5 Oct 2016

Economic and Financial Experts speak on Recession

Economic and financial experts, mostly dons and industrialists nationwide have given the Federal Government some clues, basically on creativity, diversification of economy and human development to quickly recover from the current economic recession in Nigeria. Nigeria recently slipped into its first recession after more than two decades. According to data released by the National Bureau of Statistics (NBS), Africa’s largest economy has witnessed a 2.06 per cent decline in the second quarter of 2016 after the 0.36 per cent fall in the first quarter. The two consecutive quarters of deteriorating growth have clearly pointed at a recession. The situation is largely due to the persistently low crude oil prices. Crude oil sales account for 70 per cent of government income and 90 per cent of export earnings.

 Experts say Nigeria has been dealt a heavy blow by the collapse of oil prices from the highs of about 112 dollars a barrel in 2014 to less than 50 dollars at present. A cross section of the experts, mostly economists in the universities and other stakeholders, hold the views that the ways forward for Nigeria include reducing emphasis on oil and re-directing attention to the agriculture and solid minerals sector to retool the economic. In the North Eastern part of the country, respondents in Gombe, Adamawa, Yobe, Jigawa and Bauchi states, said that government needed to match its words with actions to quickly get Nigeria out of the doldrums Mr Malik Daniel, Deputy President of Adamawa Chambers of Commerce, Mines and Agriculture, said a major step out of it was to diversify the economy by tapping other abundant mineral resources in the country.

 He urged government to pay more attention to agriculture by supporting rural farmers with soft loan through the Anchor Borrowers Scheme, advising that similar gesture be extended to small scale miners and other business entrepreneurs to ginger the economy. But a cleric in Yola, Malam Abubakar Ibrahim, called for fear of God and patriotism in tackling the recession. “Nigerians need to change; we must have fear of God by being honest, patriotic and be ready to make sacrifice for the country. Alhaji Safiyanu Sulaiman, the Managing Director of Dutse Micro-Finance Bank (DMFB) in Jigawa, urged the Federal Government to provide palliatives to cushion the effect of the economic hardship.

 Dr. Yusuf Bachama of the Economics Department, Gombe State University (GSU), said there was the need for the economy to move away from being import-dependent and become exporter of products. “The recession being experienced is not a new thing to an economy that solely depends on oil; it is quite natural that once the price of crude goes down, recession sets in. Halilu Usman, a graduate of Business Administration and Bureau-de-Change operator in Yobe, said with its large population, Nigeria needed viable market for the economy to thrive. “The country is succeeding in the war against corruption; we now have a leader with a committed political will to promote good policies to develop the economy,” he said. Abdullahi Shehu, former General Secretary, National Union of Bank, Insurance and Financial Institutions Employees (NUBIFIE) in Bauchi State, called for the suspension of some portions of the Nigerian constitution to enable the president to use emergency powers in tackling the problem.

 “United States and Japan had recession some time ago but because they love their country, a law was approved and implemented, making them to get out of the problem quickly,” he said. Alhaji Adamu Jatau, Zonal Coordinator, Nigerian Institute of Social and Economic Reseach, Bauchi, said a short term plan was for the government to expand on taxable items and for the people to pay such taxes. A long term solution is for the government to revamp all ailing industries to commence production of local goods and place restriction on importation Experts in South East proffer solutions to economic recession In the South East, experts want the government to cut down on allowances of officers by 80 per cent and channel the fund to agriculture to reboot the economy.

They also called for the removal of multiple taxation and provision of stable electricity to enable cottage industries to thrive. The Head of the Department of Economics at the Imo State University, Prof. Zik Anolu, said that at a critical period such as now, allowances should be cut to cushion the effect of the recession. Anolu said though government had earlier cut down some allowances and placed embargo on frivolous travels, the percentage was insignificant to compare with the current situation. “What is affecting the nation most is the bogus salaries and allowances paid to principal officers,’’ he said. He also advocated for a strengthened mechanised farming to help boost the economy. The HOD, however, faulted the government for placing embargo on importation of certain goods which had caused more problems than good to the economy. “When a country places embargo on goods that they don’t produce, it will lead to high level of smuggling of goods, which has serious effect on the price tags.

He said government should encourage investors to establish manufacturing industries and for the country to harness its raw materials. The Economic Adviser to Gov. Rochas Okorocha of Imo, Mr Ikechukwu Njoku, said the government should first address the problem of oil vandalism. He also advised government to open sectors such as the Nigerian Railway as a key sector in the country. “Nigerians are feeling the impact of the recession more due to high cost of transportation as a result of fuel increase. “When we make the railway service permanently functional, it will ease the difficulties of transportation thereby reducing the pressure on the people”, he said. Another business expert in Imo, Dr. Anayo Ikemba, said government should kill all form of bottlenecks that hindered discoveries of oil. He said there were high deposits of crude oil in some areas, but wondered why government had not started exploring them.

From Enugu, university teachers and economists called for a bi-directional to overcome the recession. Prof. Cletus said “we need fiscal and monetary policies that would stimulate foreign investment and job creation to take care of the millions of youths out of job”. Contributing, Dr Nathaniel Urama, a lecturer at the University of Nigeria Nsukka, said the immediate solution was a dialogue with the Niger Delta militants. He said that this would enable the Federal Government to get immediate fund to plan ahead for the future. The Executive Director, Anambra State Investment Promotion and Protection Agency, Dr Ifediora Amobi, noted that Nigerians must do away with the attitude of focusing on stomach or wasteful spending. According to him, what is needed now is productivity and cutting of all financial wastage; adding that an individual having financial scale of preference is important today. “Today, China is out of recession and has the highest number and base of cottage or family mini-industries and ventures. Rev. Fr. Innocent Ekeagwu, a lecturer of Economics, Michael Okpara University of Agriculture, Umudike in Abia, suggested the injection of funds into the industrial and manufacturing sectors of the economy.

 According to him, the measure will act as a tonic to the economy. He said that for the nation to achieve economic greatness, government needed to borrow to fund the real and critical sectors of the economy and make them productive. A legal practitioner, Mr Suleiman Ukandu, advised the government to give incentives, including tax holiday and favourable import conditions, to manufacturers and industrialists in the country. “For agriculture to play the critical role of saving the country out of the current economic malady, government needs to invest in mechanisation,” he said. The President, Onitsha Chamber of Commerce, Industry Mines and Agriculture (OCCIMA), Dr Uche Akpakama wants the Federal Government to revive the Industries as a sustainable measure to take the country’s economy out of the recession.

He said the interest rate of 14 per cent at interbank rate was high and not realistic to help the country out of recession because it could not support investment in the real sector. “How can you grow an economy out of recession when you have 14 per cent at the interbank rate. “It cannot work, wouldn’t you set up industries, wouldn’t you get this running, at what interest rate will get that done, and the private sector employs most Nigeria and the industries carry a lot of weight on that employment. Dr Tagbo Maduagwu, an economist, said that the solution might not necessarily be increasing workers’ pay but ensuring that workers were paid. He said that increasing salaries was usually accompanied by price upheaval (inflation) which should be put in check. “When the firms are operating, they would earn profit and expand capacity; this would create manpower demand and employment,’’ he said. From Ebonyi, stakeholders want the Federal Government to inject the funds recovered from public officers into the economy.

They said the measure would check the current economic recession and cushion the hardship on Nigerians. Dr Onyeka Okwara, a don, noted that Nigerians now realised that the economy needed to be injected with funds to check the recession. South West states and Kwara, that experts opined that the nation’s production capacity was totally externally dependent, putting pressure on available foreign exchange. Eminent academic, Prof. Akin Mabogunje, said that there was clearly a glaring need for government and all stakeholders to focus on policy development and articulation. He said that the was need to look into the seeming dissonance in policies to stimulate the growth and expansion of the real economy. Mabogunje said such could be done through a low interest rate policy and the prevailing Central Bank of Nigeria (CBN) initiatives to promote price stability and curb inflation Prof. Bola Okuneye, a Senior Lecturer in the Department of Agric Economics at the Federal University of Agriculture, Abeokuta, suggested that the level of production must be greatly increased for Nigeria to quit recession.

“Our major problem is that we are consuming more than we are producing, so we must encourage production. “When production is improved, then we need to ensure that people are really assisted in participating in consumption.’’ Mr Adewale Raji, the Group Managing Director of Odu’a Investment Limited, said in Ibadan that “we cannot afford to feed from overseas in terms of what we eat, wear and use. I think improving local availability, quality, standards and patronage are ways through which our demand for foreign exchange will reduce”. Dr Tunji Olaopa, the Executive Vice-Chairman, Ibadan School of Government and Public Policy, said that the nation needed to reflect its “ Made in Nigeria’’ campaign with the fundamental elements of its development plans.

A university lecturer, Dr Tolani Hassan, advised the Federal Government to reflate the economy, stabilise the oil sector and create employment opportunities to reverse the recession. Hassan, a lecturer in Economics at the College of Management and Social Sciences, Tai Solarin University of Education (TASUED), Ijebu-Odeo, Ogun, urged government to increase spending on capital projects to stimulate the ailing economy. Hassan urged President Muhammadu Buhari to engage more economic managers, including seasoned economists, to chart viable economic pathways for the nation.

Dr Samuel Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN), advised the Federal Government to invest massively in infrastructure to stimulate the economy. “Enabling environment in terms of stable power supply, good roads, macroeconomic stability and strong legal frameworks are vital to attracting foreign investors and getting out of the current recession.” he said. Mr Olusola Bankole, the Chairman, Ogun House of Assembly Committee on Finance and Appropriation, called for increased collaboration between government and the private sector. Government, he said, should stop being a “monopolist provider of infrastructure and should seek to work more closely with credible partners to bridge the infrastructure gap and unlock Nigeria’s potential’’.

 Dr Titus Okunronmu, a former Director in the Budgetary Department, Central Bank of Nigeria (CBN), warned against the sale of the country’s assets. Another don, Dr Michael Oke, said that drastic reduction in government expenses would be a practical way out of the current recession. Oke noted that the reduction should be on consumption and public office holders’ allowances which had major impact on personal expenditure of public office holders rather than public interest. He applauded government’s decision to source for loan from the World Bank, China’s Exim Bank and Japan International Cooperation Agency to tackle the recession. “Our foreign reserve as of today is less than 30 billion dollars to a population of over 170 million. “We need to invest massively in locally produced goods, especially in the area of agriculture for us as a nation to come out from this recession,” he said.

The lawmaker added that promoting locally produced goods would also help the government and the private sector in creating jobs for youths in the country. A former consultant to the Federal Government on MDGs, Mr Tosin Yusuf , said there was need to overhaul the whole fiscal policy of the government and make it “home-grown’’. According to him, the western economic theory of forces of demand and supply as a sole determinant of price mechanism should be jettisoned for practical economic reality. Yusuf said fiscal policy of the government should first take care of the immediate needs of the citizenry as a result of high poverty rate and boost the economy internally.

“One of the proactive measures against the present economic recession in Nigeria is to internalise our fiscal policy and boost the economy with home-grown logics. In the same vein, A Senior Lecturer in the Department of Economics at the Fountain University, Osogbo, Dr Goke Ilori , called for the thorough deregulation of certain sectors to facilitate efficiency and effectiveness. Ilori, said certain sectors of the economy like the aviation, maritime and oil sectors should be deregulated to reduce financial burden on the government and ensure efficiency and effectiveness. The Head of Economics Department, Obafemi Awolowo University, Ile-Ife, Prof. Philip Olomola, said government should sell some of the unproductive national assets to stimulate the economy. A professor of Economics, Gholahan AbdulGafar, called for more improvement in export of commodities as a way out of the recession. “Naira will continue to crash until export improves and leakages are blocked in Nigeria,’’ the economist said. Chief Samuel Oni, a retired financial expert with Central Bank of Nigeria, shared the same view.

 “The high level of political interference had been a major problem, in spite of the numerous gifted economic experts,” he said. “The grassroots, especially the towns and communities with their economic and tourism potentials, were always at the receiving end of government’s socio-economic development plans,” he said. Also, Dr Joseph Falaye of the Finance and Account Department of Landmark University, Omu-Aran, Kwara, urged government to prioritise entrepreneurship development to solve the nation’s economic challenges. He said the appointment into the headship of the nation’s financial institutions like the CBN should be based on merit. “This is the body that drives the nation’s economy and such appointment should be based on competence and expertise devoid of political influence to move the economic forward.

 “There is the need for proper and adequate coordination between the major economic policy makers to achieve the desired success,” he said. A legal luminary, Chief Afe Babalola (SAN), suggested a return to an agric-based economy, with a bias for promotion for commercial farming. “For Nigeria to overcome the present economic problems, we must add business to agriculture A don, Prof. Chris Taiwo, also advised that the same approach would revive the economy. “Enough of all the big retail chains carrying 95 per cent foreign agriculture-based products; let us give them the benefit of stocking our well processed and packaged products,’’ he said. Chief Kolade Oyewole, the Chairman of Ekiti Chambers of Commerce, Industries, Mining and Agriculture, shared the same view but emphasised the need for massive industrialisation through support to small and medium enterprises. However, economists in the North Central states, including Plateau, say creativity among industrialists and experts is needed to take the nation out of the woods. Some of them, who spoke with NAN in Benue, Nasarawa, Kogi, Niger and Taraba, called for more investments in mechanised farming, deeper and practical interest in the exploration of the abundant mineral resources to create jobs, feed the nation and facilitate exports.

 Dr Sylvanus Ade, an economist and university teacher, said the current challenges should be seen as “a positive development”. “Our leaders should minimise the waste, plough all holes usually exploited to cheat the system and invest the resources into farming and mechanised exploration of the massive mineral resources in states like Plateau, Nasarawa and Kogi. Mrs Gina Gabriel, a large scale potatoes farmer and an official of the All Farmers Association, advised leaders to pay more attention to more farming activities and quality seeds with better yields and additional value.

From Nasarawa State, economists and experts appealed to the three tiers of government to give priority attention to agriculture as a way of boosting the nation’s economy and pulling it out of recession. Two of such experts, Alhaji Yakubu Hauwa, former Commissioner for Local Government and Chieftaincy Affairs, and Mr Sunday Malkus, an economist, said “it was very wrong for Nigeria to heavily depend on a monolithic source of income Dr Jessy Asumate, the Taraba Commissioner of Finance, said the state alone could feed the nation if adequate attention was paid to agriculture. Similarly, financia experts in Kogi, including Dr Hussein Oju, said Nigeria should immediately start exportation of natural products, either semi processed or raw materials.

 The expert urged the government and the people to look inward and be creative and innovative in their thinking. “For instance, Ajaokuta Iron and Steel Company can produce numerous useful metallic products which we currently import daily from China, Korea and so on. Oju, therefore, advised government to create an industrial-based channel where anyone, who has creative ideas, could come and be financed to start projects. “The Federal Government should, as a matter of urgency, channel funds towards promoting industrialisation and agriculture, and not selling of national assets.” Dr Femi Adebayo, a lecturer at Federal University of Lokoja, said that government should invest more funds into the country’s educational structure to produce independent and productive graduates. Meanwhile, Mr Peter Chieshe, an industrialist and President, Newland Group, has blamed the economic recession on the rise of Nigerian billionaires who had no business establishments. Chieshe, who has diversified interests in the agricultural value chain, said growing number of Nigerian billionaires without a single productive business was responsible for the current recession.

 According to him, lack of productive businesses in any country ultimately leads to economic recession. He noted that economic development would not happen by chance but through smart policy measures pursued over a sustainable period by committed leadership. “Nigeria must undergo structural economic transformation from traditional agriculture toward an industrial economy which will begin with light manufacturing,” he said. A cross section of stakeholders advised the states and the federal governments on the necessity of retooling the economy to overcome the recession.


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