Vice-President Yemi Osinbajo says private schools will benefit from the stimulus package the government of President Muhammadu Buhari has put in place for micro small and medium enterprises to cushion the effect of the COVID-19 pandemic.
Speaking at the 2020 edition of the MSMEs awards which held virtually on Thursday, Osinbajo listed hotels and road transport workers among the beneficiaries.
Osinbajo said the survival fund would help provide payroll support to MSMEs with a minimum of 10 and maximum of 50 staff members.
“I am glad to note that this year has been an exception despite the challenges posed by the Covid-19 pandemic. Locally, businesses are facing their most challenging time and the impact is particularly severe on MSMEs,” he said.
“The central plank of our response as a government to the economic challenges posed by the Covid-19 pandemic has been the Economic Sustainability Plan recently approved by President Muhammadu Buhari and the Federal Executive Council.
“In that plan which essentially envisages an overall N2.3 trillion stimulus package, we made extensive provision for financial support to MSMEs, ranging from a guaranteed off-take scheme to a survival fund that includes a payroll support programme for qualifying businesses.
“The guaranteed off-take scheme seeks to provide support for MSMEs, manufacturing local products by guaranteeing the purchase from them of qualifying products such as face masks, hand sanitisers, PPE for medical workers, etc.
“These products will be distributed to Nigerians, Nigerian institutions and entities that would require them.
“The survival fund will help provide payroll support to MSMEs with a minimum of 10 and maximum of 50 staff. The MSMEs that qualify for these will make available their payroll for verification by government.
“Companies that meet the requirements will then be eligible to have the salaries of their verified staff paid directly from the fund for a period of three months… the target beneficiaries of this scheme will include private schools, hotels, road transport workers, creative industries and others.”
He added that there is a N200bn fund which will be made available to MSMEs in the priority sectors such as healthcare, agro processing, creative industries, local oil and gas, aviation etc.
“This will be granted through a scheme jointly run by the BOI and NEXIM Bank especially for export expansion,” he said.
“The CBN is also committed to creating a N100bn target credit facility for MSMEs. Already the recently signed Finance Act already made provision for graduated company income tax rates with zero rates for small companies and a rate reduction for medium sized companies.”
He specially commended all those who have started businesses in Nigeria, no matter how small, describing them as champions.
“Every person who has taken it upon themselves to start a business in Nigeria no matter how small is a champion and we as a government owe it to you to create an enabling environment for you to thrive,” he said.
“This is President Muhammadu Buhari’s commitment to MSMEs in Nigeria that we will continue to stand by you and to support you and to create opportunities for you to grow and prosper.”
FG Moves To Exempt Minimum Wage Earners From Income Tax
The Federal Government said that with the proposed Finance Bill 2020, minimum wage earners will be exempted from the Personal Income Tax in order to reduce the impact of inflation on Nigerians.
The government also said that the exemption and other items in the proposed Bill, alongside various economic policies and incentives would ensure the resilience of the Nigerian economy to exogenous shocks.
The assurance was given by President Muhammadu Buhari in his speech delivered virtually by Vice President Yemi Osinbajo, on Monday at the opening session of the 26th Nigerian Economic Summit Group Conference themed: “Building Partnerships for Resilience”.
President Buhari said, “We are proposing in the new Finance Act that those who earn minimum wage should be exempted from paying income tax.
“These provisions which complement the tax breaks given to small businesses last year will not only further stimulate the economy but are also a fulfillment of promises made to take steps to help reduce the cost of transportation and the impact of inflation on ordinary Nigerians.”
Explaining the role of the private sector in building a resilient economy, President Buhari said “this government has always emphasised that the private sector has a key role to play in our efforts to build a more resilient and competitive economy as expressed in the Economic Recovery and Growth Plan.
“Private companies in design, construction, logistics, and finance are very much engaged in our infrastructural projects in power and rail as well as road and bridges and the installation of broadband infrastructure which is an essential requirement if Nigeria is to participate actively and benefit from the 4th Industrial Revolution.”
Continuing, the President added, “…it is clear that we must diversify the economy away from dependence on crude oil exports, speed up human capital development and improve on infrastructure. Above all, our economy must be made more resilient to exogenous shocks.
“It is important for the private sector to play a key role as we work together to identify national priorities and try to influence our future national trajectory.”
He gave insights into the collaboration between the CBN, the Nigerian Sovereign Wealth Investment Authority (NSIA), and other stakeholders in the creation of an Infrastructure Company (Infraco) Fund to address some of the nation’s critical infrastructure needs.
“It goes without saying that partnerships remain essential to attract the resources for building a solid national infrastructural base. I am pleased to inform you in this regard that we are working actively with the Central Bank, Nigerian Sovereign Investment Authority and State Governments under the auspices of the National Economic Council to design and put in place a N15 trillion Infraco Fund which will be independently managed.
“The Infraco Fund will help to close the national infrastructural gap and provide a firm basis for increasing national economic productivity and growth,” the President explained.
Restating the commitment of his administration to sustaining collaborations with the private sector in addressing challenges, President Buhari said “if there is one single lesson to be learnt from the COVID-19 pandemic, it is that partnerships are essential for credible responses with lasting effects.”
According to him, “Our national journey to economic prosperity is a long one, so we must all certainly work together. As we saw, partnerships were essential when we were faced with the serious challenge of combatting COVID-19.
“We saw the key role that partnerships played in our national effort to combat the COVID-19 crisis. While Federal and State Governments worked together to manage the health response and ensure the establishment of isolation centres and availability of test kits, personal protective equipment, and medicines, the private sector also played an active role as individual entities, and also worked together in groups like the Coalition Against COVID-19.”
During the speech presentation, the Vice President responded to the issue of import duties raised by some speakers at the summit. The Vice President noted that “the point of the reduction in levies on motor vehicles, commercial vehicles for transportation is to reduce the cost of transportation by reducing the cost of vehicles.”
He explained that “with subsidy removal and the increase in fuel price and the pass-through to food prices, transportation costs had to be reduced. Now the automotive policy is directed at localising the production of vehicles. So the logic was to increase the duty and levies so that local production becomes more competitive. But the annual demand for vehicles is about 720, 000 vehicles per year. Actual local production is 14,000 vehicles a year.
“So, the problem is that at the current rate of production, we will not meet the serious national needs and this will just mean higher prices of vehicles and greater strain on other sectors of the economy that depend on transportation. But we are not giving up on the local auto industry.
“Two important things to note; the first is that we still have a relatively high duty at 35%, so there is still a disincentive for importation. Second is that we are promoting policy that the government must buy only locally manufactured cars.”
The opening session of the summit featured presentations by speakers including Chairman of the Nigerian Governors Forum and Governor of Ekiti State, Mr Kayode Fayemi; Governor Aminu Bello Tambuwal of Sokoto State; Chief Executive Officer of MainOne, Ms Funke Opeke; and the Chief Executive Officer of GIG Group, Mr Chidi Ajaere; among others.
The Federal Government is processing a World Bank loan of $750 million on behalf of state governments, to stimulate the local economy as well as support vulnerable household’s consumption, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said.
The Minister disclosed this at the inauguration of the Federal Steering and Technical Committees of the Nigeria Covid-19 Action Recovery and Economic Stimulus (N-CARES), in Abuja on Monday.
She said “the loan is part of windows of opportunities to mitigate the effect of Covid-19.”
She maintained that the diverse and severe impacts of the COVID-19 pandemic had continued to be felt across the world with significant consequences on informal businesses, households that survive on daily income and the peasant farmers, who depended on their farm produce to survive.
“This key population make up over 60% of our entire population in Nigeria, hence the need to cushion the effects of the pandemic on the vulnerable sectors through the provision of palliatives and stimulus package,” she added.
She noted that the Federal Government had created several windows of interventions as captured in the Economic Sustainability Plan (ESP) inaugurated by President Muhammadu Buhari on March 30.
Ahmed added that among other things, the ESP was to respond robustly and appropriately to the challenges posed by the COVID-19 pandemic as well as to identify fiscal measures to enhance oil and non-oil government revenues and reduce non-essential spending.
According to the minister, the Steering Committee was made up of carefully selected ministers and permanent secretaries, while the Technical Committee, made up of directors of key MDAs, had to be in place to ensure that the implementation of the N-CARES was in line with Federal Government priorities, as outlined in the Economic Sustainability Plan.
“Government has carefully selected you as members of the Federal Steering and Technical Committees because of the important roles your MDAs play in the recovery of the Nigerian economy as well as the fulfillment of lifting 100 million people out of poverty, and I have no doubt you can deliver” she maintained.
The major role of the Federal Steering committee would be to provide an overall policy direction for the implementation of N-CARES programme and advise the President appropriately.
The Federal Technical Committee would be responsible for the programme oversight, overall guidance, support, coordination, strategic direction, review and approval of the annual work programme as well as budget for the Federal CARES Support Unit (FCSU).
For Ahmed, inaugurating the committee was important because of the need for emergency intervention and the fact that Nigeria, as the biggest economy in Africa, could not afford to remain in recession.
“The survival of over 200 million population is germane to all we do, as such, we must address the concerns of the majority of our populace,” she added.
She reminded the committee about the high consequences that could be of the root cause of rising civil unrest in the country was ignored.
Nigeria Will Exit Recession In First Quarter Of 2021 — Finance Minister
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, on Monday, said the country will exit the current recession by the first quarter of 2021.
Channels quoted Ahmed as making the prediction about the recession at the ongoing 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Ministry of Finance, Budget, and National Planning.
It would be recalled that the National Bureau of Statistics (NBS) had said that the nation’s economy has formally entered into recession as the Gross Domestic Product (GDP) contracted for the second consecutive quarter by 3.62 percent in the third quarter of 2020.
Economic recession is defined as two consecutive quarters of negative Gross Domestic Product (GDP) growth.
Negative GDP growth is also referred to as a contraction.
Speaking at the economic summit, Finance Minister said the COVID-19-induced recession followed the pattern across the world where many countries had entered an economic recession.
“Nigeria is not alone in this, but I will say that Nigeria has outperformed all of these economies in terms of the record of a negative growth,” Ahmed said.
Also at the Economic Summit, Vice President Yemi Osinbajo emphasised that the government is committed to working in synergy with the private sector to foster equitable growth and underpin national development.
The 26th Nigerian Economic Summit focuses on building a partnership for resilience for Nigeria’s households, businesses, and the general economy.