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The Private Sector and COVID-19 Response in Nigeria

March 28, 2022

The Nigerian Economy and the COVID-19 Pandemic

The COVID-19 pandemic broke out worldwide in the early months of 2020, posing a challenge unparalleled in recent years. To curtail its effects and spread, countries of the world began gathering resources to combat a common enemy.

Nigeria reported its first coronavirus case on February 17, 2020. Upon the detection, the National Center for Disease Control (NDDC) started a national response to the spread of the infection. Subsequently, President Muhammadu Buhari initiated a 12-member task force to champion the battle against the pandemic in the country.

The economic situation of the country at the time; estimated debt service-to-revenue ratio was at sixty per cent (60%) and was likely to worsen amid the steep decline in revenue associated with falling oil prices; these constraining factors aggravated the economic impact of the COVID-19 outbreak and made it more difficult for the government to weather the crisis.

The need for intervention across all sectors was so dire that on March 31st 2020, the Nigerian government took to their social media handle – Twitter via the verified handle of the Ministry of Finance Budget and National Planning to solicit the founder of Tesla, Elon Musk, for between 100 – 500 ventilators to assist in the growing number of coronavirus cases in the country.

To curtail the spread of the virus, the Federal Government imposed a lockdown on states with a high number of cases, and subnational governments followed suit. Nigeria has a burgeoning gig economy and a large informal sector, contributing 65% of its economic output. Therefore, movement restrictions not only reduced the consumption of non-essential commodities in general but affected the income-generating capacity of these groups, thus reducing their consumption expenditure.

The lockdowns and movement restrictions hampered businesses, slowed down trade, and disrupted supply chains, causing significant uncertainty for Nigeria’s business community and investors. Several critical sectors of the economy witnessed a substantial decline in growth. 

However, the government responded to the crisis by providing financial assistance to businesses and a small number of households affected by the coronavirus (COVID-19) outbreak. The Central Bank of Nigeria (CBN) adopted accommodative monetary policies and offered a targeted 3.5trillion loan support to some sectors, but it wasn’t enough. According to the National Bureau of Statistics (NBS), the services and industries sectors of the country experienced negative growth rates in Q2 of 2020 at -6.78% and -12.05%, respectively.

CBN called for the private sector’s intervention to raise $330 million to assist the government in battling a pandemic it wasn’t prepared for. The Nigerian National Petroleum Corporation (NNPC), International Oil Companies (IOCs) as well as Independent Oil Companies in the Upstream and Downstream Sectors donated eleven billion nairas N11 Billion to the Nigeria Centre for Disease Control (NCDC) to combat the Coronavirus pandemic in the Country on the 27th of March 2020.

The Coalition Against COVID-19 (CACOVID) was birthed following after the country’s National Assembly passed the Emergency Economic Stimulus Bill that granted a 50% tax break for registered firms intending to help them improve their financial situation when the economy restarts.

What are the issues?

Before COVID-19, there was no joint platform for organised large-scale private sector philanthropy in Nigeria. Only a few of the organisations had functioning formal charitable arms. CACOVID was an avenue for the private sector to partner under one umbrella to jointly contribute to the nation’s development. COVID-19 provided the first opportunity to see how such a union would perform. While it has recorded measurable success almost two years since its inception, the establishment has been plagued with numerous issues regarding its operations.

Lack of Transparency and Accountibily in Operations

Although considerable pressure has been placed on the government by several Civil Society Organizations to open follow the footsteps of other African countries and be transparent about its COVID-19 spend, there is no established legal framework that requires CACOVID to publish an audit of their financials; they are a registered limited liability company only needed to pay taxes on taxable transactions. The coalition’s website only contains a list of donors between March and May 2020, and any information about donations after that period is unknown to the public.

In 2021, the CBN published a press release on behalf of the coalition, committing to provide the general public with full details of their financial operations by posting information relating to the procurement of goods and services and the disbursement schedule procured items on the website. A year later, the closest the coalition has gotten to fulfilling this commitment is the expenditure pie chart displayed on their website, which has no details of procurement or disbursement. This opacity played a massive role in the October 2020 looting crisis.

‘The government of the day is wicked. People are suffering and dying of hunger, yet we have food rotting away in government warehouses….’

CACOVID claimed to have spent N28.77 billion in providing palliatives in essential food items to 1.7 million households, which is equivalent to supporting eight million Nigerians. However, on October 22, 2020, nearly a third of Nigeria’s 36 states reported looting of warehouses containing food and other supplies belonging to CACOVID.

The lack of transparency, accountability and public engagement mechanisms in CACOVID’s operations fuelled the non-distribution of the palliatives and ultimately the looting. Had these mechanisms been available, the media and public would have been armed with information concerning the purchase and distribution of the palliatives, coupled with consultations with CSOs, CBOs, and other stakeholders would have eased the distribution of these items. This would have built public trust in the coalition’s actions and prevented the hunger that ravaged the nation and the looting that followed afterwards.

Beyond the coalition’s publicly touted commitment to science, efficiency, and public interest, it embodies troubling aspects of modern philanthropy; the search for quick fixes, emphasis on measurable and prompt solutions, and focus on metrics that are disconnected from the structural dynamics that reflect the reality of poor Nigerians. This disconnect became apparent during the palliative looting crisis.

When asked to look into the non-distribution of the palliatives after the looting, the ICPC claimed its jurisdiction only covers Federal Government funds and not CACOVID funds which individuals and private sector donated organisations.

Diversion of Objectives

While CACOVID may be a private sector-led initiative in its public communication, it is a group tied to the government’s apron strings using the CBN as a proxy. Having the CBN Governor as a Co-Chair, further suggests that the group lacks the independence to decide its interventions.

The risk for CACOVID to pander brazenly to state interests and veer off its major objectives became more striking recently when the coalition announced the donation of N100billion to boost the capacity of the nation’s security agencies in the fight against terrorism and other forms of insecurity confronting the country.

At the African Cup of Nations tournament in Cameroon in January 2022, Godwin Emefiele, the CBN governor, announced on behalf of CACOVID, cash rewards of $80,000 to Nigeria’s senior football team, the Super Eagles, for their performance at the tournament.

While Nigeria has left the major transmission stages of the pandemic, hereby having less to do in terms of its major objectives of combating the virus, the coalition should re-strategize into supporting the financial and logistical strategy for making the COVID-19 vaccines available and addressing vaccine apathy in the country, instead of veering off to new areas altogether.

Who are the Stakeholders?

CACOVID is headed by the Central Bank of Nigeria, the Aliko Dangote Foundation, and Access Bank. A week after its establishment, total donation to the CACOVID relief fund totalled over $55.7m as of April 6, with Dangote and the Central bank donating $5.1m each. Within two months, CACOVID had commissioned isolation centres in seventeen states, purchased 650,000 molecular testing kits to ramp up testing across the country, and unveiled a palliative drive to feed 1.7 million households across the country. 

Some of the major stakeholders are Godwin Emefiele (CBN), Aliko Dangote, Herbert Wigwe, Abdulsamad Rabiu, Femi Otedola, Folorunso Alakija, Jim Ovia, John Coumantaros, Raj Gupta, Segun Agbaje, Tony Elumelu, Modupe Alakija & Folorunso Alakija.

The Central Bank of Nigeria and Aliko Dangote of Dangote Industries Limited donated N2 billion each. While the likes of Herbert Wigwe, Abdulsamad Rabiu, Femi Otedola, Jim Ovia, John Coumantaros, Raj Gupta, Segun Agbaje, Tony Elumelu, Modupe Alakija & Folorunso Alakija donated N1 billion each.

The CACOVID team provided several medical facilities, supplies and equipment in different parts of the country. They also made available food relief programs to the most vulnerable people in several communities.

Nigeria’s foremost businessman, Aliko Dangote donated N2 billion to CACOVID while he also collaborated with Access Bank on treatment, testing, training and isolation centers across the country. Asides from the N1 billion that was donated to CACOVID by Abdulsamad Rabiu of the BUA Group, Abdulsamad likewise made some orders for medical supplies and equipment to support the containment of Covid-19 in nine states (Abia, Adamawa, Akwa-Ibom, Edo, Kano, Kwara, Lagos, Rivers, and Sokoto). In addition, there was a donation of N300 million to Edo, Ogun and Sokoto states by BUA Group.

Tony Elumelu of UBA Plc made a personal donation of N1 billion, besides the N5 billion donated by the UBA group. There was also a donation of a 110-bed isolation centre to the Lagos state government by Guaranty Trust Bank (GTB) PLC to strengthen the existing isolation centre at the Infectious Diseases Hospital in Lagos. Union Bank gave $130,000 to the Lagos State emergency food response, which was responsible for providing food supplies to low-income families.

Reccomendations

One of the lessons learnt since the COVID-19 pandemic is that even the best healthcare systems in the world are not immune to the effect of the global health crisis. Nigeria has demonstrated her skillfulness and commitment in improving our national preparedness, but another outbreak could cause a devastating loss of lives and disrupt political and economic stability. Hence, there should be a concerted effort and synergy between the private sector, civil society organisations, and the government to fortify the nation’s health and economic system against future pandemics.

Increased Funding towards Research and Development

Research and development (R&D) is a crucial component of healthy development. More needs to be done, including leveraging investment and supporting capacities for health science research in Nigeria. Africa accounts for only 1.1% (US$22.3billion) of global investment in R&D. Even after commitments to invest 1% of GDP for R&D; only a few African countries have invested close to this commitment. By comparison, most of the world’s largest developed economies have overall levels of R&D expenditure exceeding 2% of GDP. (Ayobamidele & Ladipo 2021)

Public investments in strengthening research capacity require extensive capital resources. In most countries of the Organization for Economic Co-operation and Development, the largest source of R&D funding is the private sector. This is a gap the private sector in Nigeria can fill by earmarking special donations towards research and development for our health system strengthening.

CSOs also have the responsibility to advocate for the government to increase funding for health research to achieve the 1% GDP investment to R&D in both health and other sectors.

Partnerships between the Public and Private Sector in Bridging Health Resources Gap.

According to the Health Federation of Nigeria, about 70% of healthcare establishments in Nigeria are privately owned and managed. Also, two-thirds of healthcare spending comes from the private sector, of which 95% comes out of pocket. Only 4% of the population have access to health insurance. Between 2019 and 2021, healthcare spending by the government has increased by 11.4%, while private sector spending has grown at a slower pace of 7.5% over the same period.

A partnership between both sectors towards bridging resource gaps would be productive since they are almost equal players in the field. For instance, vaccinating between 60 to 70% of the Nigerian population would require resources the government does not have, especially with a public sector debt burden of N33trn hanging around its neck. Navigating administration, storage, and distribution gaps would require private-sector logistics expertise, storage capability and convenient centres for vaccine administration. The partnership would be crucial to an effective COVID-19 response and post-COVID systems strengthening.

Improve Political and Macroeconomic Conditions

This improvement will position the private sector to attract domestic and foreign investments and, in turn, increase its capacity to relieve the public sector of the burdens it is incapable of carrying. Nigeria needs to improve its political and macroeconomic conditions, conduct regulatory reforms, and increase its access to well-trained pharmaceutical professionals.

Since the entrance and growth of large firms increase a country’s resilient economic transformation—because large firms, with more assets, are inherently more resilient and are better equipped to endure economic storms—government and policymakers should prioritise policies for facilitating the entrance and growth of such firms, through domestic deregulation and encouraging foreign direct investment (FDI).

Creating and Strengthening Engagement and Accountability Mechanism.

CACOVID’s intervention and the government’s effort in combatting the pandemic has been devoid of transparency and accountability. This has spotlighted the need for more dynamic and accountable structures to mobilise and coordinate private sector contributions regardless of the scale of intervention, set targets and agendas, and monitor performance over time.

The private sector needs to imbibe accountability and transparency into its operations. Timely and detailed information dissemination is key to achieving this. Openness regarding its financial operations will build public trust in its activities and further attract funding for its projects.

Civil society and the media need to intensify their advocacy in calling for the private sector to institutionalise its intervention systems. The public should be abreast of its inflow and spending details, and the coalition should hold robust engagements with key stakeholders in the system before embarking on significant projects.

On the other hand, the weaknesses of Nigeria’s social security system prior to the Covid-19 crisis left an inevitable gap between the government’s pandemic response and rising hunger. To cushion the effects of the pandemic on the populace, the government embarked on conditional cash transfers to “vulnerable citizens”. Still, it gave no clear explanation of how they determined who was vulnerable.

CSOs can push advocacies that call for the federal government to draft and support legislation that recognises Nigerians’ right to social security and sets the legal foundations of an effective social security system.

In combating vaccine apathy, governments worldwide have leveraged the well-established social networks, processes, and data accumulated by CSOs to disseminate information and distribute relief to the most vulnerable and difficult to reach communities. The Nigerian government is underutilising this tool in its quiver. The failure of the government to utilise this advantage has limited the implementation and effectiveness of national responses to the pandemic.

The government and private sector need to utilise the leverage of civil societies in penetrating the locals and influencing behavioural systems. This will improve relief service delivery across sectors and combat the ongoing vaccine apathy in the nation.

Restructuring CACOVID

The initial aim of CACOVID was to assist the government in combating the coronavirus disease. Subsequently, they have veered into intervening in other areas unrelated to fighting coronavirus. The coalition can restructure its aim and objective to reflect other core areas they would like to intervene as partners for development in Nigeria.

This restructuring can set the tone for creating an umbrella organisation for all private sector companies to support the government and CSOs on various development issues in the country.

Through advocacies, monitoring and evaluation, CSOs can assist CACOVID to evaluate their impact better, learn, and scale their interventions. They can also be accountability partners and transparency on how funds are spent and allocated.

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