Recession: Experts proffer solutions

The restoration of power, consumption of local products, price stability and improved purchasing power through prompt payment of workers’ salaries and creation of employment opportunities have been suggested by experts as parts of the strategies to rescue Nigeria’s bleeding economy. SIMEON EBULU LUCAS AJANAKU, EMEKA UGWUANYI, CHIKODI OKEREOCHA, OKWY IROEGBU-CHIKEZIE and DANIEL ESSIET report.

EXPERTS have been suggesting what feel the Federal Government should do to pull the economy out of recession.

Although the views are as divergent as there are contributors, a denominator runs through all – the Federal Government should initiate policies to address the downturn and give the populace a new lease of life.

The government is not folding its arms. As the Presidency and the other tiers of government engage one another to tackle the recession, the Economic Team, under the chairmanship of Vice President Yemi Osinbajo has been harnessing experts’ opinion on how to exit recession.

A World Bank  consultantProf Abel Ogunwale, urged the government to explore ways to restore power supply to boost economic growth in order to exit recession. To him, addressing the epileptic power supply has wider economic benefits.

He added that the pains of dwindling oil prices and a slowing economy are being felt most by smaller companies that cannot survive the restriction on credit facilities.

The professor pointed out that the distress in the Small and Medium Enterprises (SMEs) could adversely affect the job market, stressing the need for cottage industries to create employment opportunities.

He explained that the long-term job outlook appears negative with the continuing pressure on small business operators to cut costs, citing the zigzag economic backdrop.

Apart from empowering SMEs, the expert said improved investment in agriculture can help pull the economy out of recession.

He urged the government to give priority to investment to small holder agriculture enterprises, stating that protecting farmers’ access to financial services has become imperative.

According to him, farming, one of the biggest sectors in the economy, was not badly hurt by the economic crisis, and could benefit from increased exports across the food spectrum due to the weak naira. He noted that  tax concessions for agriculture-related projects would give the economy a further boost.

Ogunwale said the recession should serve as an opportunity to boost farm exports across the board.

Olajide Oladele, a professor of Business Administration at the Ekiti State University (EKSU), Ado-Ekiti, traced the recession to the technical hitches experienced by the economy in real growth for two consecutive quarters. According to him, the unemployment and inflation rates were rising simultaneously.

Oladele said the Central Bank of Nigeria (CBN) should focus attention on price stability, urging and the government to inject cash to reflate the economy.

“Government must make efforts to increase spending in the economy,” he said, warning that further imposition of taxes will hurt the economy more.

Describing the current interest rate regime as not investor-friendly, the professor pointed out that interest rate must go down to allow the real sector access to bank facilities.

He said the CBN should give more priority to monetary policy over fiscal.

Also, the President, Association of Telecoms Companies of Nigeria (ATCON), Olushola Teniola, said there can never be any quick fix to economic recession. He, however, said that the government must work hard to improve the power sector to stimulate SMEs.

He also identified the information communications technology sector (ICT) as a gold mine waiting to be explored.

Commending the fiscal discipline of the government, Teniola said the planned borrowing to finance this year’s budget should be directed at financing capital projects to reflate the economy.

Like Prof Oladele, Teniola said that in the short and medium-term, much needed to be done to bring in more people into the tax net, but not necessarily increasing or introducing spurious new taxes.  In the long term, he urged the government to implement its planned diversification of the economy from oil revenue.

Diversification, he said, may not yield the desired dividends in the short and medium-terms even as it holds the future of the economy.

Teniola spoke of the need for the government to restore the dignity of the naira against other foreign currencies, adding that its free fall must be halted.

“The Federal Government should start investing in the education sector to produce digital-minded youths who will run a digital economy which is the vogue all over the world”, Teniola said.

According to him, such investment will begin to yield results in the next eight to 15 years when the country will start earning foreign exchange from the export of ICT manpower.

Teniola has an ally in the Chief Executive Officer, International Energy Services, Dr. Diran Fawibe, who described economic diversification as a long-term project unlike electricity, which could be switched on and off at will.

He commended the government for its courage in deregulating the downstream oil sector and doing away with fuel subsidy.

He suggested that the about 35 per cent of foreign exchange being wasted on fuel importation should be used to turn around the manufacturing sector as no nation can survive as a net importer of finished goods.

He said steps must be taken by the government so that both local and foreign investors could start bringing money to the economy.

According to him, since the country still depended on oil for its foreign exchange earnings, the Federal Government should extend the olive branch to the rampaging militants in the Niger Delta to stabilise oil production.

The Director-General, Debt Management Office (DMO) Dr. Abraham Nwankwo, identified agriculture as the key to economic recovery. He said the country has been unable to exploit up to 25 per cent of opportunities in agriculture.

Nwankwo said: “We need to achieve internal food security and have the opportunity to export agro-based products in processed form. Imagine the variety of food stuff from savannah to the deserts, all the various legumes, roots and others that can be grown from these environments.

“If we effectively exploit agriculture, if and as we are making progress in agriculture, firstly, the major consumer of our forex like agro-based raw materials, rice, fish, poultry, wheat, will be taken care of and government will save billions of dollars from these imports.

“We have the capacity to produce these products and even export them. Based on the pronouncements of the agriculture minister on the vision of the government, in three to four years, we will be self-sufficient in poultry and rice production.

“We are on the right path to be self-sufficient in food, and enormous forex will be saved from agriculture production alone. Reserves will rise, and the local currency will be stronger. That is the essence of the growing economy.”

He said achieving self-sufficiency in power will enable government generate more income; companies will be able to pay more taxes, thereby aiding the diversification of the revenue bases.

His words: “It is possible that in the next five to seven years, the whole picture of Nigeria will be a complete turnaround because of government’s economy diversification plan.

“The difference between Nigerian and other countries facing similar economic challenges is that those countries do not have the same opportunities we have in Nigeria. Nigeria is near 100 per cent idle capacity, meaning the flexibility to grow the economy is high.”

He encouraged Nigerians not to be depressed because of drop in crude oil prices, saying: “we h=ave no reason to be depressed just because crude oil price is down. We have to see the varieties of opportunities available for the country to grow the economy based on a well-diversified and sustainable manner. We as responsible stakeholders in the economy, should emphasise these opportunities.”

President, Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, said the economy can be turned around in the next six months if the government listen to the quality advice and implement same without delay.

He identified zero confidence by both local and foreign investors as a result of frequent policy somersaults as the major challenge with the economy

Jacobs told The Nation that he regretted the damage done to the economy before now and the fact that the government has not implemented the advices offered by stakeholders.

 He said: “The damage to the economy is colossal, before now government was not engaging the private sector not considering our stake in the economy but incidentally they are now listening but we pray that they move beyond that to implementation.

“Our foreign reserve has been depleted drastically, we suggest that government should sell some of her assets which we conservatively put at $15 billion and add it to the depleted foreign reserves. If this figure is added to what is left of the foreign reserves we will be looking at something in the region of $41 billion this we believe will give investors confidence in the economy once again.”

Jacobs further advised the government to make positive statements on its belief that the private sector is better positioned to drive the economy.

The MAN president urged the government obtain loans from International Donor Agencies (IDAs) such as World Bank and the International Monetary Fund (IMF), saying such facilities will restore reputable organisations’ confidence in the economy and arouse local and international investor’s interest.

He described mistrust by investors who believe that our economic managers cannot be trusted as a result of policy inconsistency as one of the major challenges in the economy is the.

On how to curb policy inconsistency, Jacobs said the government can decide, henceforth, to give a window of five years before a particular policy can be changed to enable investors adjust to the new rules.

He stressed that all the measures he has enumerated, if adhered to by the government, will put the economy on the part of recovery.

“The economic problems facing the nation are not insurmountable but the key word to economic recovery is confidence and the integrity of its managers”, he added.

Chairman of Manufacturers Power Development Company Limited, (a sub-sector of MAN), Mr. Ibrahim Usman, said the government cannot but engage in collaborative effort with the private sector to make impact in the economy.

He said the idea of not involving the private sector before now may have been informed by the tendency of some private sector operators to engage in sharp practices, or hijack government policies to their advantage, or in the extreme use some sensitive information to the detriment of the whole economy.

He urged the government to initiate policies that can be monitored in every three months as a way of evaluating the progress of its collaboration with the private sector.

Usman argued that for the economy to move forward, the government must concentrate on its core competence as a major spender by providing strategic infrastructure such as good roads, water, electricity and others.

According to him, “it is only when government spend money and put monies in the hands of people that the economy would move from where it is today to a point of growth and prosperity and albeit out of recession.”

To Emeka Ene, the Chief Executive Officer of Oildata Group and former President of Society of Petroleum Engineers (SPE) Nigeria Council the must look inwards on how to create value from oil.

Ene, who is ex-Chairman of Petroleum Technology Association of Nigeria (PETAN), said all over the world, a sense of wellbeing of the people is primary and every government strives to achieve this objective.

Maximizing value from hydrocarbon resources, he said, should be a priority to the government because all other options are long-term and cannot be achieved overnight.

Ene said: “We are where we are today as a country because we refused to plan. Nigeria sells oil and gets money but today the same oil cannot give it the expected revenue as it used to give in the past. Will it not find something else to sell to give it money?

“The fact is that the country can still do a lot of things with oil. It is not just about mining oil and selling it; the nation can create much more value with the oil it produces. The government should create an environment for businesses to thrive first and find ways to produce cheaper oil.

“These businesses will attract the investments that will help to build modular refineries, petrochemical plants, and stimulate the over 200 oil service companies in the country.

“These steps will help in ensuring the cost of production per barrel of crude drastically comes down, create other processing outlets, relieve the government of importation of refined products, and create massive employment in the oil and non-oil sectors.

“The development of the solid mineral sector and some other sectors that are being looked at for diversification of the economy are not what can be achieved overnight. The oil sector, at the moment, remains the sector to make easiest money. Government needs to meet with the operators of the sector to find ways to produce oil at cheaper cost, process it in-country using local personnel and materials as much as possible and ensuring that value is retained in-country.”

The Managing Consultant of Nesbet Consulting, a Lagos-based firm of finance and management consultancy, Mr. Alaba Olusemore, said getting the country out of the current economic recession should be a combination of ideas and policies.

According to him, a critical look at those articulating the policies that drive the economy must be made with a view to ensuring that they are “round pegs in round holes.”

At the level of policy, he said the Treasury Single Account (TSA) policy, under which all revenue receipts and payments are made into a central pool in the CBN should be reviewed in a way that allows the idle funds to be invested into public works such as health and other infrastructure such as power, roads and railways, among others.

Olusemore argued that rather than keep the money idle, the government should invest the money into public works, noting that government is giving undue focus on the fight against corruption at the detriment of other issues plaguing the economy and Nigerians.

 The economist also called for policy consistency, pointing out that “we don’t know government’s policy direction with regards to the manufacturing sector, which is the engine of growth. There must be a clear cut policy on manufacturing”.

Olusemore said that manufacturers should be encouraged with tax incentives and access to forex, while also subsidising their power consumption rates.

Reminded that the CBN recently announced a 60 per cent special forex allocation window for manufacturers, Olusemore, who lauded the development, said the implementation remains critical.

According to him, most manufacturers have not been having access to the special forex window.

He said another sure way to get the economy back on track is for the government to manage its expenditure properly.

According to him, the time has come for government to t reduce recurrent expenditure and invest more in capital expenditure.