The World Health Organization (WHO) declared the COVID-19 outbreak a Pandemic on 11 March 2020 upon a determination that the outbreak had increased by 13-fold and the number of countries affected had tripled.1 While some countries are reported to have reached the peak of the spread and are experiencing a decline in confirmed cases, other countries are at the beginning of the outbreak, with some reporting a slower rate of infection, which is believed to be influenced by either high containment measures or low testing.

Following an initial slow increase in the number of confirmed cases in Nigeria, President Muhammadu Buhari on 13 April 2020 declared a 14-day extension of the initial 14-day lockdown period imposed on Lagos and Ogun States and the Federal Capital Territory, Abuja. The halt in economic activities and international trade between nations has led to sharp decline in economic activities and expected to result in a global recession. The IMF has dubbed the crisis as the 'Great Lockdown' which is said to be the worst recession since the Great Depression.2

Further to our last newsletter on the COVID-19 regulatory updates (please click here to read), we have continued to track new measures introduced by the Nigerian government and other regulatory developments in response to the COVID-19 Pandemic and the implications of these developments on individuals and businesses in Nigeria.

A. Monetary Policy Interventions

Based on a recent statement issued by Mr. Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), the Apex Bank has developed a monetary policy response timeline to guide the management of the COVID-19 Pandemic and the orderly reboot of the Nigerian economy.3 The CBN classified its current and planned responses into immediate term, short term and medium term policy responses.

  • Immediate Policy Responses

  • The immediate policy responses have a 0 – 3 months' timeline and comprise credit facilities at low interest rates, foreign exchange availability and interventions to affected households. Specific sectors such as the health sector have been prioritized under this category. More details on the immediate term policy are available in our last newsletter.

  • Short-Term Policy Responses

  • The short-term policies are expected to take-off once the Nigerian economy is reopened and restrictions on movements are eased. The short-term policy responses will be implemented within a 0 – 12 months' timeline and are directed towards the following:

    - providing financial support for the manufacturing sector;

    - ensuring that banks and private equity firms finance the health sector through long term facilities with the objective of reversing the current trend of outbound medical tourism;

    - establishing a ₦15 trillion infrastructural development vehicle; and

    - prioritizing provision of foreign exchange for importation of essential machinery and critical raw materials.4

    Although these plans are laudable and promising for the Nigerian economy, given that the timeline is a 12-month period, some stakeholders are skeptical on how much can be achieved within the proposed timeline.

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Footnotes

1. Tedros Adhanom Ghebreyesus, WHO Director General, (WHO Director- General's Opening Remarks at the Media Briefing on COVID-19, 11 March 2020) https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020 accessed 18 April 2020.

2. Gita Gopinath, 'The Great Lockdown: Worst Economic Downturn Since the Great Depression' (IMFBlog Insights and Analysis on Economics & Finance, 14 April 2020) https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/ accessed 18 April 2020.

3. Godwin Emefiele, Central Bank Governor, (Turning the COVID-19 Tragedy into an Opportunity for a New Nigeria, 14 April 2020) https://www.cbn.gov.ng/Out/2020/CCD/EDITED--Turning%20Covid%20Tragedy%20into%20Opportunity%20for%20New%20Nigeriat--OpEd%20by%20Gov%20Godwin%20Emefiele--Tue14April2020%201.pdf accessed 18 April 2020. (Emefiele)

4. Ibid.

Originally published 23 April, 2020

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