The Organised Private Sector (OPS) has written to President Muhammadu Buhari, demanding for a tax holiday and other palliatives for the private sector to rescue the sector from the consequences of Coronavirus crisis.
In a letter dated March 24, 2020, and signed by the Director-General of Nigeria Employers’ Consultative Association (NECA), Dr Timothy Olawale, the group noted that the implications of the ongoing COVID-19 pandemic on the private sector could be severe enough to cause closure of companies and massive job losses.
The group added that the government would also lose revenue through payment of taxes, and the resulting economic crisis could lead to an increase in social vices and insecurity unless the government intervened soon.
The letter read in part: “We commend the Federal Government and the Central Bank of Nigeria (CBN) for the on-going efforts at containing the Coronavirus. In particular, we note the various interventions and palliatives through the Central Bank of Nigeria (CBN) aimed at ensuring business continuity.”
They noted that the closures and partial lockdowns around the country could heavily affect the sector, and asked the government to put more palliative measures in place for them.
“The specific support, would among others, include: A Temporary Scheme for paying Compensation to companies in the risk of laying off in order to retain jobs. This is to aid the continued existence of companies and prevent layoffs within private companies facing financial pressures as a result of Coronavirus.
“Under the scheme, which could last for the next three months, The government will cover 60% of the salaries of employees paid on a monthly basis, who would otherwise have been fired, with companies paying the remaining amount,” the letter read.
The group also asked for support from the government to negotiate and reschedule bank loans, especially loans taken in the last three months; as well as suspension of taxes and levies since business activities had been gravely affected by the crisis.
“The Real sector is facing the risk of total shut down, as there are no imports and exports, sales are down and production at almost zero levels. At the same time workers are expected to be paid and other commitments honoured by the businesses.”
They also requested tax-free cash flow boost for employers – a stimulus package to help pay wages or for investment to protect against downturn inactivity, and tax payment deferrals for businesses with a turnover of less than N50 million, particularly in those sectors worst hit by the crisis such as Aviation, Hospitality, Manufacturing, Retails, Tourism, Food and Beverage, etc.
They added that employees, who are self-isolating or those diagnosed with the virus, should receive payment support from the government, to encourage disclosure and help contain the spread.
What it means: Olawale explained that the palliative measures would help the private sector to continue to produce in order to meet the basic needs of Nigerians and thus prevent panic buying.
He urged the government to take cue from countries like Australia, China, Cook Island, Denmark, Ireland, France, Italy and Spain where palliative measures were given to the private sectors as well, to minimise the impact on the industry and guarantee job security for citizens.
Why this matters: The Australian government provided tax-free cashflow for employers, up to $25,000 to help pay wages or for investment to protect against downturn inactivity.
Chinese government exempted SMEs from payment of Pension contributions, unemployment and work injury insurances, and halved these payments for large companies from February to April 2020. Import goods and materials were also exempted from import tax.
In France, the Government had proposed that water, gas and electricity bills, as well as rents, would be suspended for companies in a difficult situation. Fixed costs would also be reduced by the saving of rents, especially for businesses that have to close.
The Japanese government pays 8,330 yen per day for each worker who misses work, while self-employed people, as well as freelance workers, who meet certain conditions, will receive a uniform 4,100 yen per day.
All of these measures have helped these countries, as well as other affected countries, to minimise the impact of the crisis on their private sector, which is known to be the mainstay of the economy.