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How to rescue Nigeria from deep economic recession (2)

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How to rescue Nigeria from deep economic recession (2)
From left— Vice President Yemi Osinbajo, Emefiele, CBN Governor, Ezeh Onyekpere, Lead Director, Centre for Social Justice, and Obadiah Malafia, former Deputy Governor of Central Bank.

By Babajide Komolafe, Michael Eboh, Emmanuel Elebeke, Gabriel Ewepu

The Gross Domestic Product (GDP) report for first quarter of 2020 released yesterday by the Nigeria Bureau of Statistics (NBS) confirmed that the nation’s economic growth is on the decline and hence the country is heading towards a recession. According to the NBS, the recession could be as deep as -4.4 percent GDP growth for the year, though the Federal Government (FG) hopes it can reduce the contraction to -0.4 percent, through its stimulus measures.

The first part of this report published yesterday highlighted recommendations by business leaders on how to rescue Nigeria from the impending deep recession. These include: Policies that will encourage massive investment for infrastructure and into agriculture, tax incentives and immediate termination of all lockdown measures.

This concluding part focuses on other recommendations namely increased patronage of ‘Made-in-Nigeria’ goods especially by the federal government. In addition to this, they stressed the need for policy to encourage Nigerians to bring back their foreign assets and investment it into the country.

Increased patronage for Made-in-Nigeria goods

The Federal Government, according to Mr. Tope Fasau, economist and former Presidential candidate of Abandoned Nigerians Renewal Party, ANRP, have to cut down expenditures on luxury items and focus its expenditure on locally made goods.

He said: “It will be too optimistic and realistic for government to expect -0.4% recession this year. For me, it is better we plan for deeper recession so that we can plan better and take very bold steps to get out of it.

“We have to look at it from income and expenditure angles. From expenditure angle, government have to be very careful with the way they spend money on luxury goods by elected and appointed persons in government.

“They have to cut their expenses and free some of the monies they spend on needless items.

From April 1942 and December 1944, the United State government stopped everybody from buying imported cars and made General Motors and Ford to recalibrate their factories. That is the kind of decision Nigerian government is expected to take now.

“Part of the reasons Nigeria is in trouble now is that when they could have patronise local manufacturers of cars like Peugeot and Innoson Motors they are criminally culpable by patronising foreign brands. Going forward, we need to buy what we have that are essential to the people and can affect the economy.”

Ezeh Onyekpere, Lead Director, Centre for Social Justice, also stressed that saving Nigeria from the impending recession requires that the FG cut down on flamboyant expenses. He said; “We must cut our appetite for foreign goods and services. There is no reason why ministers, permanent secretaries will not use the brand of cars made locally here by local car manufacturers like Innoson and Peugeot.

“We actually need a fund to recalibrate the auto industry and make sure that their cars are sold at single digit interest rate. By doing so, we promote the industry and it will expand and employ more Nigerians and generate revenue to the government.

‘The proposed renovation of Nation Assembly with N37billion must stop. When we cut off all these flamboyant expenses, we will raise up to a trillion to fund capital projects. We have a lot of over bloated contracts which government must look into and tighten it up so that that money will not be lost again.”

Eze also called for removal of subsidy and elimination of multiple exchange rates. He said: Subsidy removal should be allowed to stand and let us chart the right course by going to the National Assembly to legalise on it.Secondly, these idea of having three of four exchange rates will no longer suffice. Let us have one market driven by one forex.”

Engr Frank Onyebu, Chairman, Manufacturers Association of Nigeria, Apapa Branch, also listed increased patronage of locally produced goods as part of measures necessary to exiting the recession. Other measures he said include tax and other fiscal incentives to manufacturers and other businesses, massive infrastructural development, port reforms, among others.

“On the medium to long term, the government needs to craft out policies aimed at diversifying the Nigerian economy. Such sectors as manufacturing, agriculture, ICT should be given a massive boost. The government should also create deliberate policies aimed at improving the ease of doing business in Nigeria,” he said.

Executive Vice Chairman, High Cap Securities Limited, David Adonri said: “My own projection is that there will be stagflation in 2020 also called for measures to make the country less import-dependent.

He said: “We cannot escape the immediate impact of Covid-19 because the economy is not structured to be resilient by being self sustaining. We can start putting in place now, measures that will make the economy internally self regenerating in future. This will make the economy less import dependent and eliminate susceptibility to the vagaries of global economic downturn.”

Domestic Borrowing & amnesty on foreign assets

In addition to calling for massive public works through direct labour to create jobs, and more transparency in fiscal and monetary policies, Obadiah Malafia, Development Economists and former Deputy Governor of Central Bank, stressed the need for policies that will encourage inflow of capital into Nigeria especially the $200 billion foreign assets owned by Nigerians. Calling for amnesty to encourage return of such funds into the country, Malafia said: “We should be careful with Executive Order 8, where the Attoney General of the Federation (AGF) has arrogated to himself the power to witch-hunt people in terms of their foreign assets.  He is approaching it the wrong way.

“The best way to do it’s to declare two-year moratorium, for everybody that took money out to bring it back. Nigeria has over $200 billion starched away in foreign accounts. After that you can go after them and prosecute them. In a time of recession, government should not implement policies that will drive away capital but those that will bring capitals rushing in.”

This position was supported by Tope Fashua who also recommended that the federal government should emphasise domestic borrowing by encouraging Nigerians to channel their excess funds into funding development projects.

He said: “There are lots of Nigerians that still have money. If we continue to borrow money to finance budget, we will not get anywhere.
It is a lazy approach to pursue foreigners for loan rather than looking inwards because those foreigners also have their own problems to contend with. When those foreigners we are chasing were growing, they relied on internal funding to finance whatever project they had.

“Nigeria should learn to use its own money to fiancé projects. We can raise our own bonds because there are so much capitals out there.  We cannot continue to use available monies to build offices and houses nobody is renting; it is a way of holding capital down. It is time we change that mentality. For me, this is time for amnesty without caring whether the money is corrupt just to support the country. We can draw a line and maybe give two years moratorium for them to bring in the hidden monies.”

In addition to the above, the Chief Operating Officer, Invest Data Limited, Ambrose Omordion said that for the country to exit the impending recession, the FG have to take some strategic decisions including sale of some government properties that are dominant, privatisation of some sectors like airports, power distribution and others, as well as granting tax holiday to some businesses.

Cash Payment to Low Income People
Speaking on how Nigeria can achieve a lower GDP contraction as expected by the FG, Dr. Obindah Gershon, Co-Chair, Centre for Economic Policy & Development Research (CEPDeR), called for incentives targeted at the poor and low income earners.

Explaining on how this can be implemented, Gershon, “For instance, the Federal and State governments could offer COVID-19 Relief Bonus payment to low-level Civil Servants (from grade level 1 to 8) just for a month or two months. Alternatively, the Personal Income tax of this category of workers could be waived for one or two months only. With this additional disposal income the low income civil servants will spend more (especially on food) thereby pump-priming the economy to faster recovery.

“To support farmers and facilitate increased trading of agricultural products within Nigeria. Increased processing of agricultural products for export to the African market is fundamental for faster economic recovery and growth.”


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