Saturday, February 24Inside Business Africa

COVID-19: Moghalu Calls for Urgent Fiscal Reforms

The Convener of To Build A Nation (TBAN) and presidential candidate of the Young People’s Party (YPP) in the 2019 general elections, Prof. Kingsley Moghalu, has listed policy actions that should be the main focus of the federation government in the fight against COVID-19 pandemic and its economic impact on the nation.

He further opined that Nigeria needs urgent fiscal reforms immediately after the virus, stressing that our economy must become truly diversified away from crude oil.

Moghalu, specifically advised that the budget of the federal and state governments should be, “completely re-programmed to focus on COVID-19,” saying, with the exception of security and payment of salaries, nothing else should matter at the moment.

The former Deputy Governor of the Central Bank of Nigeria (CBN) in a statement noted that the N50 billion fund established by the CBN for families and small businesses would not be adequate to address the crisis if and when it escalates.

He, however, advised that the fiscal authorities must plan and make provision for the subsistence funding of all extremely poor Nigerians and individual citizens, numbering approximately 100 million, for 30 days in this scenario.

He added that in a back-of-the-envelope calculation, if a sum of N20,000 were to be made available for every impoverished family to stock on food and supplies for a month in a Covid-19 total shutdown scenario, this would require an intervention of N2 trillion.

Moghalu said: “Even the N10 trillion federal government budget for 2020 may not be able to carry this burden, since it is based on projections that have turned out (as usual) to be unrealistic because of reliance on crude oil revenue and the absence of a broad base of domestic taxation.

“Third, as I have emphasised in recent interviews, the COVID-19 crisis has graphically exposed the failure of the federal and state governments to invest adequately in human capital – healthcare and education – as a priority. This is incompetent governance, pure and simple.”

While noting that Nigerian households in an already-impoverished population bear 70 per cent of healthcare expenses out of pocket, he said the federal government must urgently commence funding of the basic healthcare provision fund, with one per cent of the Consolidated Revenue Fund as provided in the Nigerian Health Act (2014).

Moghalu, who feared that the nation’s economy appeared headed for a second recession in four years, pointed out that the COVID-19 crisis further demonstrated the ludicrousness of the now-suspended plan to borrow $22.7 from foreign countries (mainly China) for “infrastructure”.

He advised that the plan should be cancelled completely, arguing that the Nigerian government would likely not be able to service, let alone repay, such debt in the next few years.

He suggested that petrol subsidy should be removed and the fuel pump price deregulated, with savings from subsidy removal invested urgently in the health and education sectors.

The TBAN convener added that foreign exchange reforms that truly incentivises a shift away from oil-dependency through increased manufacturing and export trade remained urgently needed.

Moghalu added: “The naira should be strategically and proactively devalued, and then align this move with appropriate fiscal and trade policy rather than, as is often the case, having devaluations forced on Nigerians with no accompanying policy reforms.

“The CBN should scrap its forex-access restrictions on the importation of over 40 items. Our fiscal authorities should instead impose high tariffs on items perceived as luxury or non-essential (and generate revenues from such tariffs), while industrial and trade policy should establish subsidies and other incentives for domestic manufacturers, especially those that can provide proof of export orders that will bring in hard currency and take advantage of the naira devaluation in the international market.”

He said in addition to measures already taken, the federal government should shut down the whole country for one month, barring only existentially essential services.

This, Moghalu explained, was necessary in order to give more time for contact tracing, reduce community spread of the disease, especially in urban slums and rural areas, import and deploy testing kits, and to deal with emergency treatments while it could still conceivably be handled.

Source: ThisDay

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