‘Put first things first and second things are thrown in. Put second things first and you lose both first and second things.’ – C.S. Lewis
Not too long ago, the President of the US, Donald Trump, was engaged in a fierce war of words with Kim Jong Un, his North Korean counterpart, ostensibly over the testing of submarine ballistic missiles. The muscle-flexing included stepping up of the usually controversial US/South Korea joint military drills and exercises in the peninsular. North Korea threatened fire and brimstone and in response, Kim Jong Un carried out an intimidating display of sophisticated military arsenals and launch of various categories of ballistic missiles, to warn his adversaries that his country should not be taken lightly. The world was amazed at the military sophistication displayed by North Korea. Of course, no one doubts the strength of the US when it comes to sophisticated military apparatus and defence spending, after all, it is the number one superpower. It took an unprecedented peace meeting between Trump and Kim to deescalate the hostilities and start a denuclearization program.
Today, the exchanges and meetings along the Korean peninsular are like irritants to the rest of the world that is fighting a real enemy that is killing rampantly in thousands. Trump is trying everything to stop the spread of COVID-19 and reduce the death toll, including recommending unproven and even ridiculous ‘therapies’ like the use of disinfectants and ultraviolet rays. Kim, on the other hand, is reportedly battling to stay alive after a surgery that didn’t seem to have gone well. Clearly, the massive investments in defence and the stockpiling of armaments have been rendered useless in a War in which the world is threatened by a little, invisible and unarmed virus.
One thing that is clear is that by the time these difficult times would be over, the world would not be the same again. Amazingly, no one in positions of influence and authority seemed to have foreseen this catastrophe a few months ago. Economies have tanked and markets have behaved in ways that were thought impossible just days ago. For instance, who, three months ago, would have thought that producers of oil would be begging buyers to take the dark stuff from them even for free or fee payable by the seller? It is projected that by June, the world will run out of storage space for crude oil. Demand has dropped dramatically as factories have closed, airlines are grounded, and transportation has come to a virtual stop in many parts of the world.
It is obvious that priorities will change in the emerging post-Covid-19 era and the world may begin to focus on what is truly important. Abraham Maslow propounded what is widely known as the “The Theory of The Hierarchy Of Needs”, in which he stated that man’s needs are ordered hierarchically as in a pyramid, starting at the base with Physiological needs, Safety needs, Social belonging needs, Self-esteem needs and finally Self-actualisation needs. The first level (Physiological needs) and the most important need of man is made up of the rudimentary necessities of life, which would include health, food, shelter, clothing, and sleep. These are basic needs which, only when met, would trigger the need for the satisfaction of other relatively less important, even though necessary needs. In just a few months the needs of people around the world have been reduced to the basic and physiological. Interestingly, many countries of the world will be unable to even fulfill these needs for most of the population.
Our thesis today is about preparing ourselves and our nation for the end of Covid 19. One thing we are certain about is that the Pandemic will end one day. We may not be sure of when or how it will end but we can hazard a guess as to the state that it would leave us as it ends. This is not a difficult task as we are not in doubt about where we are, just 4 months after its debut. Our economy is already in a mess. The global supply chain has been disrupted in both the consumer and producer sides of the divide. The only country shipping anything at all, for now, is China. Even at that, a significant component of its shipment comprises food, personal protection equipment, and medicaments. Those are what is important to the rest of the world now. The USA, for instance, has run out of face masks, gloves, ventilators, and respirators. Ironically, it had to receive help from Russia and in what could be seen as a diplomatic coup, Russia sent America medical materials manufactured by a firm that is under sanctions. The physiological need was more important in the transaction. The case is not different across the world. Investments in high technology applications and appliances not related to healthcare, specifically treatment of Covid-19, have been put on hold. Of course, any investment that is not channeled to physiological needs at this time is dead on arrival. However, while we prepare for extended co-existence with COVID 19, one thing that is clear nevertheless, is that the economy has gone into a tailspin which will ultimately lead us into a recession by October this year. In fact, if care is not taken, it will degenerate into a depression. This is the stark reality and we must begin to think of how to deal with it.
We had stated many times before that we should start planning for a post oil economy. We were not even expecting a catastrophe like Covid-19 then, but everybody knew that the mono product economy we had been running, was not sustainable. Granted that oil prices may, in the medium to long term recover, we must now seriously begin to think of replacing oil as the driver of the Nigerian economy. One fact brought home to us once more, is the need for the diversification of the economy. Luckily, we are a country blessed with material and human resources to make this happen. We must get more serious and decide that much of what we cannot manufacture here, we do not need. This will help us boost our productive capacity and support a self-reliant economy. Closely related to this is the curse of import dependency. We seem to be hooked on the conspicuous consumption of foreign products at the detriment of locally made ones. Unfortunately, this pandemic has brought us face to face with a major foreign currency scarcity the way we haven’t seen it in many years. So, even if we choose not to tame our appetite, the reality of the scarcity of foreign currency would force us to adjust. We are aware CBN is trying to stabilise the foreign exchange market, but it can only do so much as it cannot give what it doesn’t have. Therefore, devaluation or whatever fancy name we wish to call it has started happening and will continue given the circumstance. We will, therefore, have fewer dollars to commit to avoidable importation of foreign goods to meet our acquired tastes. CBN will do well to prioritise allocations that have direct impact on physiological needs, and they are not many.
As identified by Maslow, a major Physiological need of man is food. Covid-19 has taught us that we can do without a wide range of things, but not food. This has been demonstrated by the reaction of people during the lockdown where some had to disregard the policy in search of food. There is no doubt that any government that can guarantee the availability of food can implement an effective lockdown policy for a long period of time. While we had argued that the best way to ensure people have food to eat is to make money available to them, we must concede that to make it a reality, the food itself must be available to be bought. This means that we must have food security as a top priority for Nigeria, post Covid-19. One of the ways to ensure food security is not by implementing an indefinite lockdown policy. In fact, doing so, would ensure that by the time the pandemic ends, starvation would take over and that situation may be as harmful, if not more than the virus. It is against this background that we call on the federal government to consider easing the lockdown in an articulate and well-coordinated manner. Given that the planting season is here, state governors should begin to open their states ensuring adequate protection for citizens and observing social and physical distancing in addition to other protocols against the virus. This becomes very necessary since we are aware that even in the face of the lockdown, the spread has continued, and no one can say for sure when the virus will disappear. In the immediate term, the government should also see agriculture as the new oil and channel all the energy that it hitherto lavished on oil into agriculture. Cash calls and cash support should henceforth be extended to this sector if we want to see a post Covid-19 well-fed citizens.
Covid-19 has opened our underbelly with respect to our criminal neglect of our healthcare sector. No one could fathom that there was going to be a day when our rich people would not be able to fly abroad for medical needs. Before now, some rich people would boast that they did not have any doctor in Nigeria. “My personal physician is in the US, Harley Street in London, Germany, Dubai and Singapore” you would hear some people say. Others would tout India and Saudi Arabia. Now we are all holed up in Nigeria, our physicians have become overstretched. I believe that post Covid-19, we shall all insist that our public health system be properly funded and seriously revived. Something good that one observed as we fight Covid-19 is that the feat of setting up medical facilities in record time is not the preserve of China. We observed serious state governments and the private sector, set up medical facilities with hundreds of beds and isolation centres fitted with ventilators, in a matter of one week, or two . This gives a lot of comfort as it means that once we seriously put our minds into something, we can achieve them. We believe that we should build on, rather than lose, the momentum. We should also support the facilities with well trained personnel. One is not oblivious of the very low standard of education and the practice of medical experts taking flight in search of greener pastures. Our experience should teach us that we must begin now to plant those greener pastures here and start the process of reversing the human resource flight to enable us get our people back and attract other African skilled professionals to the country.
We expect to see more investment in education and Research and Development (R&D). We have written extensively on education and we believe that we all agree that we have failed our nation on education. As the world is battling to find a cure and vaccine, we should not just be spectators. A massive investment in R&D would help us pioneer efforts in finding solutions to our problems be they in healthcare, education, technology or agriculture. Innovation is the result of effective R&D. The world economy is ruled by innovators. Science and technology depend largely on R&D. We should get our scientists and engineers busy in the laboratories. That was how China did it. And talking about China, we believe that we can take over a chunk of manufacturing and global supply chain from them, post Covid-19. Prior to this time, China was the manufacturer of the world. Many countries are now rethinking that strategy of outsourcing manufacturing to China. In fact, Japan is offering incentives for Japanese companies to relocate back to Japan and elsewhere. The US has hinted at that also. We have the population and if we have the will, we can attract part of that market to Nigeria.
There is no doubt that we will not be able to fund the national budget for 2020 and beyond. We are likely to add at least another $10b loan to our existing debt profile, thus taking us to about $95b. Given the massive drop in revenues we will be unable to service the debt. Government should therefore begin to engage our creditors for debt relief and cancellation as that is the only option we have. In any case, we will not be the only ones asking for that. But the bad news is that the additional debt would not do much to prevent the crises. The only choice we have is to perform a surgical operation on the public sector to get rid of excess fat. We cannot afford the bloated public sector expenditure anymore. The monthly sharing ritual in Abuja would come to an end shortly because there will be nothing to share. Those who have been addicted to the despicable feeding bottle would have to fend for themselves. It is then that we will understand that building infrastructure and attracting investments and businesses to our states are no luxury. We will also understand that governments are run by taxes and not handouts. To collect taxes, you must have created some prosperity for the taxpayers. The public sector must not only yield to the private sector but support it for economic survival. The Federal government would have to work with the CBN to implement a quantitative easing policy to stimulate the economy. This, again can only work if implemented at the private sector side of the economy.
Many other sectors of the economy must change. Travels, both local and international will take time to recover. The aviation sector realises this and is already downsizing. Markets, both wet and dry would suffer, particularly in the urban areas. Stores, malls and digital platforms would be the beneficiaries. Social distancing will not abate very soon. Businesses that depend on crowds should reassess their business model as people would rather watch movies in their houses than go to a cinema, for instance.
Let us conclude by stating that many of our postulations remain in the realm of wishes. If we choose to seize the moment, out of the ashes of this pandemic, we shall emerge a stronger economy. As usual, we may also refuse to take advantage of this opportunity and sink deeper into the abyss. The choice is ours!