in poverty as supplies thin out, prices of critical goods will become expensive and at a premium, thus further impoverishing the generality of Nigerians,” he said.

Also lamenting the misfortunes that the COVID -19 has brought in its wake, Lagos Chamber of Commerce and Industry (LCCI) said the lockdown of Lagos has far -reaching implications for the Nigerian economy, the Lagos economy, the welfare of the people, government revenue, businesses and many more, stressing that the impact could stretch far beyond Lagos.

LCCI Director General, Muda Yusuf, for instance noted that as the commercial nerve centre of the country, Lagos been feeding the other states with many products used either for consumption or production.

“Lagos is an economic and commercial hub, not just for Nigeria, but for the sub region. Lagos ports hosts over 80percent of the imports into the country. The economic cost of the Lagos lockdown therefore will run into trillions of naira,” he said.

Yusuf said there will surely be significant job losses, as not many small businesses can afford to retain [for long] staff that are not working.

According to him, those of them that are magnanimous may pay for a few weeks; but majority may not be able to afford that. “Besides Lagos is host to a huge informal sector. They account for over 50 percent of the Lagos economy. Many of them live on daily income to survive. The lockdown therefore greatly hurts the informal sector players. They are perhaps the most vulnerable group.”

He added, “The lockdown adversely affected all sectors, including the industrial sector. However, it is noteworthy that the lockdown increased the demand for essential products. Citizens prioritised their spending on food, medicaments etc. It would thus appear that the food segment of the food and beverage sector experienced a surge in demand for their products following the outbreak of the pandemic. The challenge however would be in the area of replenishment of their stocks because of the disruptions in the global supply chains. However, industries that depend more on local raw materials will benefit much more at this time. They will generally be more competitive given the exchange rate depreciation.

“Food security will be at risk if there is no proper coordination and control about the various directives by state governors closing interstate borders. This is recipe for chaos. It would compound the hardship of the citizens and may create a food crisis. For instance, a cosmopolitan city like Lagos, with a population of over 20 million depend largely on other states for food supply. This closure of inter state borders would create a major problem of food shortages across the country. Such closures are not in consonance with the presidential directive on exemptions of some vehicular movements in the country. There is a lot of work to do to ensure the coordination of states restriction policy.”

On the conditional cash transfer, the NECA boss said with the current scourge of COVID-19 pandemic hitting seriously on every facet of the economy, it is apt for Federal Government to roll out various intervention schemes to cushion the excruciating impact on the economy, businesses and individuals, most especially the indigents.

He added that the Organised Private Sector (OPS) are in agreement with the distribution of relief packages as well to the vulnerable group to address the mitigating factors, but however questioned the process involved in identifying and distributing the “conditional cash transfer”.

He said, “Though, the initiative is laudable, it is fraught with concerns. The huge payout of over N2.4 billion by the government has raised questions as to whether the desired objectives would be achieved. First, what was government’s strategy for arriving at the sum to be paid out and the number of beneficiaries? Secondly, the implementation process is not clear and transparent. There are no clear implementation guidelines to ensure accountability, fairness or assurance that the funds would reach the target group.”

Olawale querried the effectiveness of this programme which he said is a source of concern, as the Government has not really made public how they intend to identify the beneficiaries of this programme and what available data is being utilised for same.

“The current mode of cash disbursement prone to corruption as it is difficult to account for. The most effective way of disbursement would have been through electronic transfers/banks which would ensure that the money is received by the identified beneficiaries after going through the necessary formalities. This would also encourage financial inclusion which is the one of the focus areas of the Central Bank of Nigeria,” he opined.

“We believe the first step is to identify, without ambiguity and to reduce the chances of turning the scheme into another charade, is to determine the number of those that will benefit from the scheme. The second step is to decentralise the locations to enable proper reach-out to the identified beneficiaries,” he stated.

Another major concern in the cash transfer, he noted is the fact that majority of poor of the poorest do not have bank accounts which leaves the country with the question of the credibility of the database to track and dispense the funds.

He maintained that the effectiveness and accountability of the scheme at this time remain questionable as in other climes, where there are database that will guide in implementing the scheme for proper documentation and accountability.

The NECA Director believes that physically gathering people together during this pandemic is just too risky as it takes only one infected person with COVID-19 to bring down the whole community.

For the success of the transfer, he however advised the Federal Government to administer the project through the grassroots: LGA’s, Traditional Rulers and Town Unions as well as using Commercial Banks or Micro finance bank in the disbursement of the Scheme and also encourage the beneficiaries to open a savings account, for proper verification and database gathering.

Government, he opined should, after the pandemic, build the capacities of the people so that after meeting their daily feeding requirements, they will be able to do something valuable for themselves and even contributing to national development.

“State Government should also be involved in taking care of the poor in the society. Thus, there should be an immediate and a complete re-programming of the budgets of the Federal and State Governments to focus on COVID-19 in 2020.

“The budgets should be re-programmed with the exception of security, improved healthcare infrastructure and the payment of salaries. A lot of emphasis should be placed on social protection at this time,” he said.

The LCCI equally acknowledged the fact that there is a major problem with the appropriateness of the palliatives announced by the President.

The LCCI boss noted that the school feeding program for instance is not relevant at this time as all schools are closed already.

Yusuf, like the NECA Director General said there is the issue of the currency of the database of the vulnerable people compiled few years ago.

According to him, the segment of the vulnerable that should be targeted at this time are the urban poor, many of them he said are in the slums of Lagos especially, and other states currently on lockdown.

Meanwhile former member Presidential Taskforce on the Reform of Nigeria Customs Serivce; Presidential Committee on Destination Inspection and Ministerial Committee on Fiscal Policy and Import Clearance Procedure, Lucky Eyis Amiwero, said the cash transfer by the Federal Government was not rightly implemented as done in other countries.

According to him, in other countries it is not political and lopsided, but targeted to the poor, the vulnerable, the weak, the lame and the blind.

He added: “So when Government starts to use these things as political tools, there is a problem and what you look at what they are giving out; it does not make any sense because that thing supposed to be targeted at the very poor and the vulnerable.

“After this incident by the grace of God when we survive it, we must understand that in all over the world now, there is a collapse of manufacturing. The supply chain has been broken, before the economy will pick back in the world; is going to take some time because as we are talking now alot of companies are not manufacturing.” (Daily Sun)