By Emma Ujah, Abuja Bureau Chief
At the onset of the Coronavirus (COVID-19) index case in Nigeria in February the Federal Government provided N102.5 billion for direct interventions in the healthcare sector.
A crises fund was established to address emerging and priority funding needs for the economy which had earlier come under pressure even before the index case as oil price crashed in the international market due to the COVID-19 pandemic.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, also announced that a N500 billion stimulus package had been arranged by the federal government to mitigate to effect of the COVID-19 on the nation’s economy. Faced with the harsh realities of a lack of buffers, the federal government’s only option was to look elsewhere to source funds for the battle against the pandemic.
The government has since secured a $3.4 billion facility from the International Monetary Fund (IMF); applied for another $2.5 billion for itself, as well as, $1 billion for state governments from the World Bank; and yet looking to receiving $1 billion from the African Development Bank (AfDB) and more from the Islamic Development Bank (IDB).
The Minister of Finance has not yet provided details of how much the federal government has applied for with respect to the IDB.
$3. 4 b IMF facility
Mrs. Ahmed explained that the facility being sought from the IMF was from the Drawing Right, meaning , it would come from Nigeria’s contribution to the Fund. Mrs. Ahmed added that it would therefore come without IMF conditionalities, and that the country was not entering into any formal programme with the Fund.
Her words, “We have also applied for funding from the International Monetary Fund’s COVID-19 Rapid Credit Facility to draw from our existing holdings with the World Bank Group / International Monetary Fund.
“This loan will not be tied to any conditionalities. Let me just state here and clarify explain that Nigeria does not intend to negotiate or enter into a formal programme with IMF at this time or in the foreseeable future.
“The COVID-19 Rapid Credit Facility is a right for every member country to draw up to limit of the amount that it has contributed and Nigeria has expressed its interest in that regard.
“We have about $3.4 billion with the IMF and we intend to withdraw the entire amount. The IMF has a provision that we can withdraw between 50 – 100 per cent. We are aware that 80 other countries have asked for similar facilities.”
Vanguard investigations indicated that although the $3.4 billion facility does not fit into the definition of the normal IMF loan which usually come with conditionalities, since it is a Drawing Right, it is not entirely free.
As learned, it has to be paid back to the Fund (replenished) within a period of four to five years with about 1 percent interest.
Nigeria’s commitment before the IMF.
Although technically, the $3.4 billion belonged to Nigeria by right since it is coming from her contribution to the IMF, the President Muhammadu Buhari administration had to make some commitments to the Board of the Fund to be granted the $3.4 billion facility.
It has emerged that the government promised to be transparent with the utilization of the funds.
A document on the facility made available by the fund indicated that the government promised to publish names of companies to be awarded contracts in the procurement processes in the fight against the COVID-19 pandemic and mitigating its effects on the nation’s economy.
In addition, the federal government pledged an independent audit of the expenditures under the COVID-18 crisis-mitigation activities.
According to the document, “To ensure financial assistance received as part of the COVID-19 response is used for intended purposes, the Nigerian authorities committed to undertake an independent audit of crisis-mitigation spending and related procurement processes and to publish procurement plans and notices for all emergency-response activities, including names of awarded companies and beneficial owners.”
It was learnt that discussions on the facility took place via videoconference calls during April 17-21, 2020.
The IMF team was lead by the Mr. Amine Mati , Snr. Resident Representative and Mission Chief for Nigeria. The IMF team held videoconference calls with Vice President Osinbajo; Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed; Central Bank Governor, Mr. Godwin Emefiele; among other senior government officials.
The report added, “Since the onset of the crisis, the authorities have allowed greater exchange rate (FX) flexibility and have taken important steps towards unification of existing FX windows, which should be finalized immediately.
“They have put in place measures to contain the pandemic and mitigate its economic impact. Once the COVID-19 crisis passes, they intend to resume their revenue-based fiscal consolidation program—which they started this year by increasing the VAT rate and introducing an automatic fuel pricing mechanism— while creating fiscal space for priority spending and avoiding recourse to central bank financing.
“Staff assesses public debt to be sustainable and that there is adequate capacity to repay the Fund. The authorities are committed to continue to strengthen financial supervision and regulation in order to safeguard macro-financial stability.”
CACVOVID FUND hits N27. 16 billion
Outside government efforts, the Organised Private Sector (OPS) has also played a major role in resource mobilization towards containing the COVID-19 pandemic, as well as, mitigating its effects on the economy.
As at April 28, 2020, the update on the Nigeria Private Coalition Against COVID-19 Fund indicated that N27.160 billion has been raised by companies and individual donors, in this regard.
Some of the major contributors to that fund included the CBN and Aliko Dangote who topped the list of donors with N2 billion each. The Flood Relief Fund donated N1.4 billion.
The following donated N1 billion each: Abdulsamad of BUA Sugar Refinery Ltd; Segun Agbaje of GT Bank; Tony Elumelu of the UBA Group; Oba Otudeko of First Bank; Jimi Ovia of Zenith Bank; Herbert Wigwe of Acess Bank.
European Union’s EUR 50 million
The European Union (EU) has made one of the most significant donations to the COVID-19 fund with its EUR 50 million (about N21 billion).
The Head of EU delegation, Amb. Ketil Karlsen who announced the donation at a meeting with President Muhammadu Buhari, at the Presidential Villa, Abuja, on April 14, said that the money was to cushion the effects of the pandemic on the people.
A federal government official shortly after the donation was announced, reportedly said that the EU money was not for palliatives for the poor.
Fund Monitoring Committee
A key issue in the funds being raised by both state and non-state actors, has been the transparency in the utilization of the resources.
The minister of Finance, at her April 6, briefing, assured Nigerians that all private donations and public funds set aside for the fight against the COVID-19 would be transparently utilized and accounted for.
She said that an independent committee would be set up to monitor the disbursements and appropriate inform the public on how the funds were spent. Almost a month after, that committee is yet to be announced.
What else to do
Prof. Magnus Kpakol, former National Coordinator of the National Poverty Alleviation Programme (NAPEP) and for Chief Economic Adviser/Chief Executive Office of the National Planning Commission, opined that the federal government may have to pursue the debt relief, like other African countries, in order to free funds, to tackle the pandemic.
He also called for better coordination of the livelihood aspect of the battle against the pandemic.
“Apart from the above, the federal government may have to borrow or pursue the debt relief like other African countries in other to free funds to be able to fight the pandemic.”
Former Deputy Governor of the Central Bank of Nigeria, Mr. Kingsley Moghalu, also advised the federal government to use about $500 million of the $3.4 billion facility from the IMF to establish “a venture capital fund to provide equity capital to unemployed youth (with a skills training component), urban slum and rural unemployed citizens to start new, small and Micro business ventures.
“The fund will be a co-owner of the businesses in order to ensure return on investment and corporate governance. This Venture Capital Fund should be run by the private sector based on a PPP arrangement and transparent guidelines that guarantee equal access to qualified Nigerians in all parts of the country.”
According to him, this is necessary to stimulate the economy and address the massive unemployment brought about by the COVID-19 pandemic.