The Nation Newspaper

Tag: recession

  • NGF bars Journalists from coverage of induction programme

    The Nigeria Governors Forum (NGF) are not happy with Journalists over the report of the looming recession warning raised on Monday by the Chairman of the forum, Governor Abdulaziz Yari of Zamfara state.

    The warning which has generated a lot of backlash for the governor did not go down well with the forum, it was learnt.

    Consequently, Journalists who came to cover the day two of the induction programme for newly-elected and returning governors were barred from gaining entrance into the venue.

    The three day induction programme is ongoing at the State House Conference Center, (Banquete Hall), Abuja.

    The State House Correspondents and the accredited NGF correspondents were not allowed entrance into the venue.

    Yari had in his opening remarks on Monday warned incoming governors to be prepared for the possibility of another cycle of recession by the mid-2020 to third quarter of 2021.

    The NGF chair who was preparing the minds of the governors, especially the newly elected ones of the challenges ahead had noted that  while the crude oil price was over $100 from 2011-15, the price noise dived to less than 75 percent from 2015 leading to recession.

     “On our part, we made a lot of achievements in infrastructural development and provision of social services because we enjoyed a relatively high oil price of about $100 to $114 per barrel between 2001 and the middle of 2014. However, by the mid-2014, the price of crude oil, which is sadly the main driving force of government’s expenditure, dropped to $75 per barrel. It, therefore, became very difficult for many states to even pay salaries of their workers.

    “This scenario is a wake-up call for all of you to come amply prepared to face these kinds of challenges, especially since we are expecting the possibility of another cycle of recession by mid-2020 and which may last up to third quarter of 2021. Your good spirit of stewardship will make you contain the situation should there be one. Also, as members of the National Economic Council, you must work hand in hand to boost the economy in tandem with the global best practices.”

    As at the time of filling this report, there is no official statement on why Journalists were barred from further coverage.

    Not even the Forum spokesperson, Mr. Abdulrazaq Barkindo was able to provide answer to why the reporters were not granted access to the venue.

    Barkindo who dismissed the suggestion that the directive came from the NGF posited that the security officials took the decision on their own accord.

    He also said all efforts to get them to reverse the decision failed.

  • Olayinka: Three years of managing recession in UI

    When he made up his mind to vie for the position of Vice Chancellor, University of Ibadan (UI), Prof. Abel Idowu Olayinka certainly did not envisage that, Nigeria, which depended solely on crude oil as her major source of income, was going into economic recession. He had lofty plans, designed to take UI to greater heights, he probably did not believe his sublime and idealistic roadmaps would be skewed by poor economic condition of the country!.

    Sadly, no sooner he took over on 1 December, 2015 as the 12th VC of Nigeria’s premier university than the country slipped into what is today known as economic recession. In his own words, “it was as if the recession was waiting for me to become VC”. The university system teetered on the brink of collapse, poorly funded and shorn of adequate wherewithal. Subvention for personnel cost was grossly inadequate as staff salaries could not be paid in full. Prof. Olayinka soon ran into a raging storm with the workers who would not entertain any excuse. On account of payment of what the workers called “half-salary”, the VC was nicknamed “Afusa VC” . This meek man of stellar character became the butt of derisive remarks and epithets as he found himself in an economic labyrinth.

    It is his remit really as a compass to provide direction and stabilize the situation, having taken up the mantle of leadership. Interestingly, Prof. Olayinka who turns 61 years old today, like a gold that fears no furnace,  took on the storms, the waves and the ripples with an uncommon candour, believing that the way forward is to face forward with faith.

    However, one of his biggest natural advantages is his calmness of mind. As if God deliberately wired him for terrible season, Prof. Olayinka is hardly ruffled by any circumstance. He is stoic and unshaken. With his poker-faced visage, he accepts situations with good grace, taking things as they come. There is no doubting the fact that his placidity makes his travelling on a hard road much easier and bearable for his followers.

    Like a determined hunter who is never frightened by the jungle, Prof. Olayinka has therefore been leading the road to recovery in the last three years with attendant smashing successes in many areas. He has thus been able to save the university several millions of Naira, as a result of his economic policies, developed to confront the recession. For instance, he stopped the yearly publication of calendar in 2016 which used to cost the university N12 million annually. He again stopped publication of inaugural lectures in national newspapers which used to gulp at least N3million per session, just as he asked the university to migrate to electronic bulletin, instead of hard copies of UI Bulletin which used to cost the university N8million in the past. Again, Prof. Olayinka administration has saved the institution about N8million by adopting the method of sending electronic copies of publications to external assessors,  starting with foreign assessors, just as he compelled the development of In-house software for sorting of Post-Unified Tertiary Matriculation Examination (POST UTME) questions which an external vendor had charged the university N3million for. But for space constraint, one would have loved to list a number of his achievements in many other areas,  including academic matters where so many programmes have been approved to commence. Many faculties and departments have also created.

    On infrastructural development, Prof. Olayinka administration has facilitated construction of many projects such as the on- going construction of the Faculty of Arts extention, Construction of the International Postgraduate House at Ajibode and construction of a new Faculty of Law Lecture Theatre.

    Perhaps it is appropriate to use today, being his 61st birthday to celebrate the man who has been able to calm the storm in UI with his training and temperament. An American author, Roberts Liardson couldn’t have been wrong when he asserts that “an internal security will always produce an outward stability. Prof. Olayinka is confident of himself. He is technically accomplished, tactically sound and strategically alert. He believes no matter how powerful a storm may be, it will surely calm down. His temper constitutes a template for enviable conduct. Indeed, he is a specimen worthy to be studied. Clearly, the stuff with which many in his class are made goes beyond the superficial. Rather, it is a function of a potpourri of several variables and factors.

    His outstanding qualities may have endeared him to so many eminent scholars across the globe. Without doubt, Prof. Olayinka is loved by his colleagues. For instance, Emeritus Prof. Ademola Oyejide, of Economics Department, Prof. Oye Gureje (Psychiatry), Prof. Isaac Olawale Albert (Institute for Peace and Strategic Studies), Prof. Ademola Ariyo, Prof. Oyesoji Aremu of Distance Learning Centre as well as Dr. Gani  Adeniran of Veterinary Medicine among others can go to any length to support the VC whom they consider as a rare breed and a gift to humanity. Many more people love him with the way he pauses and ponders before taking decisions. Others cherish and admire him for his humility. Prof. Olayinka is a man with high level of will power who is ever ready to trade away comfort for result.

    He is not materialistic. He is not oppressive neither is he vindictive. He is largely unassuming, ready to play any role to ensure that all is well.

    More importantly, Prof. Olayinka wishes all and sundry well. He wants he best for everybody. He encourages people to be the best they can be. Being an academic eagle himself, he always wants his students to be looking up to the sky. He always says “ If I help my students to make it, then I have made it.” He gives his time, treasure and talent to the task at hand in order to ensure that success is achieved.

    Some of his critics say he is hard to read, probably because of his seemingly inscrutability and imperturbability, but some of us who are close to him know better. We know the keys that unlock him. Prof. Olayinka appreciates hard work, dedication, honesty and excellence. He loves those who can display values. And, he rewards them handsomely. I feel proud working with him. He has never denied me any request that is meant to enhance my job. Indeed, he has been so benevolent to me.

    This UI boss could be gregarious with his penetrating jokes, for he possesses a robust sense of humor, yet, he is tough-minded, strong-willed and self-possessed. He daily interacts with all manner of people: the good and the supportive, the cocky without conscience, rude without restraint, in all the situations, this man of substance with cerebral endowments puts up his best behaviour, remaining a paladin of moral rectitude.

    Leadership is about capacity-being the type of a person who is able and willing to learn, to demonstrate courage, tackle difficulties and question the status quo. These and many more are the values Prof. Olayinka has been espousing in the last three years as UI’s boss. He certainly deserves national ovation and celebration. He is doughty enough to assert integrity in the face of opportunity for self aggrandizement.

    Born February 16, 1958 at Odo-ljesa, Osun State, Olayinka attended St. Bartholomew’s Primary School, Odo-Ijesa, 1964-1969, and was appointed the Senior Prefect in his final year. He was admitted into the famous Ilesa Grammar School in January 1970 and completed his West African Secondary School Certificate in 1975, in Division One.

    He entered the University of Ibadan in the 1977/78 session to study Geology. He graduated with Second Class Honours (Upper Division) in 1981 as the best student in his class.

    He started his postgraduate studies in September 1983, first at Imperial College of Science, Technology and Medicine, London. He earned an MSc in Geophysics at the University of London and Diploma of Membership of Imperial College in July 1984. He subsequently received the Overseas Research Students’ Award from the Committee of Vice-Chancellors and Principals of United Kingdom Universities (now Universities UK); he utilised this scholarship at the University of Birmingham for his Ph.D. research in Applied Geophysics which he completed in April, 1988.

    As Prof. Olayinka marks 61 years of productive engagements in the land of the living today, one can only pray for him to have  more favour in his future endeavor. My VC, I thank you for giving me the opportunity to work with you as I have learned a lot under your feet. Happy Birthday Sir, and many happy returns of this day.

     

    • Saanu (08059436919) is Media Assistant to the Vice Chancellor, University of Ibadan. E-mail: sundaysaanu@gmail.com

     

  • Averting economy’s relapse into recession

    The Economy Management Team (EMT) is worried by the economy’s poor showing on the first half of the year. It recorded a 1.95 per cent growth in the first quarter and 1.5 per cent in the second quarter. According to experts, these are indices that the economy may relapse into recession. But, real sector operators believe this is nothing to worry about once the right recovery policies are put in place and well managed. Assistant Editor CHIKODI OKEREOCHA reports.

    The danger was foretold. Even before the Central Bank of Nigeria (CBN) warned that the economy was on the brink of relapsing into recession, not a few real sector operators and development experts doubted that the country was out of recession in the first instance. Some of them, including members of the Organised Private Sector (OPS), especially manufacturers, described the purported exit as technical and fragile.

    For instance, before the CBN raised the alarm, about two weeks ago, that the economy may slip back into recession, citing weak economic fundamentals, the Chairman, Policy Committee of Manufacturers Association of Nigeria (MAN), Mr Reginald Odiah, faulted the National Bureau of Statistics (NBS) report, which suggested that the country had exited recession.

    Odiah,  a former chairman of the Electrical Group of MAN, said the economy was not completely out of recession; that the saving grace was that more money was coming in from the oil sector.

    “If you look closely, most businesses have closed down. I am not seeing clear policy direction and political will to bring the country completely out of recession, he said.

    Pointing out that the government is simply focusing attention on the 2019 general election, Odiah added that: “The truth is that at the slightest mistake, the country would plunge back into deep recession.”

    The former Director-General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. John Isemede, also wondered how NBS could suggest that Nigeria was out of recession with the first quarter growth at 1.95 per cent, while the second quarter recorded 1.5 per cent.

    Isemede, a consultant with the United Nations Industrial Development Organisation (UNIDO), said consumers are still under pressure due to weak purchasing power, which has been compounded by inflation, high cost of goods and services, low disposable income, delays in payment of salaries in the public sector, the continued naira exchange rate effect and high import duties on many consumer items.

    Some of these earlier doubts may have been why CBN’s warning that the country’s exit from recession was under threat may not have come as a surprise. To some experts and real sector operators, the fact that it came at a time oil prices are rebounding, hitting an all time high of $83 per barrel, as at Monday, October 8, meant that more hardnosed, strategic decisions and policies are required to sustainably exit the recession.

    The CBN’s Monetary Policy Committee (MPC) had at the end of its two-day meeting held at the bank’s headquarters in Abuja said the economy has started showing signs of weakness. CBN Governor Godwin Emefiele said the committee was concerned that the exit from recession may be under threat as the economy recorded growth rate of 1.95 per cent and 1.5 per cent during the first and the second quarter of this year, respectively.

    According to him, the slowdown emanated from the oil sector with strong linkages to employment and growth. He also listed some of the risks to output growth to include late implementation of the 2018 budget, weakening demand and consumer spending, rising contractor debt, and low minimum wage.

    Others, according to Emefiele, are the impact of flooding on agricultural output, continued security challenges in the North-East and North-Central zones and growing level of debt.

    The CBN boss said the MPC observed that despite the underperformance of key monetary aggregates, headline inflation inched up to 11.23 per cent in 2018, from 11.14 per cent in July 2018. “The near time upside risks to inflation remain the dissipation of the base effect expected from 2019 election-related spending,” he said.

    Emefiele also lamented that continued herdsmen attacks on farmers and flooding, which destroyed farmlands, affected food supply ultimately. He, however, noted that: “Relative stability has returned to the foreign exchange market buoyed by the robust external reserves, with inflation trending downward for the 18th consecutive month.

    Already, because of what the International Monetary Fund (IMF) described as “clouds on the horizon”, induced by the afore-mentioned factors, the Bretton Woods Institution has cut the growth projections made for Nigeria to 1.9 per cent, from 2.1 per cent, noting that the country’s economy was doing poorly.

    The Deputy Director, Research, IMF, Gian Maria Milesi-Ferretti, announced the downward revision of Nigeria’s growth prospects in 2018 from 2.1 per cent to 1.9 per cent this week at the annual meetings of the IMF and World Bank Group in Bali, Indonesia.

    He stated that the largest economies in Africa — Nigeria, South Africa and Angola — were holding down the continent’s economic development as a result of poor growth rates.

    “The aggregate growth rate for the continent is held down by the fact that the three largest economies are not performing up to their full potential,” he said.

    The IMF research director stated that the continent could do much better once these economies are on a more solid footing, particularly South Africa and Nigeria, because they are really large and affect a number of countries in their neighbourhood.

    The IMF had at the beginning of this year projected that Nigeria’s economy would grow by 2.1 per cent in 2018 and 2.3 per cent in 2019. On its part, the World Bank had a 2.5 per cent growth forecast for Nigeria.

    However, after the GDP growth of 1.95 per cent in the first quarter, followed by a fall to 1.5 per cent in the second quarter of 2018, it became clear that the much- anticipated economic recovery was not forthcoming, as the earlier positive forecasts are now being hurriedly reviewed.

    Worse still for Nigeria, fears are now rife that the economy may slip back into recession, a possibility, which experts and real sector operators say could be averted with right and properly managed recovery policies including re-assessing the nation’s fiscal and monetary policies to ensure that they support employment and productivity.

    For instance, an Economist, Dr. Ayo Teriba, believes that bridging the gap between the parallel and the official Foreign Exchange (forex) market rates could be the wedge for an economy on the brink of plunging back into recession.

    “As severe as Nigeria’s economic problems, it can reverse itself if the government can put the right policy in place. The truth is that even if oil is still hovering around $20 per barrel, there are things we can do to avoid inflationary shocks such as bridging the gap between the parallel and the official forex market rates,” he said.

    For the Director-General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, reversing the declining trend in the GDP required sustaining the current momentum in the implementation of the government’s ease of doing business. This, he said, would help bring down the operational cost of investors.

    He also called on the government at all levels to double their efforts to improve the state of infrastructure. According to him, the state of infrastructure has continued to take a toll on investment across all sectors, pointing out that the impact was more pronounced on manufacturing and the agric sector.

    Yusuf in his reaction to the latest report of the NBS, which showed decline in the performance of the economy in the second quarter of this year, lamented the poor performance of the manufacturing and agric sectors, despite the attention given to them by both the monetary and fiscal authorities.

    Yusuf said the decline in the performance of the agricultural sector from three per cent in Q1 2018 to 1.19 per cent in Q2 could be attributed to recent security challenges, which affected many farming communities across the country. He also said access to credit in the sector is low due largely to the nature of risk inherent in the sector.

    With regards to manufacturing, Yusuf said the real sector is still grappling with serious productivity challenges arising from the constraint of infrastructure, particularly power and logistics. He said it is imperative, therefore, that there should be greater investment and policy focus on improving logistics and enhancing the power sector.

    He said the manufacturing sector slowed from 3.39 per cent in Q1 to 0.68 per cent in Q2 because of infrastructure deficit, logistic challenges, including the Apapa gridlock, access and cost of credit, weak purchasing power and multiple taxation.

    Prof. Ademola Oyejide of the Faculty of Social Science, University of Ibadan, noted that countries that have developed did so on the back of the productivity of the manufacturing sector.

    He, however, said the manufacturing sector can only be productive and competitive with the appropriate mix of macroeconomic policies. According to him, having more than one exchange rate distorts the market and hurts the manufacturing sector.

    Although, there have been efforts at addressing infrastructure deficit particularly in the area of improving the power sector and the business environment under the Economic Recovery and Growth Plan (EGRP), experts insist that macroeconomic and structural reforms remained urgent to contain vulnerability and support sustainable private sector-led growth.

    For instance, the IMF has consistently called for measures to contain vulnerabilities and achieve growth rates that could make a significant impact in reducing poverty and unemployment, which required a comprehensive set of policy measures.

    On the fiscal front, the Fund said fiscal consolidation should be accompanied by a monetary policy stance that remains tight to further reduce inflation and anchor inflation expectations.

    It added that moving towards a unified and market-based exchange rate as soon as possible while continuing to strengthen external buffers would be necessary to increase confidence and reduce potential risks from capital flow reversals.

    “Such a policy package – along with structural reform implementation, including by building on recent successes to improve the business environment, closing infrastructure gaps, and implementing the power sector reform plan – would lay the foundation for a diversified private-sector led economy,” the IMF said.

    Experts have also identified the increased patronage of made-in-Nigeria products as a viable option to halt the economy’s plunge back into recession. According to them, this will boost the manufacturing sector, resulting to increased revenue to government through taxes and employment creation, among others.

  • How to keep economy out of recession, by experts

    The economy may relapse into recession, Central Bank of Nigeria (CBN) Governor Godwin Emefiele warned at the end of the Monetary Policy Committee (MPC) meeting in Abuja on Tuesday. According to him, the implementation of the 2018 Budget will prevent this from happening, writes COLLINS NWEZE.

    BARELY a year after the economy came out of recession, in nearly three decades, another warning of a possible slip came on Tuesday from the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele.

    It was a timely warning. Emefiele’s revelation at the  Monetary Policy Committee (MPC) meeting in Abuja, that the economy may return into recession due to the slow growth in the Gross Domestic Product (GDP) shocked many Nigerians.

    An economy is said to be in recession after contracting for two consecutive quarters. The economy slipped into recession in 2016.

    The economy declined to 1.50 per cent in the second quarter from 1.95 per cent in the first quarter of the year. Further decline is expected unless mangers of the economy adhered to the apex bank’s suggestions.

    But will the Federal Government listen to the CBN governor on the state of the economy, and possibility of it returning to recession, especially on the implementation of the 2018 appropriation?

    Emefiele warned that the euphoria that greeted the economy’s’ exit from recession may be under threat, expressing concerns that the modest stability so far achieved in key indicators, including inflation, exchange rate and reserves since its last MPC meeting in July – also appeared to be under threat of reversal, given the new data, which provided evidence of weakening macro-economic fundamentals.

    Emefiele said the implementation of the budget, the improvement in the security situation as well as sustained stability in the foreign exchange market will stabilise prices and strengthen economic growth.

    He said the committee believed, however, that accretion to the external reserves should strengthen the last quarter of 2018 with crude oil prices remaining above the $51 per barrel budget benchmark and oil production increasing to 2.23 million barrels per day.

    The apex bank urged the government to take advantage of the rebound in oil prices to strengthen the fiscal buffers.

    Speaking on the development, financial analyst, Michael Osita, said that improved access to foreign exchange, rising crude oil production and prices and upbeat in the manufacturing sector are signs that the economy is still on the right track.

    He, however, urged the government to take steps that will create more jobs and boost money flow to the grassroots.

    But, former President, Chartered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, said that as far as he is concerned, the economy never fully exited recession. He said what is needed presently is to create more jobs, support the growth of Small and Medium Enterprises, and keep inflation under control.

    “Economic growth is still low, and inflation rising. But diversifying the economy could help government achieve the desired growth,” he advised.

    He said that although there is an improvement in forex supply, there is more to be done. “There is still a lot of work to be done, including the states raising their revenue base”.

    A former Executive Director, Keystone Bank, Richard Obire, said the psychology underpinning economics is that if people had a positive outlook about the economy, they are more likely to invest in such economy.

    He, however, said the growth recorded in the economy was slim and that more must be done to sustain it.

    The former banker said: “Being out of recession gives the people positive boost that there is hope for the future and that hope will bring about more capital inflows into the economy.”

    Obire said that the government should guard the economy from slipping into recession, adding: “Being out of recession, will lead to more investments, which in turn will trigger a rise in production and subsequently, job creation. The rise in jobs, he said, will lead to more income and subsequently, drive consumption and that consumption leads to better production because economic activities go in cycles.

    Saying the effects of the loss of jobs that occurred during the five quarters of the last recession are still there, so, is the high inflation rate, he insisted that now is the time for the people and economic managers to work hard to ensure the economic indicators get better.

    Obire said: “We’re out of recession because we registered two-quarters of positive growth. But that does not mean we are out of the woods yet because we could slip back into recession if the growth indicators are not sustained.”

    According to him, the improved access to forex by manufacturers has been a boost to the economic recovery, warning that: “We can still slip back very easily. We need to liberalise policies. Let’s avoid political statements that would destabilise the economy, especially as the 2019 election approaches.”

    Emefiele said the committee identified rising inflation and pressure on the external reserves created by the capital flow reversal as current challenges.

    He noted that the inflationary measure has started rebuilding, and capital flow reversal has intensified as shown by the bearish trend in the equities market, even though the exchange rate remains very stable.

    The MPC, he said, expressed concerns over the potential impact of liquidity injection from the election related spending and increase in Federal Accounts Allocation Committee (FAAC) distribution which has risen in tandem with oil receipt increase.

    “The MPC however, called on the government to fast track implementation of the 2018 budget to help jump start the process of sustainable economy recovery and to facilitate passage of the Petroleum Industry Bill in order to increase contribution to the overall GDP”, Emefiele said.

    Forex restriction on 41 items

    The CBN restriction on 41 items from accessing forex from official windows has also helped to resuscitate domestic industries and improve employment generation.

    More than two years after the policy shift, its objectives, such as encouraging local production of the affected items and boosting local industries, suffocated by the importation of competing products are being realised.

    The policy implementation was part of the homegrown solution, introduced by Emefiele, to sustain forex market stability and ensure the efficient utilisation of available forex to grow critical segment of the economy.

    This policy implies that, those who import these items can no access foreign currency through the official window to pay their overseas’ suppliers. Rather, they will have to source forex from the parallel market or Bureaux de Change (BDCs) to pay for their imports.

    The CBN chief said the bank has been developing home-grown policies to surmount challenges that confronted the economy in recent times.

    For instance, over the last decade, the CBN had invested over N2 trillion in funding agriculture, Small and Medium Enterprises (SMEs) and other manufacturers in the agriculture value-chain.

    Emefiele said assured that bank would continue to support operators in the agriculture, SMEs and manufacturing enterprises through its development finance initiatives, with a view to complementing the Federal Government’s efforts at diversifying the economy and ensuring that the nation is self-sufficient in food production.

    Speaking on the 41 items on Arise Television, Emefiele said: “The issue of those 41 items, unfortunately, is one that has been on my table. But, I think it is important that in the life of an economy, there is a need for us to take a look and ask ourselves: what are we really importing into this country?

    “When this thing started, we said, why should we import rice? Why should we import toothpick? Why should we import palm oil? At a point in this country, Nigeria was the largest producer and exporter of palm oil and we were controlling 40 per cent of the market share.

    “So, there is the need for us to say at this time when there is a scarcity of forex, it should be set aside for the import of items we cannot produce in this country.”

    Emefiele’s logic is that when items, such as palm oil, are imported, the local producers are made poorer.

    He said: “When we import rice, we impoverish the rice producers in Abakaliki, Kebbi, Sokoto, Katsina and other parts of the country. We need to look at that very seriously because God has blessed this country, with good climate, good weather, which should be taken advantage of.”

  • CBN: Nigeria risks relapse into recession

    • ‘Skye Bank had N800billion deficit’

    •CBN reviewing MTN documents for resolution

    Nigeria risks a relapse into recession, the Central Bank of Nigeria (CBN) said yesterday.

    CBN Governor Godwin Emefiele told reporters at the end of the Monetary Policy Committee (MPC) meeting in Abuja that MPC members were worried that “the exit from the recession may be under threat as the economy slowed to 1.95 per cent and 1.50 per cent within the first and the second quarter 2018”.

    The CBN raised a similar alarm in 2015 and 2016 of an impending recession if certain threats to the economy were not addressed.

    The economy plunged into recession shortly after from end of 2016 through 2017.

    Emefiele said:  “The Monetary Policy Committee  appraised the microeconomic environment and noted that at its July meeting, modest stability was achieved in key indicators, including inflation, exchange rate and reserves. In particular, relative stability returned to the foreign exchange market, going by a robust level of external reserves with inflation trending downward for the 18th consecutive months. These gains so far achieved appear to be under threat of reversal following the new data which provides evidence of weakening fundamentals.”

    This threat to the economy, he said, comes from “rising inflation and pressure on the external reserves created by the capital flow reversal as the current challenges grow”. He noted that the inflationary measure was rebuilding, and “capital flow reversal has intensified as shown by the bearish trend in the equities market even though the exchange rate remains very stable.”

    The MPC, Emefiele said, “noted that the slowdown emanated from the oil sector, with strong linkages to employment and growth in the key sectors of the economy”.

    The committee urged the government to take advantage of the current rising trend in the oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.

    Other threats to the economy, which may aggravate the onset of recession, Emefiele warned, include “the potential impact of liquidity injection from election related spending, and increase in FAAC distribution, which is rising in tandem with increase in oil receipt.”

    The Committee “was concerned with the rising level of non-performing loans in the banking system, traced mainly to the oil sector and urged the banks to closely monitor and address the situation.”

    Members of the MPC were concerned over the weak intermediation by the Deposit Money Banks and its adverse impact on credit expansion and investment growth by the private sector.

    The MPC noted that the economy was still confronted with growth challenges and inflationary pressure but reiterated the need for synergy between the monetary and fiscal authorities as availed option for macroeconomic stability.

    The MPC also called on the fiscal authorities “to intensify the implementation of the Economic Recovery and Growth Plan (ERGP) to stimulate economic activities, bridge the output gap and create employment.”

    The committee lamented that the threats to the food supply chain in major food producing states due to poor infrastructure, flooding and security challenges may lead to a “rise in food prices, contributing to the uptake in the headline inflation”.

    However, the committee was optimistic that as harvests progress, “in the coming months, pressure on food prices would gradually continue to recede while growth enhancing measures would over the medium term, have some moderating impact on food prices”.

    The MPC called on the government to fast track implementation of the 2018 budget to help jump start sustainable economic recovery and to facilitate passage of the Petroleum Industry Bill to increase contribution to the overall GDP.

    Takeover of Skye bank

    On the takeover of Skye Bank and the change of its name to Polaris Bank, Emefiele said: “The strategic health of the Nigerian banking system remains sound. In every chain, there will always be strong points and weak points in a chain, but what we will continue to do is to make sure that that chain remains strong in all aspects of it.”

    On Skye Bank, the CBN Governor maintained that he would “love to see a situation where banks are not liquidated, that we have to think outside the box to see how much we can ensure that we have more banks in the country than have less number of banks in the country, and that is what we are doing.”

    The situation with Skye Bank, he explained, “is that as at two years ago when the news broke that the bank had slid into negative capital as a result of Non-Performing Loan at that time, we compelled the entire board and executives to resign and they did”.

    “After that, before we conducted an internal audit, the hole (financial gap) was about N370 billion .After the forensic audit, it came to the level it was today, which is almost about N800 billion. So what we did was to say that having established a hole at this level, tax payers’ money will be invested in this bank as a loan.

    “So we decided that there is a need to let shareholders know, particularly those that have lost their investment, we will try to make sure that small investors remain protected.

    “It is for this reason that the name had to be changed from Skye bank to a sexy name, Polaris Bank. The name had to be changed for legal reasons, having got to the point where the Central Bank of Nigeria has invested close to N800 billion in this bank. At some point it must be seen to be owned by the CBN until we find investors that can pay a fair price for the bank. That is the reason why the name had to change from Skye Bank to Polaris Bank.”

    On whether Polaris was registered or not before it assumed control of Skye bank, Emefiele said: “The insinuations that the company wasn’t registered is false. It was first of all registered as a limited liability company about three weeks ago and it was registered as a bank on Friday, which is a day before we took that action.

    “We should look beyond all that and focus on the real issue, which is that we are embarking on a journey to keep a bank alive, to protect depositors’ monies and also ensure that we don’t throw over 5,000 staff out into the labour market.”

    Face off with MTN

    On the face off with MTN and four other banks, the CBN Governor explained that it was “important to know that the $8.1 billion is the dollar equivalent of MTN’s naira generated from their profit. So, I would neither call it a fine or a penalty.

    “What CBN sought by asking MTN to return that money is that we want a reversal of that transaction because it was not finally authorised by the CBN, and because the fund moved through these four banks, the quantum of dollars that passed through the banks is what we said the banks needed to remit back, or the company needed to remit back to the CBN through the banks,”Emefiele said.

    He went on: “It did not mean that these were the banks’ obligation and we understand that there was some interpretation in some quarters that aside from the naira penalty, that there was some conclusion that those dollars attributed to have been remitted by these banks on behalf of MTN were indeed the liabilities of the bank and that is why we provided a clarification to the banks when they called us that the liability is that of MTN and not theirs and that the CBN was not in any position or in any way going to debit the banks for the dollar because it was not their liability.”

    Emefiele said he felt vindicated that “in the history of the banking sector, I, at least gave a chance where the regulator, the governor sitting in the meeting, the Director, Banking Supervision, with over 20 examiners sitting in a hall, with the company (MTN) and the banks, asking them to resolve the issue, because we agreed that MTN is an important telecom company in Nigeria.

    “After that meeting of May 25, 2018, the discussion was inconclusive. The CBN gave MTN and the banks one week to send documents, but it was not done. But realising the importance of this company, we gave extra two weeks for them to provide relevant documentation to the examiners. Unfortunately, this didn’t happen and we felt that we couldn’t wait indefinitely and that is the reason we released the investigation reports.”

    “Right now, they have responded and provided documents which I have sent to the examiners to review. We will go through the pain again to invite the banks and MTN to prove their case, because it is normal that we should allow them to clear themselves and that is what we are doing. I believe that in due course, we should make a final call on this subject.

    At the end of the MPC meeting, the committee decided by a vote of seven members to retain the MPR at 14 per cent. However, three of the seven members voted to raise Cash Reserve Requirement by 150 basis points. The other three members voted to raise the MPR by 25 basis points.

    The MPC retained the MPR at 14 per cent, retained the Asymetric Corridor at +200 and -500 basis points around the MPR, retained the CRR at 22.5 per cent. However, other members believed that the CRR should be raised to 24 per cent, which actually signaled that they preferred to tighten and to retain the liquidity ratio at 30 per cent.

    Before arriving at this decision, the committee identified two likely policy options: tightening or maintaining the status quo ante.

    By tightening, it would have tamed inflationary measure, tamed the reversal of portfolio capital, improved the external reserves position and any other position and maintained stability in the foreign exchange market.

    Conversely, the committee noted that raising rate would further weaken growth, as credit would become more expensive, non-performing loan will increase further, leading to a deceleration in output.

    “In the committee’s opinion, the upward adjustment would not only signal the bank’s commitment to price stability but also its desire to maintain all policy interest rate,” Emefiele said.

    A decision to hold all policy parameter, however “will sustain natural improvement in output growth,” Emefiele said, adding: “There is need to maintain the current policy stance and await a clearer understanding of the quantum and timing of liquidity injection into the economy before deciding on possible adjustment.

  • ‘Real estate market getting out of recession’

    The real estate market was one of the worst hit during the15-month period of economic recession,  GroupManaging Director, Alpha Mead, Femi Akintunde, has said.

    He said during the period, which  was between 2016 first quarter and the second quarter of 2017. the growth in the sector dimmed, as the market was defined by low demand, widening vacancy rates, increasing case of rent service charge defaults, and slowdown in construction activities.

    He said these market characteristics are gradually giving away, due to improving macro-economic indices.

    For instance, Q1 2018 report by International Real Estate Partners (IREP) Nigeria, one of Alpha Mead’s Strategic Business Units (SBUs), noted that rents in commercial properties, such as Grade “A” Office space, could lightly fall below the current average of $700 per square metre, as the market anticipates the arrival of 37,000 square metre in Victoria Island and Ikoyi; and the demand for this class of office space is not growing at the same pace.

    In the retail space, the report further suggested that the rise in neighborhood retail stores are decreasing footfalls at the modern retail centres, therefore, the modern retail centres need to provide add-ons of some leisure experience to increase footfall and deliver value to their investors.

    Therefore, for these markets to receive new lease of life, stakeholders argued that it is important to understand what roles facility management (FM) play in enabling the positive experience for its stakeholders.

    For instance, he said by using the PPP model and Facilities Management, performance of existing national infrastructure assets can be optimised and strategies explored to build new ones in response to the country’s infrastructure deficit.

    “How do we deliver stronger return on investment (RoI) to private real estate investors and developers? How do we improve collaboration between private and public sector to leverage global standards of living and working through provision and management of quality public space and infrastructure?” Akintunde said.

    He explained that as Facilities Managers, his firm reckons that PPP arrangements like what government is considering, are critical to enabling the prosperity of the market. Therefore, he further said, there is the need to make stronger case for the strategic involvement of Facilities Management as a sustainable strategy for PPP projects.

  • Yobe: Of recession and development

    With a record 82 percent budget implementation rate and more in the lived reality of the people’s lives – 2017 will go down as a tipping-point year in the annals of Yobe State’s socio-economic recovery.

    First, the economic recession in which the country was stuck for most of the year was a pivotal, defining moment. The recession depleted the nation’s revenue earning and meant that many states across the country, at some point, were unable to meet certain basic obligations to their people, including obligation to workers who are at the front and centre of every service delivery effort. With less going into workers’ pockets, local businesses took a hit as well resulting in many of them finding it hard to replenish their inventories.

    How Governor Ibrahim Geidam successfully navigated Yobe State through that difficult period still puzzles many keen observers of the state’s socio-economic development. The governor, for instance, not only did not take any bank loans to finance expenditures, such as salary payments, he towered above with visible impact in the lives of the people while never slowing down on the projects he was executing. Projects in healthcare, road construction, school renovation and expansions, waters supply in communities across state, etc., were carried on with unbelievable consistency and panache.

    Part of this has to do with his background as an accountant and auditor who knows what it takes to maintain a balanced sheet but most of it is about his commitment to the values of transparency and accountability in the conduct of government business. These ensured that the governor remained faithful to the provisions of the 2017 budget and the budgets before that; they ensured that he measured every single move that the government makes according to the strength of its purse and resulted in never invoking any expenditure or spending unless he was sure the government could properly finance it.

    As a consequence of these measures, Yobe emerged stronger because of the governor’s leadership.

    In healthcare, for example, 2017 marked the formal opening to the public of the brand new Yobe State University Teaching Hospital (SUTH) that Governor Geidam has built. The government recruited more than 500 doctors, nurses and other professionals to work in the hospital well ahead of the commencement of clinical services.

    The year also marked the completion of most of the rehabilitation and expansion works carried out in major government hospitals across the state. It marked the procurement and installation of new and badly needed equipment that those hospitals in Gashu’a, Gaidam, Potiskum and Damaturu need to provide quality services to the people in those areas. It marked the start and completion of the construction of a new College of Medical Sciences complex based inside of the Yobe State University campus in Damaturu.

    More significantly, the year marked the expansion of Yobe’s drive in maternal and child care, topping the third straight year in which no case of polio was reported throughout the state because of the measures being taken to prevent its resurgence and those of other child-killer diseases. Indices for maternal and child health also improved significantly. In short, in 2017, Yobe’s healthcare sector got better than in the previous year.

    Professionals wowed by the governor’s effort to transform a sector so vital to the lives of everyday people expectedly took notice. First, the Society of Gynaecology and Obstetrics of Nigeria (SOGON) conferred its honorary membership on the governor for his effort at improving the health of women and children in the state. Then, two weeks later, the umbrella body of all medical and dental practitioners in the country, the Nigeria Medical Association (NMA) through its Yobe State branch, followed suit by honouring the governor at a well-attended ceremony in Damaturu.

    Outside of the health sector, 2017 was also historic for Yobe’s education sector. It’s the sector that was the hardest hit by Boko Haram violence. So much of Yobe’s education infrastructure was destroyed during those insurgency years by a ragtag army of crazed fanatics who hold fundamentally distorted – and demonstrably wrong – notions about the place of western education in Islam.

    As a result of these setbacks, primary and secondary education, for the most part, had to be rebuilt across the state from the ground up. Progress, of course, wasn’t easy. But because of Governor Geidam’s determination, many primary schools have been rebuilt and expanded and provided with the basic learning tools and supplies that the pupils enrolled in them need.

    In secondary education, five secondary schools were selected and worked upon by the Geidam administration. The schools were totally rebuilt, expanded and furnished with new classroom, staffroom, hostel and staff quarter furniture, laboratory equipment and chemicals and other vital supplies at over N2.8 billion.

    Six more secondary schools are slated to be totally rehabilitated and equipped this year. This means that by the end of 2018, an environment more conducive and more amenable to great teaching and learning would be fully secured for a lot of Yobe’s secondary school students.

    The preceding year also marked the start of Yobe’s International Cargo Airport project. When completed in November this year, the airport will not only be Yobe’s first, it will be the first of its kind to be wholly dedicated to cargo and freight services in the Northeast, a move likely to accelerate business and other economic activities in a region now recovering from so much devastation from Boko Haram attacks.

    Governor Geidam will surely build on these and other milestones of his administration in this ‘legacy’ year. As he nears the end of his eventful two-terms in office and the start of the rest that he so richly deserves, the governor will seek to make even more impact in the lives of the people by, amongst others, completing ongoing projects and starting new ones. He will consolidate on his feats in security, healthcare, education, water supply, agriculture and the civil service, amongst others, and make the APC, his political party, even stronger political platform around which to rally the people.

    He’s already started the year strong with a donation of vehicles worth N350 million to the military as they make their final push to defeat Boko Haram. He’s paid N1.1 billion as gratuities to retired workers. He’s saying, by these actions, that 2018 will be as action-packed as the preceding year and the years before that.

    • Bego sent this piece from Damaturu, Yobe State.
  • Recession exit: Manufacturers renew push for local products

    Recession exit: Manufacturers renew push for local products

    Mostly driven by an improvement in oil prices and production volumes, the economy is out of recession and the manufacturing sector is also gathering momentum due to improved foreign exchange liquidity. But, to sustain the recovery tempo, manufacturers are seeking for increased patronage of locally-made products by the government. They argue that the government, being the single largest spender in the economy, holds the ace to boost the industrial sector by increasing its patronage of made-in-Nigeria goods.  Assistant Editor CHIKODI OKEREOCHA reports that the government’s patronage of local products will increase revenue through taxes and job creation, among other positive spin-offs.

    Manufacturers are unrelenting in their push for patronage of locally-made products. Even before the exit from recession, their heart cry was the promotion of goods and services produced locally. Their argument: it is the fastest way of pulling the country out of recession.  According to them, cutting down on the insatiable appetite for imported material to the detriment of locally-produced ones will reduce the pressure on Foreign Exchange (forex) triggered by the nation’s huge import bills and low receipts from exports.

    They further argue that curtailing the growing demand for forex for consumption, rather than capital products and equipment; will strengthen the local currency (the Naira).

    Besides, the patronage of locally-produced goods will stimulate economic growth by revitalising the manufacturing sector and boosting its competitiveness thereby creating jobs.

    Bouyed by the benefits, local manufacturers have again renewed their clamour for increased patronage of their products, following the country’s exit from recession, stating that doing so will sustain the recovery of the economy.

    The National Bureau of Statistics (NBS) has confirmed in one its reports gave the economy, which slipped into recession for the first time in more than two decades in August last year, a clean bill of health. According to the NBS report, in the second quarter of 2017, the nation’s Gross Domestic Product (GDP) grew by 0.55 per cent (year-on-year) in real terms.

    The Bureau described as an indication that the economy has exited recession after five consecutive quarters of contraction since the first quarter of last year. It attributed the recovery to improved performance of oil, agriculture, manufacturing and trade sectors of the economy.

    Experts at multinational consulting firm PricewaterhouseCoopers (PwC) Nigeria also confirmed the out-of-recession claim. The PwC attributed the recovery partly to a sharp recovery in the oil sector, driven by an improvement in global prices and production volumes.

    The experts said that in addition, the non-oil sector recorded a positive growth for the second consecutive quarter, boosted by a strengthening of the broader manufacturing sector, reflecting impact of improved foreign exchange liquidity.

    In a report made available to The Nation, PwC experts led by Partner & Chief Economist,  Dr. Andrew S Nevin, said that besides the improvement in real GDP, the performance in other macro-indicators suggest that the economy is on track for a broad-based recovery.

    The report entitled: “Nigeria’s Q2’17 GDP: From Recession to Recovery” was a projection that Nigeria’s real GDP will attain full recovery by 2019, with growth moving closer to its long-term trend of 6.7 per cent.

    Latching on to the recovery trend, particularly in the manufacturing sector, manufacturers are renewing their clamour for increased patronage as a viable, credible and win-win strategy to sustain and strengthen the sector’s recovery process.

    At the forefront of the push is the President, Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, who has identified the government as the largest single spender and could drive industrial development and economic growth by increasing its patronage of locally-made products.

    Jacobs, who spoke in Lagos at the 50th Annual General Meeting (AGM) of Ikeja Branch of MAN, appealed to the government to increase its patronage of made-in-Nigeria products, noting that this will boost the manufacturing sector, resulting to increased revenue to government through taxes and employment creation, among others.

    The AGM had as its theme: “Building a Competitive Manufacturing Sector: Road Map to Nigeria’s Economic Recovery”, with special emphasis on “Monetary and Fiscal Policy Measurers: Catalysts to Restoring the Growth of the Real Sector”.

    It offered a platform to review the activities of the branch, the performance of the manufacturing sector as well as the economy in the past year.

    Udemba, in his address at the AGM, noted the Federal Government’s efforts at reviewing the current Public Procurement Act (PPA) at the federal level and the introduction of the Executive Order on improved patronage of made-in-Nigeria products as well as the current build up against smuggling and counterfeiting activities in the country.

    The MAN president, who was represented by the Vice President of MAN, Lagos Zone, Rev. Isaac Ade Agoye, however, said it was pertinent to note that public procurement is not just mere purchases, but a strategic fiscal tool that has been used by other countries, including advanced nations, to develop their manufacturing sector.

    The Federal Government, through the Minister of Industry, Trade & Investment, Dr. Okechukwu Enelamah, announced that at least 40 per cent of government procurement spending will be on made-in-Nigeria goods and services.

    The minister also said the government was working at moving up 20 places up the ranking on the Ease of Doing Business index this year and it has to start from growing made in Nigeria.

    The development was sequel to the signing of three strategic Executive Orders by Vice President Yemi Osinbajo, when he held the forte for President Muhammadu Buhari, to promote patronage of made in Nigeria products, transparency and ease of doing business in Nigeria.

    Going forward, Enelamah said that any document issued by any Ministry, Department and Agency (MDA) for the solicitation of offers, bids, proposals or quotations for the supply or provision of goods and services shall expressly indicate preference to be granted to domestic manufacturers, contractors and service providers and the information required to establish the eligibility of a bid for such preference.

    All documents of solicitation shall require bidders or potential manufacturers, suppliers, contractors and consultants to provide a verifiable statement on the local content of the goods and services to be provided.

    Defining ‘local content’ as the amount of Nigerian or locally-produced human material resources utilised in the manufacture of goods and services, Enelamah said that made-in-Nigeria products shall be given overwhelming preference, or at least 40 per cent, of the procurement spent on locally manufactured goods and service providers.

    He listed some of the priority items to include: uniforms and footwear; food and beverages; motor vehicles; pharmaceuticals; construction materials; information and communication technology, furniture & fittings and stationery.

    The Nation, however, learnt that government agencies have not lived to the manufacturers’ expectations in their compliance with the Executive Oder on patronage of local goods and services.

    The MADs’ attitude has prompted the manufacturers and other private sector operators’ renewal of advocacy with the hope of getting more government patronage.

    Justifying the MAN’s position at the AGM, Jacobs said: “It is an established fact that when we buy foreign goods, we pay the returns to factors used in producing them in the originating countries; that is to say that we pay wages, rent, interest and profit to foreign countries with our local resources.”

    He said greater patronage of made-in-Nigeria products, on the other hand, will enhance the manufacturing sector and in turn, result to increased revenue to government through taxes. It will also reduce social vices as well as guarantee peace.

    The MAN chief specifically called on the Lagos State government to set a minimum percentage threshold for its purchases of made-in-Nigeria products.

    He said: “At the federal level, a 40 per cent minimum threshold of purchase has been fixed for Small and Medium Enterprises (SMEs) through the Executive Order One.

    “Also, we want you (Lagos State government) to give an acceptable Margin of Preference (MoP) of about 35 per cent in terms of price consideration for those products as against foreign ones.

    “This will mean that even if local products cost a little more than foreign ones, the local ones should be patronised within the set margin of preference,” Udemba said.

    According to him, this is in consideration of the prevailing high cost of the operating environment in and the need to keep local manufacturing companies in production. Besides, he said there is the need to retain jobs and create new ones.

    Udemba pleaded with Governor Akinwunmi Ambode and his colleagues in other states to ensure patronage of made-in-Nigeria products in their states’ procurement policies and processes.

    The thinking is that the made-in Nigeria campaign must be driven by all the states if the targeted objectives must be met.

    Not a few operators and stakeholders in the various sectors believe that if the made-in-Nigeria campaign must succeed, it should not be the challenge of the Federal Government alone; the 36 states must have a role to play.

    A voice for robust monetary, fiscal and exchange rate policies

    Prof. Ademola Oyejide of the Faculty of Social Science, University of Ibadan, who was guest lecturer at the AGM, noted that countries that have developed did so on the back of the productivity of the manufacturing sector.

    In his presentation entitled: “Monetary, Fiscal and Exchange Rate Policy Measures for Restoring Nigeria’s Real Sector Growth,” Oyejide said the manufacturing sector can only be productive and competitive with the appropriate mix of macroeconomic policies.

    According to him, having more than one exchange rate distorts the market and hurts the manufacturing sector.

    Dr. Okechukwu Kelikume of the Department of Economics, Lagos Business School (LBS), noted that indeed, Nigeria exited recession, starting from the second quarter of 2016, precisely February 2016, when oil price started moving up gradually.

    He, however, said that if the recovery momentum must be sustained and strengthened by riding on the back of the renewed campaign for patronage of local goods, it was important to ensure that “if we make policies, we must also stop distortions.”

    Citing the government’s policy to encourage local production of rice, the expert said it was critical to halt the distortion in the policy by way of halting the smuggling of the product.

    For instance, he said that at a time a bag of foreign rice cost about N13, 500, the price of a bag of local rice cost N17, 500. He said even though the policy to encourage local production of the product was in place, it made more economic sense for consumers to buy foreign rice because it was cheaper.

    Kelikume, who blamed it all on smuggling and high of doing business in the country, traced manufacturing contribution of a meagre 0.6 per cent to the GDP to the inability of the government to curb smuggling.

    Govt re-assures real sector operators

    In his remarks through the Commissioner for Commerce, Industry & Cooperatives, Prince Rotimi Ogunleye, who represented him at the AGM, Ambode said that his administration has intensified efforts at making the environment conducive for manufacturers and other private sector operators to thrive.

    He listed some of the efforts to include the state’s contribution to improving Nigeria’s rating on the World Bank’s Ease of Doing Business Index; automation of Lands Bureau to facilitate unhindered and smooth access to members of the public and other stakeholders who transact business with the institution; aggressive infrastructure development across the metropolis.

    Prof. Osinbajo had also assured that the Federal Government will not rest on its oars on improving the economy. He said the latest impressive ranking in the World Bank’s latest ‘Doing Business’ report, was an indication that the President Buhari-led administration’s reforms were producing results.In the World Bank report, Nigeria achieved the unprecedented step of climbing 24 places in the rankings, and earning a place on the list of 10 most improved economies in the world.Many stakeholders have described news as cheery for real sector operators, even as some of them argue that if government could complement this by increasing its patronage of locally made products, the current economic recovery momentum will be sustained and strengthened.Some operators who spoke with The Nation have advocated the urgency to address the lack of supportive infrastructure and challenging monetary and fiscal policy environment that weaken the manufacturing sector’s capacity to produce goods and services for local consumption.

  • Recession, our well-being and economic experts

    Since the publication of the 2017 second quarter Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS), which indicated that Nigeria has inched out of recession, commentators who apparently do not agree with that position have struggled to link their perception to the state of well-being of majority of Nigerians. To them, since there is still an outcry of hardship in the land, then the country’s economy is still neck deep in recession.

    They maintain that the recession regime is still on, in spite of the marginal 0.55% positive growth gained after five consecutive quarters of negative outing. However, put simply, a recession results when there is two consecutive quarters of negative GDP growth in a national economy. Exiting recession therefore is when a succeeding quarter growth level turns positive.

    For a layman, linking exiting recession and escaping hardship might be excusable since it is largely an expectation; but it hardly would be for those who claim to be economic experts. A number of those who have so classified themselves have in their analysis in the past three months exposed their limited relationship with macroeconomic dynamics; even as some of them have jumped into the popular side of the public gallery while still waving the banner of economic expertise.

    Initially the bashing was assumed as a euphoria thing characteristic of the politically partisan Nigerian landscape which sometimes throws sanity to the winds. It was thought ordinarily that it would wane with the frenzy that the report generated in some quarters; but it has not. Some economic “experts” and newspaper columnists still use the erroneous perception to garnish reports aimed at dismissing government’s economic policy initiatives; especially pronouncements that seem to indicate that some progress is being made with gains on the economic landscape. This indeed is unbecoming and requires some intervention otherwise it would linger and eventually become accepted as true.

    One does not need to be an expert in economics to know that there is a difference between exit from recession and full economic recovery, even if they are some cross-cutting variables. Simple economics can attest to this! A recession occurs when there are two consecutive quarters of negative GDP growth in an economy; therefore exiting a recession is simply when the quarterly growth turns positive. Even though an exit from recession is a necessary and important precursor for economic recovery, exit from recession does not necessary amount to full economic recovery. There is no real harm talking about it in that light within a context, but using it generally and trying to dress it in an intellectual garb to push a set position would amount to either basic ignorance or intellectual dishonesty.

    For those who are well versed in economics as opposed to those playing politics with it, when an economy slides into a recession, the first step towards recovery is to arrest the slump and prevent the economy from sliding further. It is when this is successfully done that building towards economic recovery begins. Simply put, without an exit from recession there can be no recovery. What the second quarter report simply indicated was that the slump has stopped and recovery has begun. It did not say that the economy has fully recovered and everyone would suddenly quit poverty and exit hardship.

    It is worrisome that some persons who otherwise should know and who should be helping with strategic initiatives and projecting positive values to help drive the economy for the benefit of all have allowed other considerations to becloud their patriotic and professional perspectives. Everybody need not agree on a particular situation or issue, but mischief or half-truths can hardly be helpful in addressing it. Nigeria is particularly unlucky to have some “experts” who are more knowledgeable in propaganda and mercantilism than in the fields they claim to profess.

    At the drop of a hat, more than 100 “experts” could write and discuss on a particular development with largely varying perspectives and positions; often without verifiable indicators, variables, parameters or fundamentals. The country has been invaded by a motley gang of experts who profess according to their respective feelings and expectations rather than the scholarship of their calling.

    Just as in the case of dismissing exit from recession on the basis of low level individual indispositions, some of these “experts” point to government’s poor revenue stream and resultant shortage of expendable money to justify their disagreement. In real economic terms, what would be the relationship between coming out of recession and the amount of money available to government for public sector spending? It would be necessary to explain that the Nigerian economy using GDP-by-output has 46 activities. Public administration is just one of the 46; and the “experts” in their analysis are often referring to just one of the activities. There are others which include:  agriculture that does not depend on whether government has money or not to grow; same with trade and even crude oil which does not come from wells only when government has money to spend. Financial services, arts, entertainment and recreation, telecommunications, among others, do not, in strict economic sense and in this context, depend on the amount of money available to government to spend.

    Apparently because of the mindset of some of these “experts”, they lose sight of the fact that the report was a GDP report on the whole economy, formal and informal, and not a public sector performance report. Government is just one part of the whole economy which the report referred to. By expenditure approach, GDP is household consumption plus government consumption plus government investment plus private sector investment plus net exports. Capital is just one of five parts and the smallest part of the above equation, so it cannot be used to determine recession or otherwise.

    There is no doubt or hiding the fact that the Nigerian economy is still in the woods; but unnecessary bashings from arm-chair economic experts who stand facts on the head is not going to help the situation get better. Instead, it will create more confusion and panic in the system which can never be in the interest of anyone, including the acclaimed experts themselves. A simple content analysis of the proposals and postulations of a number of these experts would produce nothing but a cacophony of sounds with very little or no beneficially related substance, because everyone is seeing things from individual perspectives and assuming that such personal positions are the very remedy to the situation at hand.

     

    • Ikot, a commentator on national issues, resides in Uyo, Akwa Ibom State.
  • Nigeria will be out of recession soon – Cleric to Nigerians

    Nigeria will be out of recession soon – Cleric to Nigerians

    Nigeria has been advised to be optimistic and continue in their prayers for President Buhari led administration as the recession will soon be over permanently.

    The Senior Pastor of Praise Arena, Pastor Jummy Adetoyese-Olagunju said this in an interview with The Nation recently at the Special Service for Nigeria’s independence held at Le-Real Hotel, VGC, Lagos.

    He said that the recent data released by the Nigeria Bureau of Statistics of Nigeria exist from recession is divine and an answer to the prayer of God’s children.

    He noted that the agitations by some ethnic groups, President Buhari’s ill health and discovery of weapons at the Sea Port were a big distraction to Nigeria’s unity and government plans and policies to take Nigeria out of recession but God shew himself strong and to him be all the glory.

    “OPEC took consideration of our peculiar situation, Nigeria and Libya were given unrestricted production, is indeed an uncommon favour, that implies that our dollar will become stronger, the economy that was just thriving to survive will now have a better leverage”, he said.

    Olagunju, who is also an energy expert opined that OPEC recent announcement for a cut in global crude oil but excluded Nigeria is an uncommon favour.

    He added that Nigeria generate over 75% of its internally generated revenue from oil and every effort to strengthened the sector and bring in new and genuine investors will have its bearing on Nigeria overall economic growth.

    He opined that sectors such as agriculture, tourism, mining, transportation, manufacturing and the creative industries have great potentials for growth and could contribute immensely to Nigeria gross domestic products but proceeds from oil are needed to grow these sectors.

    He asserted that diversification is good but it is a long-term plan, we can still control oil. If the oil price stabilises, the agitation of the Niger Delta is handled properly, Nigeria will be better for it

    He commended the recent support and encouragement given by members of the oil producing communities in maintaining peace and order, said is greatly commended.

    Olagunju added that the host communities in oil-producing areas must be included in well-targeted development programmes of government and more private sector involvement in oil exploration and production.