It is not all gloom for the economy and some businesses in the face of Covid-19. Despite the pandemic, banking sector, telecoms, e-commerce and even manufacturing have leveraged on technology to show strength.
The tailored measures executed by governments and central banks across the world to meet pandemic-induced shocks on businesses, stronger tech-bases and digital channels in banks, more data sales in telecoms, expanded distribution channels for e-commerce companies and improved performance in manufacturing have triggered sustainable economic growth.
The cost of Covid-19 to the global and local economies remains high. Global management conglomerate, McKinsey & Company, estimated that by 2025, Covid-19 will have cost the world between $16 trillion and $35 trillion.
Governments, financial sector regulators and businesses have equally faced the need to solve multiple, competing priorities like rising inflation, capacity constraints, and supply-chain disruptions, simultaneously.
One of the toughest: how to keep an economy going while at the same time shutting it down to protect citizens from infection.
Still, as the pandemic raged and several sectors like the hospitality industry, airlines, among others count their losses, others like banking, telcos, e-Commerce, manufacturing have major successes to celebrate.
Still, the progress recorded in these sectors did not come cheap. They are product of regulatory and government supports as well as businesses leveraging on technology to meet consumers’ changing needs.
The Central Bank of Nigeria (CBN) and its counterparts across the globe, have implemented various forms of liquidity measures to support their governments’ short-term budgetary needs and frameworks for businesses.
Interestingly, the Nigerian economy achieved some level of growth within the fourth quarter of 2020, when the pandemic was still at its peak.
The agricultural sector achieved 3.42 per cent growth, year-on-year, which had a significant effect on overall growth as Agriculture itself accounts for 26.95 per cent of Gross Domestic Product (GDP). Within same quarter, the oil & gas sector (which accounts for 5.87 per cent of the economy) fell by 19.76 per cent, which reflects low oil prices during second and third quarters.
In a report titled: Fourth Quarter GDP and Implications for Markets, Head Research at Coronation Asset Management, Guy Czartoryski, said the least surprising development was the continued growth of Telecoms (12.45 per cent of the economy) which maintained its rapid development, growing by 17.64 per cent year-on-year in the fourth quarter.
He explained that home working and data streaming likely account for its success. The most surprising sector was Real Estate (6.38 per cent of the economy) which ended its long recession by growing by 2.81 per cent year-on-year in the fourth quarter of 2020.
The six sectors mentioned so far (Agriculture, Trade, Manufacturing, Telecoms, Oil & Gas and Real Estate) together account for 75.71 per cent of GDP.
Findings showed that African mobile app market showed strong growth, with overall installs increasing by 41 per cent. Nigeria showed the highest growth, with 43 per cent uplift, followed by 37per cent in South Africa, and 29 per cent in Kenya.
Many Nigerian banks have also created mobile Apps and deepened their e-payment tools to serve customers better leading to improved revenue.
More bank customers used the Covid-19 triggered fears to embrace digital services, activated their mobile Apps and demanded for low-cost banking services that have now come to define sectoral competition.
Financial inclusion is one area that many banks need to pay much attention to. But successfully enrolling new customers from all cadres of the society will require huge investments in technology and quality customer services.
Aside being known for their customer-centric approach to service delivery, banks took steps to promote digital services , which allowed customers transact businesses from their point of comfort and in the convenience of their homes and offices.
For the non tech-savvy customers, the Unstructured Supplementary Service Data (USSD) remains a most convenient and available platform for use.
Technology has also supported its quest for enhanced re-skilling of its greatest asset – employees – for the emerging demands and habits of its over 11million (Mobile App) customers during the COVID era and beyond. All these have reflected positively on bank’s unaudited results for the full-year ended December 30, 2020.
The pandemic also triggered an e-commerce boom in Nigeria, alongside the rest of the world. The e-commerce companies and platforms enjoyed a rise in activity and profits, while retailers that had not previously developed their online presence found themselves obliged to do so in order to survive.
The success of these sectors and more in the face of the pandemic followed supports policies measures and supports they got from the CBN.
CBN Governor, Godwin Emefiele, who clocks 60 years on August 4, has consistently reiterated his commitment to the domestic economy.
This led to more funding going to key segments of the economy to ensure the impact of the Covid-19 pandemic was reduced on the people and their businesses leading to economic recovery.
In line with its Covid-19 response plan, the CBN under Emefiele created credit facilities for the healthcare, N100 billion, Targeted Credit Facility, N100 billion, and manufacturing sector N1 trillion.
From January 2021 till date, N157.5 billion have been disbursed for 29 real sector projects under the Real Sector Support Facility , while N857.6 billion have been disbursed for 234 real sector projects under the RSS-DCRR (inclusive of (CMIS) from inception November 2018 till May 28, 2021.
Also from January 2021 to date, N26 billion have been disbursed for 10 projects under the Covid-19 Manufacturing Intervention Scheme (CMIS) while N255.9 billion have been disbursed for 78 projects under the CMIS from January 2020 till May 28, 2021.
Likewise, 98 healthcare projects have been funded to a tune of N97.44 billion under the Healthcare Sector intervention Facility (HSIF) as at May 28, 2021.
In the five year Policy Trust of the CBN- 2019 to 2024, Emefiele promised to improve access to credit for Micro, Small and Medium Enterprises (MSMEs) as well as spur consumer spending to stimulate growth and enhance employment, among others.
Following the an apparent credit squeeze which started in March 2019, the CBN boss modified some long-staring rules that were perceived, rightly or wrongly as one of the constraints to bank lending.
To unlock the potential of the real sector to engender output growth, value added productivity and job creation, the apex bank recently established a N300 billion Real Sector Support Facility (RSSF).
The facility is supporting large enterprises for startups and expansion financing needs of N500 million up to a maximum of N10 billion in key sectors of the economy, especially manufacturing, agriculture, agricultural value chain, and services.
The facility is also meant to increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis.
In the economic outlook for 2021, the former Lagos Chamber of Commerce and Industry, LCCI, Director-General, Muda Yusuf, said several governments globally provided fiscal stimulus to support households, small businesses, and their economies generally, while central banks eased monetary policy conditions through large-scale purchases of financial assets and interest rate reduction to rescue their respective economies.
Banks show strength despite headwinds
The CBN has also assured banks’ depositors of the resilience, safety and soundness of commercial banks and other financial institutions despite Covid-19-induced challenges on global economies.
CBN Acting Director, Corporate Communications Department, Osita Nwanisobi, said that stress test conducted on Nigerian banks showed the soundness and reliance of the banking sector. He said the banks had proven to be very sturdy in spite of the pandemic.
According to him, routine bank examination and stress test for financial institutions operating in the country indicated that no Deposit Money Bank (DMB) licensed by the CBN is currently under any form of financial distress.
He said assured depositors that the banks have adequate capital to absorb unexpected losses that may arise.
He made this clarification in response to certain false and unfounded stories circulating in the social media attacking the soundness and safety of some Nigerian banks.
In line with the bank’s resolve to ensure adherence to prudential standards, Nwanisobi said the CBN continues to monitor the activities of banks in order to ensure that no individual or institution breaches the laid down guidelines.
He therefore advised the banking public to disregard any report alleging insolvency in the Nigerian banking sector.
Similarly, he reiterated the desire of the CBN to prioritize financial inclusion as a measured approach to increase the number of adults included in financial services provided by banks in Nigeria.
Nwanisobi therefore urged members of the banking public to take advantage of the services provided by the banks, particularly the intervention programmes initiated by the CBN, to enhance their economic status and contribute to overall national development.
Policy plan for economic growth
The CBN under Emefiele had in April 2020 developed a three-year policy plan to revive the economy. The Policy Response Timeline will guide Nigeria’s crises management, and orderly rebooting of the economy by relying on homegrown solutions.
In a report titled: Turning COVID-19 Tragedy into an Opportunity for a New Nigeria, the CBN boss said the policy framework will come in three phases- immediate term policy of zero to three months, short-term policy priorities of zero to 12 months and medium-term policy priorities of zero to three years.
Emefiele said the outbreak of the Novel Coronavirus Disease (COVID-19) in China has rapidly permeated and profoundly changed the world. While the crisis is first and foremost a public health issue which has claimed the lives of over 123,600 people worldwide, and counting, the economic damages are unprecedented on several fronts.
“That is why in response to COVID-19, the CBN is strengthening the Nigerian economy by providing a combined N3.5 trillion in targeted measures to households, businesses, manufacturers ad healthcare providers. These measures are deliberately designed to support the Federal Government’s immediate fight against COVID-19, to build a more resilient, more self-reliant Nigerian economy,” he said.
“We do not know what the world will look like after this pandemic. Countries may continue to look inwards and globalization as we know it today may be dead for a generation. Therefore, as a nation, we cannot afford to continue relying on the world for our food, education and healthcare. This time has come to fully transform Nigeria into a modern, sophisticated and inclusive economy that is self-sufficient. Rewards the hardworking, but protect the poor and vulnerable, and can compete internationally across a range of strategic sector,” he added.
Emefiele said: “For a country of over 200 million people, and projected to be about 450 million in a few decades, we can no longer ignore repeated warnings about the dangers that lie ahead if we don’t produce locally, because the security and well-being of our nation is contingent on building a well-diversified and inclusive productive economy”.
“There would be no need to continually rely on the world for anything and everything at any time. He said now is the time for Nigeria to look inwards as a nation and guarantee food security, high quality and affordable healthcare, and cutting-edge education for the people,” he said.
