By Victor Ahiuma-Young
THE dust raised by National Bureau of Statistics, NBS, recent report that Nigeria has exited the excruciating economic recession on the ground that Nigerian economy grew in real terms for the first time in 15 months in the second quarter of 2017, will take time to settle as concerned individuals and groups have continued to comment on it.
One of such groups is the Nigerian Employers’ Consultative Association, NECA, which at a meeting of its governing council, deliberated on the state of the Nigerian economy and declared that while the exit from recession is positive, a detailed review of sectoral performances suggests that weakness persists and the Nigerian economy still remains very fragile.
Briefing on the outcome of the meeting, President of NECA, Mr. Larry Ettah, among others, warned against rising employment crisis in the country. According to him: “Reported unemployment rate in the country such as ours is about 25.7 or there about. That is quite high for a country of 170 million people.
“If you also look at a further analysis of that, put it into the unemployment rate in terms of demographics, and with those mostly affected people between 18 and 30 or 35, you find out that it is actually higher than the 25 per cent. You will be talking of about close to 40 per cent. So, it means our very young population, which is part of the larger population in the country is unemployed and that in itself has security concerns for what happens in the country. You can see some of the things that are happening because like they say, that the idle mind, even the idle hand can also become the devils workshop.
“So, to that extent, it becomes a social problem not just an economic problem, it becomes a security problem itself and it can actually be fueling some of the sectarian agitations that we see. It could actually be a fallout of this unemployment frustration that we are talking about. But beyond that, you also have a situation where your population is growing at about 3.2 per cent per annum. It means we are having more babies born and the population is growing, and if the economy itself is not growing, it just means that your per capital income, that means the income you generate as a country divided by the total number of people in the country, is reducing.
“If it is reducing, it means that our poverty level is actually increasing. Worst still, because of the high level of unemployment, it also means that the inequality level is also increasing. To that extent, it just highlights that social problem. Even for industries, industries manufacture because they have to sell to those who can buy. Purchasing power itself is also important because if you have a situation where the capital income itself is not growing; it means income itself is not growing. And then, you put that against inflation.
“Inflation is rising in which case the amount of money that people have to buy goods and services and amount of goods and services they can buy with the money they have, is actually reducing. So, that will impact on ability for businesses to expand. If the businesses are not expanding, then it means the businesses cannot reinvest. If the businesses cannot reinvest, the businesses cannot grow and if the businesses are not growing, they cannot employ new people. So, to that extent, there is no growth within manufacturing, and there is no growth within the economy sufficient to generate new employment. That in itself is something of great concern to us as members of the organized private sector beyond the social concerns.”
Overcoming socio-economic challenges: Suggesting ways to overcome the socio-economic situation facing the country, Mr Ettah noted, “Our review of the NBS GDP data shows that the marginal growth recorded in Q2 2017 is weak and fragile. Additional measures are required to ensure growth is sustainable and the economy does not relapse into recession. We recommend very strong and concerted implementation of the ERGP in order to boost confidence of both local and international investors in the Nigerian economy and generate additional investment which appears critical to building a sustainable recovery. We note that against our population growth rate of 3.2%, any GDP growth lower than 2% makes no dent in Nigerian poverty, unemployment and inequality and is insufficient to ensure business growth and profitability. We urge economic planners to adopt measures to attain the ambitious growth targets stated in ERGP. Already we fear that the 2.19% growth target in ERGP for 2017 appears unattainable.
“The NBS report for Q2 confirms the dire situation in most economic sectors including manufacturing, trade, telecommunications, hotels and restaurants, construction, real estate, transport and professional services. The report also shows the poor state of our social sector, as revealed by the recession in both education and health. It is clear that policy responses are yet to reverse these unfortunate trends. We are of the opinion that government needs to adopt specific, targeted and effective policies to attract and promote private capital investment in the Nigerian economy, especially into infrastructure and industry. So far, it does not appear as if the rhetoric in ERGP to make markets work and leverage private capital as the engine of growth, has been matched by appropriate policy responses.
“With regard to inflation, we are worried by the continued rise in food prices with domestic food inflation reaching 20.3% in July 2017 according to NBS data. We suspect this trend is connected to conflicts between herdsmen and farmers in vast areas of Nigeria’s North Central region, the country’s food basket, alongside forex conditions making food exports attractive thereby exacerbating local scarcity. We urge government to take firm actions to end these conflicts. More so the recent floods in the region may affect harvest, further worsening the situation. We retain the view that domestic interest rates are too high for the productive sector, and monetary policy must abandon its tightening posture to both reduce interest rates and support better GDP growth.”