Experts proffer ways out of hard times
• Blame Delayed Release Of Stimulus For Worsening Economy
• Urge Increased Spending And Investment
Last week the Federal Government finally owned up that the economy had entered into a recession, having gone through two quarters of negative growth.
Also, the National Bureau of statistics (NBS) posted that the inflation rate for the second quarter had climbed to 16.9, the highest in 11 years.
The implications of these revelations have started to manifest in job losses, as many companies and financial institutions, have adopted measures to survive, including retrenchment and shutdowns.
Poverty index has gone up, as many now find it difficult to feed, thus swelling beggars’ communities.
To reverse the situation, the Federal Government has announced measures, which include fiscal discipline on how public money is spent.
According to the Finance Minister Kemi Adeosun, by cleaning spending, cost of salaries had been reduced from N165b to N159b. Besides, capital-recurrent expenditure ratio had been restructured to 30:70 ratio, compared to previously, when recurrent expenditure was 90 per cent and capital expenditure 10 per cent.
She maintained that the government has declared war on wastes by stopping the funding of nonessential items. “The objective is to release money for capital expenditure to get the economy going,” she said.
Notwithstanding, experts say if government had commenced implementation of the stimulus package earlier, perhaps, much could have been achieved.
Managing Director and Chief Executive of Financial Derivatives Company Limited, Bismarck Rewane stated that embarking on a deficit budgeting is part of measures to address recession.
Also an economist and Chairman of Stanbic Bank Plc, Atedo Peterside noted that the ominous signs of economic recession were there since August last year.
He blamed government for pursuing a set of fiscal, monetary and exchange rate policies that exacerbated the nation’s economic challenges.
He however, admitted that a few adjustments have now been made one year later, but stressed that “other supporting measures are still not in place and so investors’ confidence remains low”
Former presidential candidate, Professor Pat Utomi said current economic reality playing out in the country could only be addressed if concerted efforts are made to correct political party ideologies.
Utomi, who spoke with The Guardian yesterday, said that the very base of why Nigeria was not functioning properly was because there were no plans to implement party programmes.
“Until political parties realise that their primary role is to develop ideas on how to run a country and educate people who are in the party on how to solve problems, we will still keep having this type of problem.
“I know the All Progressives Congress (APC) has a party plan but I don’t think anything I am seeing resembles what was planned,” he said.
Utomi stated that Nigeria has been running a ‘false economic’, adding that the prevailing economic situation was occasioned by poor economic orientation.
According to him, until Nigerians develop the mindset of production against consumption, the country’s economic challenges will remain.
Going forward, Rewane noted that the monthly allocation from the Federation Account may rise to about N800b from the present N500bn threshold with the Federation Accounts Allocation Committee distributing more to the three tiers of government to intervene in many states.
“Though the government has not announced the second quarter GDP growth even when we are in the third quarter, the standard formula on getting the nation out of recession is increased spending, enhanced investment and accelerated growth.
“If the stimulus package announced by the government had been embarked upon before now, this situation could have been avoided. The currency adjustment process also took a toll on the economy. With increased spending, projects will be embarked upon and jobs will be created. However, it is better late than never. We are getting there,” he added.
Indeed, the Lagos Chamber of Commerce and Industry (LCCI) had warned on the imperative of making very strong moves to resolve the weakening oil revenue and find creative ways of incentivizing forex inflow to Nigeria, so as to boost liquidity and ease access to forex, through alternative sources such as FDI in critical sectors of the economy and diaspora remittances.
The LCCI’s expectation of marginal recovery in the nearest future in economic activities is hinged on disbursement of funds for capital projects and social intervention programmes.
Professor Akpan H. Ekpo of West African Institute for Financial and Economic Management (WAIFEM), said government should begin to spend by putting more money into the economy. He said the spending should not be limited to capital projects, but also on recurrent.
“This is because, in so many states, people are owed salaries, so they do not have money to buy goods and services. Then firms are not producing much because there is no demand, so they need to put money into people’s pocket, thus they need to pay the backlog of salaries in order to jumpstart the economy and reduce the impact of the recession.
“So we need a robust fiscal policy, and if they have to borrow, they have to borrow to pay the backlog of salaries, and spend on capital because this recession is a special type that is affecting both the demand and supply side, as we have infrastructure deficit everywhere. And it should be urgent, no room for delay, like the budget was delayed, and up till now we are not sure they have started implementing the components that will help the economy in the budget.
“So delay is big problem in recession, they should act fast like yesterday. If they do not do that and the recession persists, we may enter a depression, which is much serious. The monetary authority, CBN and the government, finance minister should be meeting regularly for proper coordination,” he said
Dr. Emmanuel Analiefo, an Economist and National Coordinator of Fix Nigeria Campaign Organisation has identified the resistance of new ideas by those in position of authority as the reason for the slow negative growth leading to where the economy has receded.
He said the Nigerian economy has since been in recession just that people didn’t care because they were collecting money and spending and as such didn’t feel the impact like today, when the fortunes from oil receipt have dried up, hence the drivers of the economy have been groping in the dark.
He called for a quick stakeholders’ conference where the correct route that can lead us to property would be identified and followed.
The Transition Monitoring Group (TMG), which decried the current economic woes in the country, called the government to immediately take the economy by the scruff of its neck.
Chairman of TMG, Comrade Ibrahim Zikirullahi said, “Nigerians will no longer bear with the endless tinkering on the basis of fancy theories. It is time to look inwards in solving the economic problems and create the conditions to enable Nigerians live a better life. In this regard, putting young Nigerians to work is critical.
“As a think-tank that has observed the unemployment crisis closely, it is our considered view that if the administration decides to use the Local Governments as hubs for job creation and development, it would have gone a long way in dealing with the job crisis that is currently keeping able bodied men and women out of gainful employment”.
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