By Michael EbohA map of Nigeria
The Federal Government would need to significantly increase its expenditure and mobilise about $40 billion to stimulate the Nigerian economy and bailout small and big businesses.
This would prevent the country’s economy from plunging deeper into recession, according to Chijioke Nwaozuzu, Professor of Petroleum Economics, Management & Policy.
In an interview with Vanguard in Abuja, yesterday, Nwaozuzu, who is also Director, Emerald Energy Institute of the University of Port Harcourt, however, noted that the major challenge confronting the government would be how to mobilise the $40 billion needed to stimulate the economy and carry out the bailout programme.
Nwaozuzu said that it was crucial the Federal Government increase its expenditure during this period, adding that the main focus of government’s intervention should be on Micro, Small and Medium Scale Enterprises (MSMEs).
According to him, most of the MSMEs would have consumed their capital by now, going by the prolonged lockdown and with the shutdown of economic activities within the period of the lockdown induced by the Coronavirus (COVID-19) pandemic.
He identified the other sectors that would need bailout to include banks, telecommunication companies, power distribution companies, (DISCO) and airlines, while he noted that Nigeria’s situation is worsened by the absence of a stabilisation fund and the fact that it failed to save during the period of high crude oil prices.
He said, “To address the issues of achievable level of recession and stimulus measures that could help reduce the Covid-19 induced recession, we have to examine some fundamental macro-economic relationships.”
He warned that during this circumstance, GDP growth rate would hit below zero, which is negative GDP, and result in economic recession.