The novel Coronavirus (COVID-19) has been spreading like wildfire and the effects on the global economy are at best imagined. The latest Situation Report from the World Health Organisation (WHO) as at 06 May 2020 states that the total number of countries, areas and territories that have been affected by COVID-19 is 215.
COVID-19 and Its Effects on the Global Economy:
- Global Outlook: The IMF predicts that the global economy will contract by -3% due to COVID-19 pandemic, worse than the 2008-2009 global financial crises which contracted by -0.1%. Is there hope for the future? Yes. The IMF also predicts that the global economy is projected to grow by 5.8% in 2021 if economic activity normalizes, aided by policy support.
Sub-Saharan Africa is predicted to contract by -1.0% while Nigeria’s economy is predicted to recede by -3.4%. Like the global economy, there is hope for the future in Nigeria. Nigeria’s economy is projected to grow in 2021 by 2.4% with the implementation and enforcement of effective policies.
Federal Government’s Fiscal and Monetary Palliatives to COVID-19
- Establishment of a 500 billion COVID-19 Intervention Fund
What will the money be used for?
- Upgrade healthcare facilities
- Finance the Federal Government’s Interventions to support States in improving healthcare facilities;
- Finance the creation of a Special Public Works Programme
- Fund any additional interventions
2. The Emergency Economic Stimulus Bill: Nigeria’s Emergency Economic Stimulus Bill: Nigeria’s Emergency Economic Stimulus Bill: On Tuesday, March 24, 2020 the House of Representative passed the Emergency Economic Stimulus Bill, 2020 (the “Bill”) which is aimed at cushioning the extreme economic effect of the global pandemic in Nigeria. The bill is styled as “A Bill for an Act to provide for Relief on Corporate Tax Liability, Suspension of Import Duty on Selected Goods and Deferral of Residential Mortgage Obligations to the Federal Mortgage Bank of Nigeria for affixed term to protect jobs and alleviate financial burden on citizens in response to the economic downturn occasioned by the outbreak of COVID-19 disease”.
Three (3) main aims and objectives of the Bill are:
- Provide job security to employees and tax relief to companies
- Provide extension of moratorium (180days) on mortgage payments to the Federal Mortgage Bank of Nigeria (FMBN)
- Import duty waivers on all medical goods
Please read our detailed article on the Economic Stimulus Bill in “Nigeria’s Fiscal Response to COVID-19: The Emergency Economic Stimulus Bill, 2020” here.
3. Amendment of the 2020 Appropriation Act
The Budget Office Nigeria is currently working on a revised 2020 – 2022 Medium-Term Expenditure Framework / Fiscal Strategy Paper (‘MTEF/FSP’) as well as an Amendment to the 2020 Appropriation Act. There would be downward adjustments to the Non-Oil Revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises.
FG Proposed revised budget
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|crude oil benchmark price||$57/b||$30/b|
4. The Government Enterprise and Empowerment Programme (GEEP), one of Federal Government’s Social intervention programmes which comprises of TraderMoni, MarketMoni and FarmerMoni, and executed by the Bank of Industry stated that it would distribute a total of N5 billion to 500,000 petty traders nationwide.
5. President Buhari’s Approval of the Disbursement of Relief Materials To 3.6 Million Households
President Muhammadu Buhari in his address on Sunday, 12 April 2020 to the citizens of Nigeria on the extension of the COVID-19 pandemic lockdown stated that the current social register would be expanded from 2.6 million households to 3.6 million households in the next two weeks.
6. FGN has provided N102.5 billion in resources to be available for direct interventions in the healthcare sector.
7. Two- month Licence Fee Waiver to Broadcast Stations: The Federal Government has granted a two-month licence fee waiver for terrestrial broadcast stations as part of efforts to ease the negative effect of the COVID-19 pandemic on the broadcast industry in the country.
8. Augmentation to the States’ FAAC Allocations & Moratorium on States’ Debts
Due to the drastic decline in global oil prices President Muhammadu Buhari has approved that the sum of US$150 million be withdrawn from the Nigeria Sovereign Investment Authority (‘NSIA’) Stabilization Fund to support the June 2020 FAAC disbursement.
Tax Palliative Measures to COVID-19
Federal Inland Revenue Service (FIRS) and Several States’ Internal Revenue Service (SIRS) Palliative Measures to Cushion the Effects of COVID-19 on Businesses & Taxpayers:
- The FIRS AND several SIRS have stepped in to also cushion the effect of COVID-19 on businesses and taxpayers. Some of the measures set up by the FIRS are:
- Taxpayers can submit their documents online
- Late Returns Penalty (LRP) has been waived for taxpayers who pay early and file later.
- Value Added Tax (VAT) and Withholding Tax (WHT) has been extended to the last working day of the month as opposed to the 21st day of the month.
- Field Audits, Investigations and Monitoring visits have been suspended till further notice.
- Taxpayers facing challenges in sourcing for FOREX to offset their liabilities can pay in Naira at the prevailing Investors & Exporters (I & E) Forex Window rate on payment date.
- Interests and penalties arising as a result of tax arrears from desk review, tax audit and investigation has been waived for all taxpayers but they must pay their debt in full on or before May 31 2020.
The following are the measures taken by SIRS:
- Extension of deadline for filing Annual Individual Personal Income Tax (PIT) Filing Returns: The Lagos State Internal Revenue Service (LIRS) extended the deadline for filling annual returns for individuals to 31st May 2020. The FCT-IRS has also extended the deadline to the 30th of June 2020.
The Central Bank of Nigeria (CBN) Palliative Measures in Response to COVID-19 Pandemic:
- Creation of a N50 billion Targeted Credit Facility (TCF): CBN introduced the N50 billion TCF as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic.
- Extension of Moratorium: The CBN granted a further moratorium of one year on all principal repayments which takes effect from March 01, 2020.
- Decrease in Interest Rate Interest by 44%: Interest rates have been reduced from 9% to 5% for a period of year on all CBN intervention facilities which takes effect from March 01, 2020.
- Regulatory Forbearance: The Central Bank of Nigeria (CBN) has granted all Deposit Money Banks (DMBs) leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of COVID-19 particularly the Oil & Gas, Agriculture, and manufacturing industries.
- N100billion Credit Support to the Healthcare Industries: The CBN as part of its measures to cushion the effect of COVID-19 has provided N100billion credit support intervention to the Healthcare Sector. This is with a view to strengthening the sector’s capacity to meet potential increase in demand for healthcare products and services. The scheme is to provide credit to indigenous pharmaceutical companies and other healthcare value chain players intending to build or expand capacity.
- CBN, Bankers’ Committee Suspend Lay-offs in Banks: To minimize and mitigate the negative impact of the COVID-19 pandemic on families and livelihoods, CBN has ordered banks in Nigeria not to retrench or lay-off any staff of any cadre (including full-time and part-time).
- Extension of Deadlines By One Year For The Revised Minimum Capital Requirements For Microfinance Banks (MFB0: The CBN extended the deadlines for compliance with the revised minimum capital requirements for all categories of MFBs by one year.
Customs & Ports Palliative Measures to COVID-19
- The Nigerian Ports Authority has directed all Terminal operators to extend the suspension of all applicable terminal storage fees on consignments (demurrage) for another fourteen days with effect from April 13, 2020.
- The Nigerian Shippers’ Council directed shipping companies to suspend demurrage charges during the period of the COVID-19 lockdown with effect from 30th March 2020.
External Funds from International Organisations
- The IMF approved $3.4bn loan to support Nigeria combat COVID-19.
- The Nigeria Centre for Disease Control (‘NCDC’) has access to a Regional Disease Surveillance Systems (‘REDISSE’) facility from the World Bank in the sum of US$90 million.