Vice-President Yemi Osinbajo, who put forward the proposal, said that millions of Nigerians could fall into extreme poverty before the pandemic ends if measures are not taken.
The government anticipates 39.4 million job losses by December due to the pandemic, according to Osinbajo. The outcome means that more Nigerians will be forced to live in extreme poverty.
In 2018, a report by The World Poverty Clock showed that Nigeria had overtaken India as the country with the most extreme poor people in the world, even when India has a population seven times larger than Nigeria's.
In May 2020, the Central Bank of Nigeria (CBN) had to reach an agreement with other banks of the country to suspend staff layoffs until further notice to help "minimize and mitigate the negative impact of the COVID-19 pandemic on families and livelihoods.
However, the hardest hit in the aftermath of the pandemic is small and medium businesses that are responsible for most of Nigeria's employment. These enterprises account for 96% of companies and 84% of jobs.
The vice-president Osinbajo said the plan was also to put money into the economy, and hopefully stop it from slipping into recession, as the country faces the impact of the decrease in oil production, one of its main assets.
Africa's largest oil producer relies heavily on fuel as oil sales contribute about 90% of the country's foreign exchange earnings.
At the end of last year, Nigeria's Employers Consultative Association (NECA) warned that during 2020 unemployment rate would rise from 23.1% to 33.5%.