… Economics proffer policy options
By Emeka Anaeto, Economy Editor
Vanguard Media online opinion poll has revealed large scale disapproval of the economic management policies by president Mohammadu Buhari, even as economists and institutional analysts clamor for policy changes.
The poll asked respondents how would they score Buhari’s government on economic management so far, on three rating scales: Fantastic; Bad; Average.
With a total 18,719 respondents the result shows that a whopping 17,080 or 91.3 per cent of them rated the president ‘bad’ while only 5.6 per cent and 3.2 per cent rated him ‘fantastic’ and ‘average’ respectively.
The poll results appear not surprising following the steady negative statistics on Nigerian economy performance since present regime.
Figures released by the National Bureau of Statistics, NBS, last week show that the economy has gone into recession with two consecutive quarters of negative growth, first time in over 20 years while inflation has continued to go up since this present regime, hitting 17.2 per cent in the month of July, over 11 years high point.
Unemployment figures were also bad as it continued to grow showing over 26 million able bodied Nigerians unable to get employment, while many more are losing their jobs.
Most economy analysts have, therefore, posited alternative policy options which indicates that present policies have failed.
Director General of the West African Institute for Financial and Economic Management, WAIFEM, Professor Akpan Ekpo, weekend, blamed the Federal Government and the Central Bank of Nigeria, CBN, for Nigeria’s current economic woes and for the country’s recent plunge into recession.
Ekpo who is also an economist, former Director of the CBN, and former Vice Chancellor of the University of Uyo, in an emailed response to Vanguard enquiries in Abuja, said that the delay in passing and implementing the 2016 budget and the CBN’s monetary and foreign exchange policy stance helped worsen the country’s economic situation.
He said, “There was a near absence of fiscal policy – the economy lacked the necessary fiscal buffers. Money and exchange rate policies were the only voice”.
On growth, economists at WSTC Financial Services, a Lagos based investment house, said “the performance of the economy in Q2:2016 was broadly in line with our projection of -2.0% for the period and we remain less optimistic on the performance of the economy for 2016.
“As foreign exchange related challenges linger, we expect this to weigh down on economic performance especially in the manufacturing sector given the heavy dependence on imported raw materials.
“Our view on the Manufacturing sector is further buttressed by the Manufacturing PMI data which has remained below the 50 point mark in 2016, a leading indicator for weaker manufacturing output.
“Streamlining to Q3:2016, PMI in July settled at 44.1 and reduced to 42.1 in August; thus, we expect a contraction in manufacturing output by Q3:2016.
“Against the backdrop of the lingering challenges in the currency market, oil production distortions in the Niger-Delta and uncoordinated policy responses, we expect economic activities to stay negative in Q3:2016.
“As such, we revise our 2016 GDP projection downwards, from +0.4% to -1.0%.”
WSTC economists also lamented the inflation figures and the consequences, and they stated: “In spite of the commencement of harvest season, Food inflation increased to 15.8% in July.
“We believe this increase was as a result of the pass through effect of a weaker Naira as reflected by the 40 bases point increase in imported food prices.
“The Core sub-index (which measures changes in price of All-items less volatile agricultural products) rose by 16.9% from 16.2% recorded in June. Energy and energy-related prices were the largest contributors to YoY Core inflation during the month.
“The highest increases were seen in Electricity, Liquid Fuel and Personal Transport groups, amongst others, as the impact of the recent adjustment in price in the downstream petroleum sector and hike in electricity tariff continues to impact the Headline index.
“Clearly, rising core inflation suggests the presence of underlying inflationary pressure. We expect the reduced system liquidity resulting from the restrictive monetary policy stance of the Central Bank of Nigeria (CBN) to continue to subdue aggregate demand.
“However, in spite of the persistent weakness in the economy, we believe Headline inflation will continue to be driven by cost push forces, which will result largely from higher cost of credit, higher energy prices and volatility in the foreign exchange market.”
On policy options, Ekpo stated: “For the country to be able to get out of recession, Federal Government should place emphasis on spending on capital projects and recurrent expenditures, especially in the area payment of salaries owed workers, while also increasing its spending on power, roads and other hard infrastructures.”
He said, “I hate to disappoint Nigerians – the private sector cannot get us out of the recession. Government must lead for the private sector to follow until recovery sets in. As part of stimulating aggregate demand, the social programmes in the budget must be implemented urgently.
“Furthermore, government has no choice but to borrow externally and domestically to spend and get the economy out of the recession.”