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Coronavirus

How labelled Covid-19 bonds can help to combat Coronavirus pandemic in Nigeria

A major challenge to Covid-19 action in Nigeria, like most other African countries, is scarce public finance.

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FBNQuest's, Covid-19,A Post-COVID Economy

Governments across the world are ramping up efforts to combat the Coronavirus pandemic. A major challenge to Covid-19 action in Nigeria, like most other African countries, is scarce public finance. Already, Nigeria’s revenue expectations and fiscal projections for the year 2020 has been drastically reviewed downward, largely due to oil price slump.

Overcoming a global health emergency like Covid-19 requires a whole lot of money. It is commendable the Central Bank of Nigeria-led Private Sector Coalition against Covid-19 (CACOVID) fund has grossed N25.8billion. CACOVID is combating Covid-19 by raising public awareness, supporting healthcare professionals, institutions and governments, and by mobilizing private-sector leadership and resources. This is in addition to Central Bank of Nigeria’s (CBN) combined stimulus package of about NGN 3.5 trillion in targeted measures to households, businesses, manufacturers and healthcare providers. These measures are deliberately designed to both support the Federal Government’s immediate fight against Covid-19, and build a more resilient, more self-reliant Nigerian economy.

Essentially, a significant share of the investments needed in the unfolding crisis would be from private finance components. Navigating the uncertain times and meeting the unprecedented financial commitment for Covid-19 pandemic demands a degree of innovation. One such innovation is labelled Covid-19 bonds.

As a recent innovation in sustainable finance, labelled bonds can be applied to any debt format, including private placement, securitization, covered bond, and Sukuk. As with conventional bonds, labelled bonds issue represented borrowed funds over a period, and investors or creditors receive a coupon with a fixed or variable rate of return. The main difference between them is the use of the proceeds.

(READ MORE: Essential steps companies and employees must take now to survive COVID-19)

The Covid-19 pandemic is a social issue that threatens the world’s population both in terms of health and economic welfare; efforts and investments to combat the pandemic qualify for social treatment. Consequently, existing guidance related to social bonds is immediately applicable to efforts addressing the pandemic.

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For those who are interested in issuing social bonds to help combat Covid-19, the Executive Committee of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines (the Principles), supported by the International Capital Market Association (ICMA), have advised that existing guidance for Social and Sustainability Bonds is immediately applicable to efforts addressing the Covid-19 crisis. In Nigeria, the guidelines are adapted in the Nigerian Green Bond Guidelines (GBGs) published by the Federal Ministry of Environment in 2016.

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Although beneficiaries of social bonds are usually specific groups, the pandemic nature of Covid-19 means a general population as whole may be targeted. The qualifying projects include Covid-19 related healthcare and medical research, and development of a vaccine; investment into additional medical equipment or manufacturing facilities to produce more health and safety equipment and hygiene supplies; specific projects designed to alleviate unemployment generated by the pandemic. Other qualifying uses of proceeds are: converting facilities into emergency and intensive care units; reconfiguration of healthcare services for Covid-19 treatment; staff costs, including training and salary of researchers; vehicles and transport equipment and buildings; IT and telecommunication systems and equipment, such as surveillance, diagnostics and modeling; and supply chain management, warehousing and storage facilities.

Progress has been made over the last month as the social bond market mobilizes to combat Covid-19. Many institutions are seeing the opportunity – from a financial and sustainability perspective – in issuing this kind of debt. It’s now the fastest-growing sustainable finance sector. The very first labelled Covid-19 bond issuance of USD 1 billion by the International Finance Corporation (IFC) was followed by a record-breaking USD 3 billion issuance by the African Development Bank (AfDB). In each case, the proceeds were earmarked for combating the pandemic.  Other labelled Covid-19 issuances include Council of Europe Development (CEB) EUR 1 billion issuance; the European Investment Bank SEK 3 billion issuance; the Inter-American Development Bank (IADB) USD 2 billion issuance; the Nordic Investment Bank USD 1 billion issuance; the Italian development bank Cassa depositi e prestiti EUR 1 billion issuance; Swedish medical supplier Getinge SEK1 billion issuance, etc.

(READ MORE: List of things you must accomplish during the Covid-19 lockdown)

The SEK 1 billion commercial paper issued by Getinge to exclusively finance increased production of ventilators and other capital needs to expand the production of life saving equipment to meet rising demand due to the Coronavirus pandemic shows that issuance of labelled Covid-19 bonds is not restricted to supranational organizations, multilateral development banks and investment banks. Any type of issuer, first-time or seasoned, can issue a labelled Covid-19 bond provided their evaluation is based on four core components: use of proceeds, project selection process, management of proceeds and reporting, as outlined in the ICMA Principles.

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These are critical times for Nigeria. As noted by the Governor of the Central Bank of Nigeria Godwin Emefiele: “countries around the world have moved away from multilateralism and responded by fighting for themselves with several measures to protect their own people and economies, regardless of the spillover effects on the rest of the world.” There is a unique opportunity to build on the experiences of past issuance of labelled bonds by the Federal Government, Access Bank PLC, and North-South Power Company Limited to do the heavy lifting in the fight against Covid-19. Considering Nigeria total debt profile at N33 trillion (after recent approval of additional $22.7 billion foreign loan by the National Assembly), issuances of labelled bonds by corporates in the country is desirable as the ongoing pandemic create several investment opportunities.

Even as Covid-19 affects the stock markets, labelled Covid-19 bonds are veritable investment instruments for investors seeking to contribute to responding to the global disruption engendered by the Coronavirus pandemic in addition to achieving financial returns.

The Coronavirus pandemic is a new and immense challenge and we must all rise to the occasion. The reported cases of community transmission of COVID-19 by the Nigeria Centre for Disease Control (NCDC) underscore the need to observe all standard recommendations to prevent the infection. That is our first line of defence until the epidemic runs its course.


Oluwaseun Oguntuase writes from Lagos, Nigeria

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Business News

COVID-19 Update in Nigeria

On the 20th of April 2021, 120 new confirmed cases were recorded in Nigeria

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Covid 19 update symptops

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 164,423 confirmed cases.

On the 20th of April 2021, 120 new confirmed cases were recorded in Nigeria.

To date, 164,423 cases have been confirmed, 154,406 cases have been discharged and 2,061 deaths have been recorded in 36 states and the Federal Capital Territory.

A total of 1.84 million tests have been carried out as of April 20th, 2021 compared to 1.81 million tests a day earlier.

COVID-19 Case Updates- 20th April 2021,

  • Total Number of Cases – 164,423
  • Total Number Discharged – 154,406
  • Total Deaths – 2,061
  • Total Tests Carried out – 1,838,174

According to the NCDC, the 120 new cases are reported from 8 states- Enugu (53), Lagos (22), Rivers (18), Ogun (8), FCT (7), Abia(6), Kano (5) and Bauchi (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 58,119, followed by Abuja (19,756), Plateau (9,035), Kaduna (9,014), Rivers (7,060), Oyo (6,839), Edo (4,897), Ogun (4,639), Kano (3,942), Ondo (3,226), Kwara (3,120), Delta (2,617), Osun (2,572), Nasarawa (2,380), Enugu (2,281), Katsina (2,097), Gombe (2,034), Ebonyi (2,020), Anambra (1,909), Akwa Ibom (1,843), and Abia (1,683).

Imo State has recorded 1,655 cases, Bauchi (1,540), Borno (1,337), Benue (1,188), Adamawa (1,063), Niger (930), Taraba (910), Bayelsa (885), Ekiti (869), Sokoto (775), Jigawa (527), Kebbi (450), Cross River (394), Yobe (365), Zamfara (240), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

Governor Babajide Sanwo-Olu of Lagos State announced the closed down of the Eti-Osa Isolation Centre, with effect from Friday, 31st July 2020. He also mentioned that the Agidingbi Isolation Centre would also be closed and the patients relocated to a large capacity centre.

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Due to the increased number of covid-19 cases in Nigeria, the Nigerian government ordered the reopening of Isolation and treatment centres in the country on Thursday, 10th December 2020.

On 26th January 2021, the Federal Government announced the extension of the guidelines of phase 3 of the eased lockdown by one month following the rising cases of the coronavirus disease in the country and the expiration of phase 3 of the eased lockdown.

On 28th February 2021, the federal government confirmed that the first tranche of Covid-19 vaccines will arrive in Nigeria on Tuesday, March 2nd, 2021.

On Tuesday, 2nd March 2021, the National Primary health Care Development Agency announced the arrival of the expected COVX Astrazeneca/Oxford covid-19 vaccines.

On Saturday, 6th March 2021, President Muhammadu Buhari and his vice, Yemi Osinbajo received vaccination against the covid-19 as the State House in Abuja.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

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Coronavirus

FG explains how the Covid-19 vaccines work and their composition

The NPHCDA Director said that Covid-19 vaccine candidates are of various categories based on their mechanism of action.

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The Federal Government through the National Primary Health Care Development Agency (NPHCDA) has explained the composition of the Covid-19 vaccines and how they work.

This is as some of them have been approved for emergency use by the World Health Organization (WHO) and some countries, while others are still at different phases of clinical trials for possible approval.

According to a report from the News Agency of Nigeria (NAN), this insight was given by the Executive Director/Chief Executive of NPHCDA, Dr Faisal Shuaib, who said there were several COVID-19 vaccine candidates.

READ: African Union signs deal for 400 million Johnson and Johnson single shot vaccine

He said that Covid-19 vaccine candidates are of various categories based on their mechanism of action such as the inactivated or weakened virus vaccines.

He explained that the idea behind the formulation of an inactivated or weakened virus vaccine is to elicit an immune response without causing the disease itself. Shuaib also said there were protein-based vaccines, which used harmless fragments of proteins or protein shells that mimic the Covid-19 virus to safely generate an immune response.

He added that the viral vector vaccines used a virus that had been genetically engineered to produce coronavirus proteins to safely generate an immune response and not give rise to the disease.

Going further, Shuaib pointed out that the Ribonucleic Acid (RNA) and Deoxyribonucleic Acid (DNA) vaccines employed a cutting-edge approach that used genetically engineered RNA or DNA to generate a protein that safely prompted an immune response.

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READ: China publicly presents its COVID-19 vaccines, 2 doses to cost below $146

What you should know

  • It can be recalled that on March 2, 2021, Nigeria received the first set of about 4 million doses of the AstraZeneca Covid-19 vaccine, manufactured by the Serum Institute in India and shipped via the COVAX Facility, a partnership between CEPI, Gavi, UNICEF and WHO.
  • A few days ago, the Executive Director of NPHCDA disclosed that a total of 8,491 Nigerians have reacted adversely to the AstraZeneca inoculation since the exercise began on March 15.
  • He said that Nigeria recorded 52 cases of moderate to severe incidents of Adverse Effects Following Immunisation (AEFI), presented as fever, vomiting, diarrhoea headaches, dizziness and allergic reactions.
  • About 1.09 million Nigerians have so far been administered the first dose of the AstraZeneca Covid-19 vaccine.

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