•Calls for debt relief, single digit interest rates
As Nigerians struggle to absorb the shock of an extended COVID -19 lockdown the national leader of the All People’s Congress (APC) Asiwaju Bola Ahmed Tinubu, has advocated an economic relief package in the form of emergency sustenance payments to vulnerable citizens while urging the Central Bank of Nigeria (CBN) to lower interest rates to single digits in order to spur the private sector and help reduce charge on deficit spending.
Tinubu, who stated this in his Economic Policy paper entitled Coronavirus Economic Stimulus Programme, reasoned that given the lethality of the disease, the goal of the government must be for the people to live neither with disease nor in hunger. “This situation presents a historic chance to establish a more beneficial social contract between government and the governed”, he advised.
To achieve this, the former Lagos state governor recommended an emergency sustenance payments, lower interest rates and a diplomatic push for debt relief.
On sustenance payments, he stated: “With the fiscal latitude provided by lifting the budgetary limit, government can render emergency sustenance relief to most Nigerian households, especially the recently unemployed, via cash payments. This will blunt hunger, maintain aggregate demand in the domestic economy and help sustain private-sector markets to the extent possible. Directed towards needy and modest households, such expenditure must be heavily weighted to local produce, not to imports. This will help mute inflation.
“Such payments can be done in either one or in a combination of three ways. First, we can designate a stipend for every household. The amount should be enough to pay for the monthly needs of an “average” household for food and other basics. While this may somewhat penalise larger families, perfection cannot be had at this time. Second, the stipends could be given as a form of emergency unemployment insurance to those who can prove they were relieved of employment due to the crisis. This would be more targeted at the actual victims of the crisis but harder to administer. This stipend would also have to be extended to owners of small and medium- sized businesses.
“Third, we could render some form of payroll support to companies and businesses that seek to retain workers albeit they may not be fully employed. The stipend could help companies stay in operation while maintaining workers on their payroll. By maintaining workers, the company can more swiftly return to full operation when normalcy returns. Payment of these stipends will require hiring additional government workers to augment the existing bureaucracies to implement this program.
This administrative requirement will help boost employment and aggregate consumer demand. Payments can be made quickly by using the BVNs of prospective recipients to make direct deposits into individual bank accounts. This will encourage those without bank accounts to establish such accounts.
Culled from The Sun