The Nation Newspaper

Tag: recession

  • Recession: Lawmaker launches ‘Operation Back to Farm’

    Rather than dissipate energy debating whether it was the Goodluck Jonathan administration or that of President Muhammadu Buhari that caused the recession, a member of the House of Representatives, Hon Sunday Karimi has said it is better for Nigerians to return to agriculture as a way out of the economic crisis.

    Karimi who spoke in his native Yagba, Kogi State, told his audience that the only option available to them if they must combat the looming hunger in the land was for all and sundry to return to the old culture of farming, which used to be the mainstay of the economy of the area.

    He disclosed that plans were afoot to launch “Operation Go Back To Farm” in Yagbaland that would see each family encouraged to own a farm. This, he stressed, was the case in the his days as a teenager when students spent their holidays farming, noting however that “modernisation has since made youths of nowadays to think of farming as a dirty job.”

    Under the scheme, he assured of support to would be farm owners in the areas of planning, funding, farm implement and seedling, among others.

    The 2016 empowerment programme  tagged “Town Hall Meeting, Empowerment and Financial Aid”.

    The federal lawmaker, accompanied by journalists and party loyalists embarked on tour of the three councils in Yagba Federal Constituency, namely Yagba West, Yagba East and Mopamuro. According to him, the programme, the fourth of its kind since he was elected as a federal lawmaker in 2011, was with a view to sharing with the electorate in their time of needs.

    It will be recalled that Hon Karimi in 2014 initiated Yagba People Empowerment Initiative (YAPEIN) through which small and medium entrepreneurs were given revolving loans to boosts their businesses.  Buses, cars, motorcycles, grinding machines among others were also freely given to hundreds of beneficiaries across the 34 electoral wards in Yagba Federal Consistency.

    However, pressed by the biting hardship and growing demands from parents who could not meet up with the school fees of their wards in the various tertiary institutions as a result of lack of or irregular salaries, Karimi disclosed that aside the distribution of items such as motorised tricycles, motorcycles, grinding machines, sewing machines, he decided to include financial aids to indigent students.

    Breakdown of items distributed across the three local governments are as follows: 130 motorcycles; 20 tricycles; 55 grinding machines; 40 sewing machines; 15 2.5 KVA power generating sets; 310 KVA power generating sets; 4 Nos block moulding machines; 350 students disbursed with student aids (N20,000 each).

    Total value of this year’s empowerment programme is put at about N70m.

    A beneficiary, Blessing Ojo Oluremi, HND 2 student of Kogi State Polytechnic said “I don’t have much to say. It is a difficult time for our parents, difficult times for the students, difficult times for everyone. In fact I am so much happy. Not everybody has benefited anyway.  I pray pray God to continue to help him so that he can extend similar gesture to others”.

    Karimi’s predecessor, Hon TJ Faniyi who spoke at Isanlu, headquarters of Yagbe East Local Government said without any doubt Nigerians going back to farming was the surest shortcut to the country’s economic downturn, saying Hon Karimi’s farming initiative was a welcome development and came at the auspicious time.

    “That is the aspect I cherished most,” he added.

  • Recession: Substandard products flood market

    Recession: Substandard products flood market

    There are clear and present dangers that the growing economic recession has led to the influx of counterfeit goods in the market, reports Omolara Akintoye

    The influx of substandard goods, especially fast moving consumer goods (FMCG) in the market, has reached an alarming rate with authorities expressing worries and concerns that this may further erode the already battered economy.

    Thus the Director General of the Standards Organisation of Nigeria (SON), Dr Paul Angya, has called for the establishment of a system that could support SON to watch list substandard products in the ports and borders, pointing out that failure to address the upsurge headlong, would be detrimental to the economy of the country.

    He said the nation was fighting another form of war against substandard products, even as he emphasised that SON would need the support of an institution like the Nigeria Customs Service (NCS) to attain success in “fighting the war.”

    While making a clarion call for action, the SON boss said: “Our mandate and what we do is very important for people living quality and fulfilled life. People can only live a quality life if there are quality goods in the market. Our job affects people’s lives. That is why we need collaboration from the Customs because they are the first point of call of importation. Now is a very challenging time in our history and we must lay emphasis on quality and standard.”

    Growing worries over products counterfeiting

    Counterfeit products are unauthorised imitations of branded goods intended to be passed off for an original with the purpose of defrauding or deceiving the consumer of the said product into believing that it is the original product.

    In the opinions of experts, the incidence of substandard goods has outrun the economy of the country. The havoc they wreak on the nation’s economy is unimaginable.

    Consumer vigilance required

    In the view of the Head, Corporate Affairs, Consumer Protection Council (CPC), Mr. Biodun Obimuyiwa, consumers should be more vigilant not to purchase substandard products.

    While noting that the rate at which substandard products are coming into the country through the seaports and the borders is quite unfortunate, regrettably, he said, the CPC is not in a position to curb it because their operations are limited within the country.

    “But I will advise consumers to be more vigilant. You are the best protector of yourself, when you are in doubt meet relevant agencies or don’t purchase,” he warned.

    Obimuyiwa pointed out that substandard products are not only in imported goods as exports goods are also inclusive.

     “When products coming in and out of the country are safe, we will all benefit from it,” he said.

    Echoing similar sentiments, the President, Manufacturers Association of Nigeria (MAN), Dr Frank Udemba Jacobs, said the influx of substandard products into the country is worrisome.

    He explained that illegal borders abound everywhere to allow these products to thrive. In order to police our borders, Jacobs tasked government to increase the capacity of Customs and other relevant agencies, employ more hands to checkmate import and export goods in order to police our borders well.

    Also speaking with The Nation, an importer/exporter, Mr Andrew Chigozie, who shared his experience at the ports, lamented that the increase in the exchange rate has reduced the numbers of containers that come in.

    “A container before for the type of goods such as household items that I deal with was N1.4million but now it is close to N5million.”

    This, he said, does not encourage importation of goods. “Most of my colleagues who were into importation of goods have gone back to other businesses. Times are really hard,” he lamented.

    Buck-passing

    Curiously, the Customs that the public rely upon to man the borders so as to curtail the nefarious activities of counterfeiters have been rather evasive.

    When our correspondent spoke with the Customs spokesman, Wale Adeniyi, on efforts being made to contain the activities of smugglers and counterfeiters alike, he was noncommittal but said all such enquiries should be directed to the Customs commands within the nation’s border towns.

    Speaking with Mr. Usman Abubakar, PRO Nigeria Customs Service, Idi Iroko, he confirmed that “The Nigeria Customs Service is doing its best to ensure that smuggling is brought to the barest minimum.”

    He was, however, quick to add that “It is not in the purview of the service to detect which good is standard or substandard since our personnel are not trained in that field. But any imported goods suspected to be substandard in the course of our examination is always handed over to the relevant agency (SON) for investigation and necessary action.”

    Echoing similar sentiments, Mr. Selechang Taupyen, spokesperson, Nigeria Customs Service, Seme Command, said: “At Seme border, the NCS doesn’t work in isolation when it comes to checkmating substandard goods imported into the country, the Customs works strictly in collaboration with the SON personnel of Seme border office where all goods imported are subjected to examination to ascertain the quality. This is evident in the examination form signed by every relevant agency at the border in which SON is inclusive.”

  • We are not in a short recession, Mr. President; we are in a serial recession that is close to a depression (2)

    We are not in a short recession, Mr. President; we are in a serial recession that is close to a depression (2)

    If you put the federal government in charge of the Sahara Desert, in five years there would be a shortage of sand. Milton Friedman

    Last week, I ended the discussion with the following observation. In his Independence Day speech, President Buhari would have been both closer to the truth and doing himself and his administration a lot of good if he had told Nigerians and the world that since the recession did not start with him, it would take quite a while before his efforts could be expected to turn things around for most Nigerians and the national economy itself. Needless to say, some questions arise from this rather strange decision of the President not take this path in his speech to the nation on October 1. Did Buhari and his advisers think that if he had told Nigerians this truth that the so-called recession did not start with him, most Nigerians – and his enemies in particular – would have accused him of passing the blame to previous administrations? Was the President afraid of being called a weak, confused or irresolute leader unable to rise to the occasion to stop the massive hemorrhaging of the national economy? Or did the President and his advisers simply and truly believe that we are really in a short recession that would, like most recessions, not last for a long time, especially if the right policies and actions are applied?

    I leave the probable answer(s) to each of these questions to the reader. However, I for one would like to offer the view that the answer to all the questions without exception is a resounding YES. In other words, just as Buhari apparently does not want to give his enemies the “ammunition” in the view that more than a year in office he is still passing the blame for our economic woes to previous administrations, so also does he not want to be considered a weak, confused and indecisive leader. Above all else, I also think that Buhari and his advisers do really believe that we are in a short recession that can be “cured” with careful use of the vastly reduced revenues that are still flowing into our national coffers even with the fall in the world price of crude petroleum. And this is what worries me the most, this sinking suspicion that not only Buhari and his administration but virtually the entirety of our economic and social elites believe that we are indeed in a short recession that can be managed and curtailed by a “reflation” made possible by the combination of our oil revenues and loans from both internal and external markets.

    This is the very simplistic and dangerous belief that I wish to explore in this concluding essay to the series that began last week. A man, a woman, a government can believe anything that he, she or it wants, as long as it does no harm to anybody, especially if it does not go from mere belief to action and deeds in the real world. I can find no better analogy to explain what I have in mind here about beliefs and the consequences they can have in the real world than the tragic devastation that Hurricane Matthew recently had on some communities in the Americas and the Caribbean. As the hurricane began to grow from a tropical storm off the African coast to a full-blown hurricane as it approached the Atlantic coast of the Americas, the warnings went out from authorities for people to evacuate their homes because “Matthew” was expected to be a Category 4 monster. However, some folks believed that as they had done many times in the past, they could also ride out the fury of “Matthew” and so they did not evacuate. As a result of this erroneous belief, many lives were tragically and needlessly lost.

    I am using the analogy of tropical storms and category four hurricanes quite deliberately in this discussion. Extending this analogy to the domain of economic activities and the wealth and poverty of nations,one could say that a recession is like tropical storms that, generally speaking, tend not to last too long or cause catastrophic damages on peoples and communities. By contrast, a serial recession is like a typhoon or a hurricane because like an economic depression, it lasts for quite a while and causes colossal havoc that usually takes a long time to recover from. In the light of this analogy, I put it to President Buhari and his economic advisers that whatever category one chooses to examine, our national economy has for a long time now been relentlessly battered by a hurricane, not a mere tropical storm: waves after waves of high school leavers and university graduates unable to find employment; industrial production operating well below 30% of installed capacities; absolute poverty rate of six to seven out of every ten Nigerians; the borrowing frenzy of our federal, state and even local governments, even when oil prices on the world market were relatively high; and ever rising levels of hardship, insecurity and restiveness among large segments of the population, especially the youths that constitute the biggest demographic community in our society. It is a great error, Mr. President, to call a hurricane a mere tropical storm that will soon end.

    At the level of formal discourse in the professional field of economics, concepts like recessions and depressions are meaningful and useful only in the true capitalist nations and economies of the world; they do not explain much inthe kind of pseudo-capitalist economy that has been in operation in our country for a long time now. There are many reasons for this. Perhaps the most important reason in the context of the present discussion is the enormously significant fact that, unlike Nigeria, in true capitalist economies wealth – or capital in its abstract form – is not and indeed cannot be constantly and relentlessly looted and taken out of productive, value-added economic activities. A second reason that is of equal importance is the fact that in contrast with what obtains in Nigeria, in true capitalist economies, recessions are not measured by a sudden and very sharp, very severe drop in the capacity to pay for imports in an economy that is overwhelmingly dependent on the importation of nearly everything needed to keep the economy running or working.This particular feature of the pseudo-capitalism in force in Nigeria is what I had in mind when I chose to quote from Milton Freidman, the arch-monetarist, free-market founder of the Chicago School of Economics for the epigraph for this piece. In a hundred years, I never would have chosen to quote from Friedman, except perhaps my intention was to critique or debunk his ideas and their influence among economists. But in this particular context, I am quoting Freidman with qualified approval: “If you put the federal government in charge of the Sahara Desert, in five years, there would be a shortage of sand”.

    Of course, Friedman did not have the Nigerian federal government in mind in this famous quote; he had the federal government of his own country, the United States in mind. Like the true supply-side monetarist that he was, Friedman’s message in this quote was simply this: as the business of government is not business, government should stay out of business, otherwise what you would have is shortages galore, even of sand in a place with an abundance of sand as the Sahara Desert. In applying this quote to the Nigerian pseudo-capitalist context, for sand let us substitute capital itself: whether the world price of crude petroleum is high or low, it makes no difference to Nigerian governments of the past and the present; there is a perpetual and artificial shortage of capital in the areas that really matter, there is an unceasing and relentless diversion of the wealth of the nation away from productive economic activities that go beyond the capacity to pay for foreign imports.

    Despite all I have been saying inthis piece, I will makethe following concession to Buhari and his economic advisers in their diagnosis of a short recession and the “cures” for it, as contained in the President’s Independence Day speech: professional, salaried, upper middle class Nigerians, together with importers and exporters that dominate wholesale and retail trade in the country are facing “recession” of the kind that professional economists in the true capitalist countries of the world have in mind when they use the concept. This is because the groups and individuals that belong to these categories of privileged Nigerians have been the only real beneficiaries of our over-dependence on foreign imports as the lynchpin of the national economy. Do I need to say why this is the case? Well, as everyone knows, the bulk of whatever is unlooted in our national wealth goes to paying for foreign imports so as to keep this form of national economy alive. Isn’t that the case, compatriot?

    I do not wish to seem cavalier and insensitive to human suffering in making this observation: the ability to meet obligations and necessities crucial for livelihoods and life itself is under severe, traumatic strain for hundreds of thousands of Nigerians across the whole country. And because these categories of Nigerians often bear responsibility for thousands of relatives and dependents that are less fortunate, the “recession” that Buhari has in mind extends far beyond the circle of the fortunate and the “blessed”. It is not unlikely that if for one reason or another world oil prices were to suddenly and unexpectedly spike upwards, relief would come to our import-dependent national economy and itsbeneficiaries. If this happens, at least for a short while the “recession” would be over.

    All the same, compatriots, let us not forget that the vast majority of Nigerians in their millions have been in a serial recession, a sort of depression, for a long time now. Buhari’s program for overcoming the “recession” as outlined in his speech on October 1, does not even begin to approach this overwhelming reality of severe hardship and suffering for most Nigerians in the hurricane of a serial recession or depression that they have endured for a long time now. Short of full employment under a vastly reformed capitalism that actually keeps the bulk of capital in both oil revenues and non-oil, value-added surplus accumulation in the country, nothing that the President and his economic advisers do can change the course from the present location of the national economy in the eye of the hurricane of serial, repeated recessions. Mr. President, will our country move away from wasteful and cannibalistic kalo-kalo, barawo capitalism under your administration and the rule of your party, the APC?

    • Biodun Jeyifo bjeyifo@fas.harvard.edu

     

  • Recession: Expert urges attention to SMEs

    As part of measures to contain the economic downturn which is currently ravaging the country, the federal government has been advised to give priority attention to small and medium enterprises (SMEs).

    Chairman, Anchoria Investment and Securities Limited, Chief Isaac Dada who gave this advice wants the government to create farm settlements for young school leavers adding government should make lands available for them as well as soft loan for smooth take off.Speaking with The Nation in Lagos, Dada said the current economic challenges encourage entrepreneurship development at all levels of government.

    “They should use their knowledge to create small jobs; with little capital they can do a lot of things that can help even the big organisations. The things that are needed by the large organisations which one can talk of backward integration can be produced by the small entrepreneurs otherwise we keep on with this problem,” he expressed.

    Rural urban migration should be discouraged, young school leavers should be encouraged to stay back in the village and go into farming, they should go into agriculture, people should not be waiting for salary jobs, and he counselled adding the advent of crude oil had left agriculture in absolute negligence.

    “Small scale enterprises should be encouraged, the young ones leaving school should be able to get loan of N100, 000 and above to be able embark on something that can earn them some income, we should not rely on big enterprises for our survival,” he warned adding we should emulate India and China example.

    “He said the immediate solution to the problem is to discipline our consumption, we should not be consuming what we cannot produce , why can’t we take something that can be  produced locally, we have no choice because when people don’t have money they have to consume what they can get and what their income can afford,” he argued.

    He also stated that the present administration under the leadership of President Muhammed Buhari to channel all the resources seized from corrupt officers including money and assets visibly to the development of the economy

    He further observed that some of the political office holders were still doing things that were inimical to the economy adding the issue of corruption should be fought with sincerity.

  • ‘Nigeria’ll come out of recession’

    The chairman of the All Progressives Congress (APC) in Abia State, Hon. Donatus Nwankpa has expressed his optimism that Nigeria will come of its present economic recession.

    Nwankpa in a chat with our correspondent in Aba, the commercial nerve of the state, said the APC-led government has been working tirelessly to fix the economy.

    He said, “like the President had stated, it is not going to be a quick-fix thing. We should not be in a hurry to forget that this country has been under the now opposition party in the last 16 years where so many things went wrong. I am convinced that with the way things are going, the country will soon get out of the recession.

    “The prospect of the country under President Muhammadu Buhari is better than what we had in the past.  This is not a time to start throwing stones or casting aspersions on the President but for all hands must be on deck especially at this trying time that we have found ourselves. I can assure you that Nigeria is in safe hands.”

    The Abia APC chair while commending the President for the maturity with which he has exhibited in handling the affairs of the country since the inception of his administration and even in the face of criticisms urged him (Buhari) not to lose focus or to be overwhelmed by the present economic challenge that the country is facing, stressing that countries have passed through what Nigeria is passing through at the moment and have equally come out stronger than they were before their economic misfortunes.

    “Nigeria will definitely bounce back from the present economic recession and I make bold to tell you that we still have what it takes to be among the ranks of world leading global economy. The situation of the country is right now is only but temporary,” Nwankpa stated

    He used the opportunity to call on all Abians and Nigerians to throw their weight behind the leadership of President Buhari, stressing that Buhari by the time he leaves office would not only have made his marks in the political history of Nigeria, but would be celebrated as the man who steered the ship of the country out of 16 years doldrums.

     

  • Recession: Nigeria needs visionary leaders – Cleric

    Presiding Bishop of Overcomers Chapel Holy Fellowship Church and President, Advocacy for Real Change, a non-governmental organisation, Dr Mike Adewusi has proffered a panacea for Nigeria to come out of the recession.

    He said the failure of the country to save and preserve money and food during its time of abundance has led us to the present state; thus the need of guidance and proper planning of visionary leaders.

    Dr Adewusi, who spoke recently in the Lagos chapter of the church during a programme tagged: Divine Steps for Coming out of Economic Recession.

    Using the illustration of Joseph in the Holy Bible, he harped on the need for the country to save in time of plenty so that it can have something to hold on to in times like this. To government, the cleric urged that its extravagant system of government be reduced and monies prudently spent.

    According to him, something needs to be done urgently, to curtail death, devastatation, starvation and suicide due to the harsh economy.

    He lauded the Muhammadu Buhari led administration for its effort, noting that a lot still needs to be done to ensure the country is better.

    He said: “For the nation to come out of recession, we must become produces and not consumers. We must be ready to produce 70 to 80 percent of the basic needs of the citizen to retain our foreign currency from other nations, grow our economy to a level of exporting our finished products.

    “Government must encourage the citizen to start their own viable business, give grants and banks should give loans more and support small and medium scale businesses. This way, there is hope for the army of youths entering the labour market on a daily basis and soonest, Nigeria will come out of recession.”

    The cleric appealed to government to allow the youth, who he described as vibrant, intelligent and knowledgeable, to participate in governance, and called on Nigerians is to remain united.

  • Recession: Gowon seeks support for govt

    Recession: Gowon seeks support for govt

    EX-Head of State Gen. Yakubu Gowon  has urged Nigerians to support the Federal Government in its effort to address the recession.

    Gen. Gowon, chairman of “Nigeria Prays’,’ spoke at a news conference on the organisation’s 20th anniversary in Abuja, yesterday.

    He expressed optimism in the ability of this administration to take the country out of its challenges, saying the problems that led to recession had lingered for years coupled with the drop in the nation’s oil revenue profile.

    According to him, things are not achieved overnight; we have missed out in some of these things over the years, that is why industries are not able to meet up.

    “Let us join heads and cooperate with the government so that something can be done about it; that is why the country needs continuous and fervent prayers.

    “The government should consult within and outside the government. We are at this level because of the political, economic, security and other problems that surround the country.’’

    Gowon explained that the aims of Nigeria Prays is to promote the virtues of patriotism, transparency, and incorruptibility in leadership and governance.

    He added that the organisation would provide opportunity for any Nigerian, irrespective of denominational affiliation, to be involved in the mission of birthing a new nation through prayers.

    The former head of state explained that the anniversary would afford Nigerians an opportunity to reflect on the past, present and future of the nation politically, socially, economically and spiritually.

    “Prayer can solve problems better and more permanent than generals and soldiers can do with physical weapons for war. I have no doubt in my mind that God will honour our collective prayer and intercession for our nation,’’ Gen. Gowon said.

    On the arrest of judges by the DSS, Gen. Gowon appealed to the government to ensure that security agencies operate within the law and respect the fundamental rights of citizens.

    Gowon added that nobody could be arrested outside the precepts of the law.

     

  • Accountability will take Nigeria out of recession – Amosun

    Accountability will take Nigeria out of recession – Amosun

    The Ogun State Governor, Ibikunle Amosun on Tuesday said that the quickest way out of the recession in the country is accountability.

    He pointed out that everything will collapse if all Nigerians in different fields are not held accountable with what they do.

    The governor spoke on the topic ‘Accountability, A collective Responsibility’ during the Institute of Chartered Accountants of Nigeria (ICAN) 46th Annual Accountants’ Conference in Abuja.

    The governor said: “If we have to quickly get out of the recession we found ourselves, we all must be accountable.

    “If we are not going to be held responsible for our actions, then everything will collapse.

    “We must be ready to adhere to world best practices.” He added
    Noting that the ICAN has been up and doing, he pointed out that not all Nigerians have been following the accountability norm.

    Presently, he said that the private sector is doing more accountability than the public sector.

    Even though Nigeria is facing tough times, he said that Nigerians must be ready to face the challenges.

  • Legal, fiscal pathways to recession exit

    Renowned author and erudite scholar Sebastine Hon (SAN)  suggests ways out of recession through law.

    fter many months of dangerously playing the ostrich, the Federal Government, just last July, admitted that Nigeria was in an economic recession.

    That our economy was already in recession two years ago was crystal clear, even to the toddlers; but the Federal Government kept playing over our collective psyche until 21 July, 2016, when the Finance Minister, Mrs. Kemi Adeosun, admitted that the national economy was in recession.

    Following this pronouncement, a flurry of (most often) misguided remedies has become the order of the day, some stemming from egocentric epicenters. The Government, too, without any profound or even slight engagement with the Nigerian public, first flirted with the idea of selling off Nigeria’s national assets, before beating a quick retreat when there instantly sprung up raging fury from Nigerians.

    There are many options open to the Government on the way out of the economic recession; and the least acceptable, given our circumstances, is that of sale of our national assets. In spite of the belated denials from high ranking officials of Government, I will still briefly examine the viability of selling of our national assets as a way out of the economic recession, before I will examine the other possible solutions. In both cases, I will cite historical, legal, economic and empirical examples.

    The New Zealand model on sale of national assets

    If we must sell our national assets, all Nigerians, via the process of a national referendum, must give their consent – and in this wise, I will suggest the recent New Zealand example.

    The 2013 New Zealand asset sales referendum, which took place from 22 November 2013 to 13 December 2013, involved the New Zealanders voting either in support of or against their government partially privatising some of that country’s national assets and the reduction in the government’s share in their national carrier, the Air New Zealand.

    Above all, however, I hereby maintain that sale of our national assets is not in the best interest of Nigeria. One pertinent question is: if we sell off such assets and the recession refuses to abate or even develops into a full depression, what will be our next step as a nation? Sale of national assets, apart from being questionable, is only a short-term measure which will have no answer to possible economic challenges of the longer future. It should be resisted vigorously. And this takes me to the Australian example.

     

    The Australian example

    Recently, the question whether or not the Government of Australia should sell off some of its precious national assets arose. In the heat of this debate, Australia’s National Treasurer, Scott Morrison, rejected outright, bids for a controlling interest in the Ausgrid electricity network and the government-owned State Grid Corp. On 11 August, 2016, Mr. Morrison declared in a press conference thus:

    “I have informed the Ausgrid bidders of my preliminary view that their foreign investment proposals are contrary to the national interest.”

    Earlier this year, the same Mr Morrison had blocked the sale of Australia’s largest cattle rancher, S Kidman & Co., to a Chinese international business concern, saying it would be against the national interest to do so. Rather than outright sale,

    Morrison has always insisted that the government is readily disposed to foreigners investing their money in Australia. A 99-year lease of the concerned assets is being offered by the Australian Government through him, instead.

    The best way out: Fine mix of macro-economic and legal measures

    Historically and economically, nations that either faced economic recessions or depressions adopted fast-track macro-economic and legal measures that produced wonderful socio-economic and even political results. We shall explore these, starting with the famous Keynesian theory adopted most by such countries.

     

    Keynesian economic theories

    British-born economist, John M. Keynes, submitted in his “The General Theory of Employment, Interest and Money,” that lower aggregate expenditures in an economy contribute to a massive decline in income and to employment that is well below the average. In such a situation, he submitted, the economy reaches equilibrium at low levels of economic activity and high unemployment. His  solution is this: to keep people fully employed, governments have to run deficits when the economy is slowing, as the private sector would not invest enough to keep production at the normal level and bring the economy out of recession. Accordingly, that during severe economic crisis, government should increase spending and or cut down taxes.

    These theories were later expanded to include another important element: that during such austere times, the government should also extend credit guarantees and lower interest rates.

    We shall examine the regimes of two US Presidents which employed these theories, utilising sound legislation and fiscal policies, to pull the US out of deep economic climb downs at two different historical intervals.

    President Franklyn Roosevelt and the Great Depression

    Leading economic historian, Irving Fisher, has argued that the controlling factor that led to the Great Depression was a vicious circle of deflation and growing over-indebtedness. He outlined nine intertwining factors, which in his opinion contributed to that Depression, thus:

    • Debt liquidation and distress selling;
    • Contraction of money supply;
    • A fall in the level of asset prices;
    • A still greater fall in the net worth of businesses, precipitating bankruptcies;
    • A fall in profits;
    • A reduction in output, trade and employment;
    • Pessimism and loss of confidence;
    • Hoarding of money; and

    Economic historians have segmented “The New Deal” into two. The “First New Deal” (1933–34) dealt with the pressing banking crisis; and this was achieved through the Emergency Banking Act; the Federal Emergency Relief Administration (FERA) and the Civil Works Administration (CWA). While the FERA provided hundreds of millions of US Dollars to the various States and major cities’ administrations, the CWA provided quick funding for localities to undertake projects in the 1933-1934 period.

     

    The “Second New Deal” covered the period 1935-1938; and during this time, the “Works Progress Administration” (WPA) programme consolidated on the gains of the First New Deal, by deliberately providing massive capital to ensure the US Federal Government was by far the biggest employer of labour. And to prevent labour being mindlessly exploited, the Fair Labour Standards Act, 1938 was enacted.

    There were also the Farm Security Administration of 1937 and the Social Security Act, which were protective legislations that targeted the rural and poor/challenged segments of the population.

    As stated above, President Roosevelt, with the backing of the US Congress, pulled the US economy out of the Great Depression, a feat that contributed in earning him a historical four terms in office!

    Clearly, therefore, Nigeria which is only in recession and is not yet in depression will quickly opt out of this quagmire if just half of what President Roosevelt did is implemented. And for a reminder, President Roosevelt massively cooperated with the US Congress to achieve that feat. Our dear President Muhammadu Buhari should, with respect, do no less.

    Enters President Barak Obama

    It is too soon to forget that President Barak Obama assumed office of the USA when that country was on the roller coaster to economic recession. What instruments of government and governance did he deploy in trying to pull back his country from that journey to the dark? We shall examine the efforts, highlighted in the following bullet points.

    • Less than one month upon assumption of office, President Obama pushed for the promulgation by Congress of the American Recovery and Reinstatement Act, which enabled the provision of $800billion in government spending and tax cuts – to jumpstart the economy. Out of this amount, a princely $54billion a year as provided for, to expand unemployment insurance. These legal and fiscal measures alone rolled back unemployment by over 3 million jobs.
    • In early 2008, the Government lowered interest rates; and later that year, it completely erased interest rates – by adopting a zero-interest rate regime.
    • Rather than sell national assets, the Congress, in October, 2008, established the Troubled Asset Relief Program (TARP). The Federal Treasury used part of the proceeds from this to inject massive funds into the nation’s banks, which in turn dished out interest-free loans to large scale, medium scale and small scale businesses. The effect this singular policy had on the US economy can only be imagined.
    • Between 2009 and early 2010, the US Government engaged itself in massive ease-offs, by buying treasury bonds and mortgage securities – to consciously lower long-term interest rates. The Government also guaranteed bank debts for responsible corporate organisations – to give then stability and growth, which in turn was to help grow the national economy.

     

    • The Federal Government also gave tax rebates to the lower and middle income earners – for the purpose of further strengthening the economic and purchasing power of these groups and therefore stimulating the economy. Through this and related efforts, close to $1trillion was injected into the national economy.

    With these and several other measures, the Obama-led government successfully pulled the USA out of recession and rapidly placed it back on the fast lane of growth, earning President Obama a well-deserved 2nd term in office. Thus, in his last State of the Union Address in January, 2016, Mr. Obama proudly announced thus:

    “Let me start with the economy, and a basic fact: the United States of America, right now, has the strongest, most durable economy in the world. We’re in the middle of the longest streak of private-sector job creation in history. More than 14 million new jobs; the strongest two years of job growth since the ’90s; an unemployment rate cut in half. Our auto industry just had its best year ever. Manufacturing has created nearly 900,000 new jobs in the past six years. And we’ve done all this while cutting our deficits by almost three-quarters. Anyone claiming that America’s economy is in decline is peddling fiction.”

    Conclusion

    The present economic difficulties faced by Nigeria and Nigerians are not too peculiar as to attract panicky measures. The President as the father of the nation should be proactive, patriotic and unrelenting, as did Presidents Roosevelt and Obama of the USA, which saw the US pulling out of the economic complexities of those times.

    I will add that, with the resumption of bombing of oil facilities by the Niger Delta militants, coupled with the growing uncertainty in the international oil business, the best bet for the Buhari-led administration is to channel efforts towards agriculture and manufacturing, using the Keynesian economic theories, intermixed with a proactive legislative effort as adumbrated above. And of course, the sooner the herdsmen-farmers’ dispute is put behind us, the faster we shall achieve these goals and move Nigeria out of recession.

    President Buhari himself acknowledged this role of agriculture and manufacturing on 29th September, 2016, at the 44th Annual General Meeting of the Manufacturers Association of Nigeria, held at Transcorp Hilton Hotel, Abuja, when he told his audience that given the present realities, these two sectors remained the surest ways out. Both sectors of the economy will, however, serve this purpose if there is peace and equity in Nigeria.

    Admittedly, the Federal Government of Nigeria is having severe liquidity problems; but better options include borrowing from friendly international organisations. In any case, it is shocking that Mr. President’s economic team recently rejected lowering of interest rates, which as shown above is a very important component of the Keynesian economic theory of arresting receding economies! This policy should be reversed immediately! The same thing goes for the Government’s annoyingly restrictive policy on foreign exchange, which has unwittingly soared the price of forex, thereby nearly bringing down the entire economy!

    God bless Nigeria.

    Sent in for publication by:

    SEBASTINE HON, SAN, FCIArb.

    (Abuja-based Private Legal Practitioner/Constitutional Lawyer)

     

     

     

  • Recession, a necessity for revival, says James

    Rather than complain, Christians should take advantage of the economic hardship to seek the face of God and repent in utter surrender.

    This was the submission of general overseer of Glory Christian Ministries, Lagos Dr. Iruofagha James.

    He said the recession should draw Christians back to God for support instead of make their hearts bleed.

    James spoke at the annual get-together of Kingdom Partners for the ministries.

    Recession, he said, have hidden opportunities, calling on Christians to return to God on direction to access them.

    According to him: “God’s plan for us is to joyfully enjoy life and be free from any form of depression, oppression or recession.

    “But due to our nonchalant attitudes, mismanagement and ingratitude towards His divine provisions for us, He allows some occurrences to checkmate us”.

    He admonished Nigerians not to complain, regret, depressed or be intimidated but remain steadfast and look up with absolute trust in God.

    The situation, he said, offers greater opportunities, provisions and chances that abound to make life meaningful and enjoyable in Jesus Christ.

    He cautioned the federal government against borrowing and loans.

    Rather, he said government should invest hugely to rediscover and develop available natural resources.

     Supporting the on-going war against economic corruption in the country, James said: “It is a welcome development to sanitise the system, build a better society and expose treasury looters who defrauded the country to enrich themselves.”

    He however said the war should be holistic and not selective.

     “Truth is, we had never had it so bad in this country but in the midst of it, God is exposing cankerworms that had been eating our commonwealth and preparing us ahead of future challenges.

    “Under any circumstances, Nigeria will be great. We should continue praying and stop speaking negative about the country”, he said.