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Nigeria’s FEC Approves ₦2.3 Trillion Plan to Speed Up Economic Recovery

Nigeria will be getting a ₦2.3 trillion lift to get it out of an impending recession. This comes after the country’s Federal Executive Council approved the Nigeria Economic Sustainability Plan (NESP), a set of policy measures aimed at fixing the country’s troubled economy.

The economic sustainability committee, headed by Vice President Osinbajo, had earlier submitted the plan to President Muhammadu Buhari, after working on it for two months.

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The stimulus is designed to reduce the impact of the COVID-19 pandemic on Nigeria’s economy. It is also intended to shield the real sector from the effects of the fall in crude oil prices.

Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, gave notice of the approval at the end of the FEC meeting on Wednesday.

She explained that of the ₦2.3 trillion announced, about ₦500 billion had already been provided for in the amended 2020 Appropriation Act.

Also, ₦1 trillion would be given in loans to local manufacturing and production businesses, at low-interest rates. The funds would be provided by the CBN and “other development partners and institutions.”

The minister added that additional funds would be derived from local and external sources to make up the remainder of the spending plan.

Details of the Plan

According to the Federal Government, the NESP is expected to support local businesses that have suffered the effect of the pandemic-induced lockdown, create new jobs, and stop the economy from sliding into a steep recession. The plan should run for 12 months and will be succeeded by a new policy strategy after running its course.

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If fully executed, it will drive the cultivation of 100,000 hectares of new farmland, the construction of several hundred kilometres of roads, and deliver 300,000 homes annually. A solar home system project is also proposed, which should serve 5 million Nigerian households not currently connected to the grid.

Other courses of action mentioned are the disbursement of loans and payroll support to MSMEs, the promotion of domestic gas utilization, and an enabling environment for ICT. Another measure, the reduction of NAFDAC registration fees by 80%, had earlier been announced by Vice President Yemi Osinbajo.

The Plan’s Growth Projection for Nigeria’s Economy

The NESP forecasts Nigeria’s GDP to shrink by -4.4% for the year 2020 if there is no economic stimulus. It, however, predicts a milder recession if its ₦2.3 trillion support is realized; the economy’s GDP would only contract by -0.59% in that instance.

It also says the economy could be back to modest growth by 2021 if its more optimistic forecast materializes.

Meanwhile, the IMF now says it expects Nigeria’s economy to shrink by -5.4% this year.

The government will be banking on the successful execution of its economic sustainability program to get the country back to growth.

Featured image source: Market Forces Africa

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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