As the COVID-19 pandemic continues to inflict high and rising human costs worldwide, the International Monetary Fund (IMF) has projected a contraction in the global economy by -3 per cent this year.

The cumulative loss to global GDP over 2020 and 2021 from the crisis could be around $9 trillion, greater than the economies of Japan and Germany combined.

For the sub-Saharan African region, the IMF, in its latest World Economic Outlook report, projected a contraction of -1.6 per cent, with Nigeria topping the chart with a negative growth of -3.4 per cent, indicating a looming recession for a country that is just recovering from one.

Indeed, the negative growth is hinged on plummeting oil prices and food inflation, even as the latest report deviates from the IMF’s earlier projection of 2.5 per cent growth for 2020 and 2021.

Finance Minister Zainab Ahmed had warned that Nigeria could fall into its second recession in five years if drastic actions were not taken to cushion the economic blow. She estimated this week that the economy could shrink as much as 3.4 per cent this year without a massive stimulus plan that includes billions in Central Bank, Federal Government and international support.

The warning came as the IMF began considering Nigeria’s emergency request for $3.4 billion in funding and the World Bank, from which the country has sought up to $2.5 billion, released $82 million to strengthen the country’s healthcare infrastructure.

According to the IMF, effective policies are essential to forestall outcomes which may be much worse than during the 2008-09 financial crisis, even though Nigeria might be repeating the 2016 recession chronicles, having failed to do anything different in terms of diversification and building buffers for moments like this.

If necessary measures to reduce the contagion and protect lives are taken, the IMF noted that a short-term toll on economic activity is expected and would aid the country’s recovery by 2.5 per cent in 2021. It said that in a baseline scenario (assuming that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound), the global economy is projected to grow by 5.8 per cent in 2021 as economic activity normalizes, helped by policy support.

Already, President Muhammadu Buhari, on Monday, while extending the lockdown, directed the Ministers of Industry, Trade and Investment, Communication and Digital Economy, Science and Technology, Transportation, Aviation, Interior, Health, Works and Housing, Labour and Employment and Education to jointly develop a comprehensive policy for a “Nigerian economy functioning with COVID-19.”

The IMF said: “The risks for even more severe outcomes, however, are substantial. Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health.

“Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.

“And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channelling aid to countries with weak health care systems.

“Economic policies will also need to cushion the impact of the decline in activity on people, firms, and the financial system; reduce persistent scarring effects from the unavoidable severe slowdown, and ensure that the economic recovery can begin quickly once the pandemic fades.”

On its part, the Lagos Chamber of Commerce and Industry (LCCI) stated that now is the time for economic managers to set an agenda for the nation’s post-pandemic economy.

“Businesses have been grounded by the lockdown; supply chains disrupted, and aggregate demand depressed. Investment assumptions have collapsed across sectors. Businesses are faced with a force majeure and the shocks are profound and unprecedented. The mortality of SMEs is set to heighten as they have the tenuous capacity to absorb shocks, especially of a scale that we are currently witnessing,” it said.

According to the chamber’s Director-General, Dr Muda Yusuf, through digital platforms have become more vibrant, they are not enough to generate the desired momentum of economic activities, as interactions and connectivity among economic agents are at the lowest ebb.

To save the economy from collapse, the LCCI urged the salvaging of investments across all levels – micro, small, medium and large enterprises.

“Without investment, we cannot have jobs; aggregate demand would remain weak; government revenue would be in jeopardy as tax revenue plummets, and economic sustainability will be at risk. This underscores the imperative of an urgent rescue package for business, to enable investors to ride out the storms,” it added.

Some of the proposed measures include tax breaks and concessions for investors, fiscal policy palliatives for the real sector, commercial banks loan facilities, aviation sector palliatives and deregulation of the downstream sector.

Team Lead, Centre for Social Justice (CSJ) and Developmental Law expert, Eze Onyekpere, advocated full deregulation of the downstream sector as well as the patronage of locally produced goods.

According to him, the current situation offers the Federal Government an opportunity to implement certain reforms like the passage of the Petroleum Industry Bill.

On his part, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Timothy Olawale, said in the short term, Nigeria needs greater fiscal space to boost the health infrastructure in order to contain the spread of COVID-19, support the sectors mostly hit and stimulate domestic consumption, while the Central Bank should cut interest rates and channel liquidity to firms and households.

“There is a need to provide a series of economic policy options to target households and businesses. With the current challenges in generating revenue to sustaining the national budget, due to the drop in the price of crude oil globally, we believe that the Federal Ministry of Finance should push better for debt relief as part of the measure to get the economy back to business as usual as soon as possible.

“Key sectors that would be most affected, like hospitality, tourism, aviation, entertainment should be provided specific stimulus packages to bounce back from the rubble, to guarantee the functioning of the essential sectors.

“For workers who lost their jobs as a result of the pandemic, Federal Government should provide emergency income grant as palliative”, he added.