By Vincent Ujumadu
AWKA— FORMER Governor of the Central Bank of Nigeria, CBN, Professor Charles Soludo said yesterday that the current economic recession in the country was a big eye opener for Nigerians, advising the nation’s leaders to begin to think of Nigeria without oil.
Speaking on the theme, ‘Managing a Recessed Economy: Options for Nigeria’, at the 2017 international conference of the Department of Business Administration of Nnamdi Azikiwe University, Awka, Soludo warned that as long as the mind set of leaders was still about sharing of revenue from oil, the country would continue to experience problems.
According to him, oil had done damage to the country’s economy, advising that it was therefore necessary to begin to think of alternatives to oil.
He said: “Success and failure are all in the mind and only those who persist get to their destination. The recession Nigeria went into was largely avoidable and for things to change for the better, Nigeria cannot afford intellectual isolation because there is need for exchange of ideas among intellectuals from various fields to put things right.
“Though economic crisis started in 2007 when most countries were witnessing recession, Nigerian economy was growing because of the power of ideas of the people in charge. Instead of sustaining the growth, we drove the economy into this recession.
“For example, between 2010 and 2014, oil price was above $100 per barrel but we were unable to accumulate foreign reserves. When I took over as the CBN Governor, foreign reserve was about $10 billion and we kept growing it on annual basis as a deliberate policy such that it was over $45 billion by the time I left.
“In 2010, I warned that if oil price went down to below $40 per barrel, most states would not be able to meet their obligations and that was exactly what happened. So, the problem was that we were not saving and we were even borrowing to implement recurrent expenditure.
“We were borrowing for consumption and for capital projects with the result that all the money we spent was borrowed at a time.
“When the oil prize slumped, some people in government even felt that it was not going to last and continued their spending spree. Some also felt that the exchange rate could be fixed and some of us warned that doing so would result to high inflation.
“And when the problem manifested, fire- fighting approach was adopted by the CBN which decided to give bailout to states. Because of these responses, the economy witnessed a shock and we thought we could reinvent economic theory and principle as a unique Nigerian approach.”
Soludo was however optimistic that the recently launched economic recovery plan by government could eventually lead to recovery, especially as there was mounting pressure on government to perform because election was approaching.
He also observed that what he called Abuja’s stranglehold on the economy was impacting negatively on it, advising that the number of items in the exclusive list must be reduced in favour of states.
“We do not have to be running to Abuja for everything and that was why I was surprised when some people canvassed that local governments should be going to Abuja to take their allocations directly,” he said.
According to him, the first step should be to let the states take control of minerals to and pay taxes to the Federal Government.