Of­fi­cially in re­ces­sion

Daily Trust - - OPINION -

Min­is­ter of Finance Mrs. Kemi Adeo­sun con­firmed last week what bankers and econ­o­mists have been hint­ing at since early this year, that the Nige­rian econ­omy is in re­ces­sion af­ter three straight quar­ters of neg­a­tive growth. Her re­marks came a day af­ter Gover­nor of the Cen­tral Bank of Nige­ria (CBN) God­win Eme­fiele told a closed door ses­sion of the Se­nate that for­eign cur­rency in­flow dropped from $3.4 bil­lion per month to $400 mil­lion. This has led to the col­lapse of the value of the Naira against the dol­lar, which was put at about N375/$1 on the par­al­lel mar­ket as at last week­end and above N300 to the dol­lar for the first time ever on the of­fi­cial in­ter-bank mar­ket.

On its part, the In­ter­na­tional Mon­e­tary Fund (IMF) pre­dicted gloom as it stated that the coun­try’s GDP con­tracted by 0.36 per cent, while the Na­tional Bureau of Sta­tis­tics (NBS) emerged with a re­port that the coun­try’s in­fla­tion rate was as high as 16.5%, the high­est in over a decade. Mrs. Adeo­sun how­ever qual­i­fied her gloomy con­fir­ma­tion with cheer­ing news. She said, “Things are tough but we are not ig­no­rant. I want to as­sure Nige­ri­ans the econ­omy is in good hands and we are ab­so­lutely do­ing our best. We want to as­sure Nige­ria we are on the right path. We are on the right track.”

Though the Finance Min­is­ter at­trib­uted the short­fall in in­come to the ac­tiv­i­ties of mil­i­tants in the Niger Delta cou­pled with the fall in the in­ter­na­tional price of crude oil, many ex­perts think it is the Buhari regime’s pol­icy re­sponse that ag­gra­vated the de­cline. Though the ad­min­is­tra­tion says it has an eco­nomic team headed by Vice Pres­i­dent Yemi Os­in­bajo, the im­pact of this team is not be­ing felt as its ap­proach in bat­tling the cur­rent challenges does not seem to be yield­ing pos­i­tive re­sults. For in­stance, the ban on rice im­por­ta­tion has not been ef­fec­tive as the CBN Gover­nor is com­plain­ing that rice, eggs and school fees still take a huge chunk of forex al­lo­ca­tions ev­ery month. It is al­leged that some of those who pro­cure for­eign ex­change from the of­fi­cial mar­ket in the name of im­port­ing rice and agri­cul­tural equip­ment en­gage in round trip­ping by sell­ing the dol­lars to Bureaux de Change at higher rates, thereby en­rich­ing them­selves at the ex­pense of those who gen­uinely need forex. It is nec­es­sary for CBN to prop­erly scru­ti­nize the ac­tiv­i­ties of most of the deal­ers and pe­nal­ize fraud­sters. It is also time for gov­ern­ment to take an­other look at the list of items on which forex should not be sold at the of­fi­cial rate.

It is time to stim­u­late and en­cour­age lo­cal pro­duc­tion, es­pe­cially of agri­cul­tural prod­ucts and en­sure proper pro­cess­ing and pack­ag­ing for ex­port in or­der to di­ver­sify our sources for­eign ex­change. It in this re­gard that the com­plaint by non-oil ex­porters, who said gov­ern­ment’s poli­cies dis­cour­age rather than en­cour­age them, need to be looked into. The Or­ga­nized Pri­vate Sec­tor Ex­porters As­so­ci­a­tion claimed re­cently that gov­ern­ment failed to pro­vide in­cen­tives for its op­er­a­tion, hence non-oil ex­port dropped from $3 bil­lion to $1.6 bil­lion in the last two years. It is feared that earn­ings from that sec­tor could drop fur­ther in 2016.

The Buhari gov­ern­ment’s fo­cus on the fight against cor­rup­tion is highly com­mend­able. But with the poor state of the econ­omy, high in­fla­tion, drop in GDP growth, un­em­ploy­ment, un­der­em­ploy­ment and mass poverty, it must com­ple­ment that with ur­gent eco­nomic re­vival mea­sures. Re­triev­ing stolen money should not be the gov­ern­ment’s only fo­cus be­cause if proper eco­nomic pol­icy mea­sures are put in place, the coun­try could earn more than the stolen funds in a short time.

Now that the Fed­eral Gov­ern­ment has of­fi­cially ad­mit­ted that our econ­omy is in re­ces­sion, we ex­pect to see the en­tire psy­che, at­ti­tude and ori­en­ta­tion of gov­ern­ment change in or­der to meet the new challenge. Pres­i­dent Muham­madu Buhari could make a good start in that direction by putting in place a real team of eco­nomic ad­vis­ers.

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