How far is the IMF in providing Covid-19 relief to Nigeria?
Let me first express my deepest sympathy to the people on the continent that are most affected by the pandemic and even more so the economic shock it has created. The IMF responded very early with a commitment to rapidly increase emergency financing. With the support of our shareholders, we doubled what we can provide. From the African countries we have about 40 requests, and I’m glad to say that 21 Sub-Saharan African countries have received financial support from the IMF with Nigeria, the largest $3.4bn assistance. We are aiming to continue with rapid approvals because we recognize speed is of an essence to help health systems cope with the pandemic but also to help vulnerable people and vulnerable parts of the economy to cope. Our aim is, to get some $18bn into the hand of policy makers. We have done two important things for Sub-Saharan Africa. We’ve mobilized debt relief for the countries with low income to their debt service to the fund. 23 countries are able to not pay us for the next 6 months and we would extend that to most likely two years.
Secondly, together with the President of the World Bank, we led the effort to come with the debt standstill for official bilateral creditors. We call on private sector to also join in. when the economies stand still, debt economies should also stand still.
What is your assessment of the impact of funding on Nigeria, and the scale of emergency and support need for Nigeria is?
The pandemic has not affected very large number of people, but it has spread in Nigeria and rightly so, the government has taken precaution measure by restricting the movement of people even with some easing. Even as at today, it is still at a point when to protect people and the economy-measures are in place. Seriously, Nigeria has been hit by the economic fallout from this pandemic. It is hit because of measures it takes, because of restrictions in the world economy and by the collapse of oil prices. To put this in numbers, for Africa we project a contraction of one and a quarter percent. This is going to be a deeper contraction in our perception, in Nigeria. It would go from +2% growth to -3.4%. whilst we are projecting recovery in 2021, it is going to be only a partial recovery. Therefore, difficult days are ahead and in that context, we very much welcome the decisive measures to protect the economy and to protect the most vulnerable people in Nigeria. What we project in a situation when the fiscal gap is going to be quite significant in the order of somewhere between $11bn, that’s the injection from he fund and other financial institutions, is critical and timely. We expect that collectively with the world bank, African development bank and other partners of Nigeria, we can feel this gap halfway through and then the country itself can take measure, re-prioritise spending and make sure that there is some increase in domestic borrowing so the economy can weather this very difficult time. We are also very much welcomed that Nigerian actively ask for more accountability to the citizens of Nigeria in the money they get.
One important message we sent to all African countries and Nigeria inclusive, is that spend because you have to support the economy going over this difficult times, but keep the receipts. We cannot afford to have accountability and transparency take back seat.
On the approved assistance to Nigeria, what sorts of timeless are we looking at for the disbursements for Nigeria and would the funds come in tranches?
We have already disbursed in emergence assistance. The board approved and disbursed to the country. It goes to Central Bank in Dollars and gets transferred in Nigeria in the case of Nigeria. The conditions hare quite favourable, whilst the re-payment period is five years. Up to two and half years is grace period. And the interest on the lone is one percent. So in that sense, our members can benefit through the fund, from interest rates globally. We also have a number of safeguards when we provide financial support to countries that have been approved, met and exceed the safeguards.
What’s your view on Nigeria and Africa’s opportunity here as a whole to build resilient and tough healthcare systems?
Across Africa, as it is the case across the whole world, this crisis puts pressure on moving fast in digitalisation and transforming how societies and economies work. And I very much hope that Africa that has been geared towards that kind of transformation, comes out with a stronger capacity to be part of the new knowledge economy. That means that countries need to sustain after Covid -19, investment in health, education, human capital which are critical for success and also prioritise their pubic investments in a way that it supports that kind of transformation. Governments across Africa should build buffers so they can weather shocks. In the case of Nigeria, the finance Minister is setting an agenda to increase the share of tax to GDP. Before the crisis, it was 8%, this years because of drop in revenue, it may even shrink to 5%. But eh objective of 5 years is to lift it up to 15%.