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Tag: recession

  • Agbakoba: How Nigeria can get out of recession

    Agbakoba: How Nigeria can get out of recession

    A former Nigerian Bar Association (NBA) President  Olisa Agbakoba yesterday warned that Nigeria could remain in recession until the fourth quarter of 2020 if new economic models are not adopted.

    At a news briefing in Lagos, the Senior Advocate of Nigeria (SAN) called for a council of economic advisers made up of economists, statisticians and other financial experts to map out economic recoverystrategies.

    Agbakoba urged the Federal Govermment to reduce raging inflation at 17 per cent in the medium-term, implement this year’s budget to reflate the economy, provide massive social benefits, and create a robust private sector-led market by waking up dead capital trapped in the national housing stock which he said is valued at N7trillion.

    According to him, a full deregulation of the forex market by the Central Bank of Nigeria (CBN) will allow a level playing field and remove distortions such as round tripping.

    To him, CBN’s focus on forex management is encouraging round tripping and creating what he described as an asymmetry.

    Agbakoba, a graduate of the London School of Economics and Political Science, said the proposed emergency powers for the President was welcome if it is only to make the procurement process more efficient, as according to him, a massive spending in public works will help boost the economy.

    He urged the Federal Government to study the “new deal” policy deployed by the late United States President Franklin D. Roosevelt to get his country out of the Great Recession.

    “He created massive public works programmes, especially the momentous Tennessee Valley Authority; enacted the Glass-Stegall Banking Act, directing banks not to speculate or trade but lend; enacted the National Industrial Recovery Act to deal with massive employment, and created the Works Progress Administration, putting back millions to work on public infrastructure,” Agbakoba said.

    The development lawyer urged the Federal Government to give the funds in Treasury Single Account (TSA) to banks at single digit rates and supervise usage.

    “There is need for massive legal regulatory and institutional reform in the financial services sector because money is oxygen to the economy, but it is not flowing as a result of bottlenecks,” he said.

    Agbakoba believes the CBN should focus on the productive value of the economy and not on numerical value of the naira.

    He said: “The CBN is trying to defend the dollar, but what it should be doing is pushing the productive value of the economy, then it won’t matter what the rates are. Why is the CBN regulating dollars in the first place? I don’t see what business they have regulating foreign currency.

    “Government has no business been in business, be it banking, schools, health. What we need to do is to say: anybody who has foreign currency should trade it on the market and sell on the daily price, so that the diaspora people will bring their money and sell it. If I have dollars in my account that clients have paid me, I can sell it.

    “When you do demand-side economics, meaning you want to control demand, you will have problems. The correct approach is supply-side economics. Let CBN absolutely deregulate the foreign exchange market and let’s see where the rate will go.

    “So, an open liberal economy with strong social regulation is the best way to go.”

     

  • Recession: engage economists, NLC urges Buhari

    Recession: engage economists, NLC urges Buhari

    The Nigerian Labour Congress (NLC) has advised President Muhammadu Buhari to rely on indigenous economists to generate the necessary ideas and policies that will the country out of economic recession.

    NLC President AyubaWabba, who spoke yesterday in Abuja, said  the present situation requires indigenous experts to fashion out how best the economy can be revamped.

    “I think we should not shy away from relying on Nigerian experts instead of relying on information and dictates of IMF (International Monetary Fund) and World Bank that have their own vested interests.

    “We have good economists that have been tested and trusted; we should not shy away from using their expertise,’’ he said.

    Wabba said statistics released by the Bureau of Statistics (NBS) showed that jobs were being lost and that unemployment was also soaring due to galloping inflation.

    According to him, economic indicators show that there is a continuous free fall of the naira since the Central Bank of Nigeria (CBN) came up with the flexible exchange rate system.

    With this, government can hardly meet their expenditure, especially the payment of mandatory expenses such as salaries in states and local governments, he lamented.

  • Apc: recession consequence of Pdp misrule

    Apc: recession consequence of Pdp misrule

    The All Progressives Congress (APC) yesterday said the prevailing economic hardship is a direct consequence of mismanagement of the nation’s economy and looting by the past administration.

    In a statement in Abuja by APC’s National Secretary, Mai Mala Buni, the party said attempt by the main opposition, the Peoples Democratic Party (PDP) to turn the truth on its head was fraudulent, insensitive and an insult to Nigerians.

    The statement urged the PDP to own up to what he described as the party’s transgression, and apologise to Nigerians for mismanaging the nation’s wealth.

    The party urged President Muhammadu Buhari not to be distracted, but to remain focused in his effort to restore economic growth.

    The statement reads: “In reacting to the orchestrated and insensitive comments by the PDP on the economy, the APC urges the President Buhari-led administration to remain focused in its bid to restore economic growth.

    “In spite of the PDP’s orchestrated and feeble attempts to blackmail the administration and twist facts, the reality remains that the socio-economic hardship faced by Nigerians is a direct consequence of mismanagement of the economy and unprecedented looting perpetrated under its watch.

    “The PDP’s attempt to turn truth on its head is fraudulent, insensitive and an insult to Nigerians. For the umpteenth time, the PDP must own up to its transgressions, and apologise to Nigerians.

    “Going forward, the task before the President Buhari-led APC administration is to restore the country’s battered economy back to health and all legitimate and innovative means are being employed to achieve this.

    “The APC assures Nigerians of the political will and commitment of the President Buhari administration to revive the economy and tackle the nation’s challenges through suitable and well-thought out economic policies, fiscal discipline and socio-political reforms.

    “Among other strategic economic agenda, diversification of the country’s economy is a priority for the administration. To this end, President Buhari is aggressively formulating and implementing policies aimed at diversifying the economy from oil to other sectors, such as agriculture, mining and manufacturing.

    “The APC assures Nigerians that the administration will pull the country out of the hardship. With the support, cooperation, patience and prayers of Nigerians, the country will reach its potential under our leadership.”

     

  • APC responsible for economic recession, says PDP

    APC responsible for economic recession, says PDP

    The Peoples Democratic Party (PDP) has blamed the ruling All Progressives Congress (APC) for the economic recession plaguing the land.

    In a statement yesterday by spokesman of the party’s caretaker committee, Prince Dayo Adeyeye, the PDP rejected claims that the recession was caused by mismanagement of the nation’s resources by its past leadership.

    The PDP was reacting to reports credited to the Jigawa State Governor, Abubakar Badaru, that the past administration of the PDP brought the country to its knees through corruption and economic mismanagement.

    “Our attention has once again been drawn to the inconsiderate statement attributed to the Governor of Jigawa State, Abubakar Badaru, and similar comments from people of likeminds to the effect that the PDP administration was responsible for the economic recession.

    “In the first place, this blame is misplaced because our elementary understanding of economics teaches us that the major cause of recession is inflation and poor handling of the economy given that the higher the rate of inflation, the more impoverished people become, industrial production and GDP decline, resulting in massive job losses.

    “Perhaps we should quote those who should know and tell Governor Badaru that wrong economic policies of the All Progressive Congress (APC)-led government caused the stagnation and recession in the country.

    “It is really disappointing that a notable personality as highly placed as a governor could be drawn into making idle and pedestrian claims without facts.

    “It is either he does not realise the obligation of speaking responsibly in that position or he is grossly ill-informed; in which case, we could only try to put the facts before him, and hoping he would recognise them”, the statement said.

  • Now that Nigeria is officially in recession

    Now that Nigeria is officially in recession

    Incidentally, many of those who collaborated with the Peoples Democratic Party (PDP) to bring the economy on its belly have also been out parroting solutions as if  Nigerians do not know where they are coming from

    This past week, the Bureau of Statistics (NBS), in its Second Quarter Report, said the Nigerian economy contracted by 2.06 per cent to record its lowest growth rate in decades and that it shrank by 0.36 per cent in the first quarter of 2016 to its lowest point in 25 years. Unemployment, it further said, increased to a record high of 13.3.  The U.S is currently at about 4.9, down from between 9.6 -10 percent during President Obama’s first year in office in ‘09. But first, let me salute the Comrade Governor, Adams Oshiomhole, who, on Channel’s television, Friday, 2 September, 2016 did much more than all the information agencies of the President Buhari administration have ever done, to bring to the public space, the challenges confronting the government and how it has been trying to resolve them and bring succour to a traumatised citizenry. The ‘Mammy Water’ slayer, a name he got by reclaiming water-logged and totally impassable roads in Benin-City-,  also passionately demonstrated that he understands the very essence of governance when, in answers to the panelists’ questions, he showed how he has done his best in meeting the yearnings of the people. How, for instance, he has turned former governor Igbinedion’s ‘swimming  pool’ township roads to six lanes in some areas of the state capital, and how water now flows in the Ekpoma area of the state where it was once believed you could never have productive boreholes and people had to depend on rain water, stored over time.

    May your tribe increase, Comrade Governor.

    There had been no shortage of suggestions to the president by all manner of experts as to how to exit recession since the Bureau of Statistics made its report public. Incidentally, many of those who collaborated with the Peoples’ Democratic Party (PDP) to bring the economy on its belly have also been out parroting solutions as if Nigerians do not know where they are coming from. As I read many of the suggestions which are mostly from economists and allied professions, I am reminded of another trained economist, a Mr Fasua, who, on two different appearances on the Gbenga Aruleba –may the good Lord comfort the family on the loss of their darling daughter, 13-year-old RereOluwa – moderated programme – FOCUS NIGERIA – made the point that resolving Nigeria’s current economic problems are far beyond Economics. And may I say, I completely agree with him. In so doing and while perfectly aware that we are neither in a military administration nor President Muhammadu Buhari a military dictator, a particular step would have to be taken which might be considered draconian. It is a low hanging matter which, once confronted, with the support of thoroughly affronted and bemused Nigerians, some of who now pawn their little children for foodstuff, would rid Nigeria of some horrible acts of corruption which are literally ravenously eating up the country itself. The result would be massive savings which will facilitate our ability to exit recession. I would conclude the article with that lo hanging fruit but in the meantime, here are some suggestions from J.J. Jegede as ways to exit recession:

    1. Accelerate the prosecution of alleged looters in order to release the stolen funds back into the economy. Funds already collected are, unfortunately, currently idle and so not having any multiplier effect on the economy.
    2. With NASS support, declare an economic emergency.
    3. Encourage very aggressive local food production through grants, loans etc
    4. Strengthen internal controls to block leakages.
    5. Place embargo on salary increases.
    6. Explore new sources of revenue generation.
    7. Implement the Oransaye Committee recommendations.
    8. Mandate local governments to collect levies and taxes in accordance with Approved Levies and Taxes Act. Bring informal sector into the tax net.
    9. Rigorously increase security to encourage investors.
    10. Reduce cost of governance.
    11. Improve power supply

     What I call the low hanging fruit is nothing other than the National Assembly with their huge illegal allowances. In case our legislators cannot, by themselves make the offer, I think the time has come for Nigerians to call on the National Assembly to prorogue itself for, at least the next one year. The Yoruba would say: Ore bo le gba mi, fi mi sile bi o se ba mi, meaning, if you can’t help me, leave me as you met me. This 8th assembly – the two chambers – has been totally unhelpful to Nigerians. Aside the multiple ways in which they financially undermine the country, their salaries and illegal allowances are far beyond what Nigeria should be called upon to pay in a recession. If they cannot by themselves offer to give up a minimum of 50 percent of their earnings according to Hon Jibrin, then it is time for either President Buhari or Nigerians, by themselves, to call their bluff. I give below, a sampler of Hon Jibrin’s disclosures. Conerning what the House calls ‘running cost’, Jibrin wrote: “Most of these members use it to acquire properties, cars and live a life of luxury they never had before coming to the House. Though there exist systems for retirement but a simple investigation by a primary school pupil will reveal the massive fraud therein. From computation of various sub heads of allowances of the House, the 10 Principal Officers received the following amounts:

    1. Speaker Yakubu Dogara has been in the House from 2007 to date. He has received about 1.5billion naira
    2. Deputy Speaker Yusuf Lasun has been in the house from 2011 to date. He has received about 800million naira
    3. House Leader Femi Gbajabiamila has been in the House from 2003 to date. He has received about 1.2billion naira
    4. Deputy House Leader Buba has been in the House from 2007 to date. He received about 1.2billion naira.
    5. Whip Alhassan Doguwa has been in the House from 2003 to date. He has received about 1.2 billion naira
    6. Deputy Whip Pally Iriase has been in the house from 2011 to date. He has received 700 million naira.
    7. Minority Leader Leo Ogor has been in the House from 2007 to date. He has received 1.2 billion naira
    8. Deputy Minority Leader Barde has been in the House from 2011 to date. He has received 700 million naira
    9. Minority Whip Chuma has been in the House from 2007 to date. He had received 800 million naira
    10. And finally, Deputy Minority Whip Binta has been in the House from 2011 to date. She has received 700 million naira”

     I ask Nigerians: Can we afford these luxuries even without a recession?

    President Buhari, Nigerians are waiting for your clarion call.

  • Recession: How far can banks go with IPOs?

    Recession: How far can banks go with IPOs?

    Faced with the prospect of dwindling balance sheets, most of the deposit money banks are desperately shopping for fresh funds by seeking Initial Public Offerings (IPO’s), Bukola Aroloye reports

    These are not the best of times for many banks as the problem of inadequate equity capital remains a hard nut to crack. With a weakening economy that has shrunk by -0.38 per cent in the first quarter of 2016 and which is expected to have done worse in the quarter to June; banks have unsuccessfully scampered to raise fresh funds to finance loans as both local and foreign sources of money dry up.

    Justification for fresh capital

    While some banks had at their 2015 annual general meetings earlier this year, obtained the approval of their shareholders to raise fresh capital, others may be compelled by the development at Skye Bank to seek for ways to beef up their capital bases.

    Roll call of banks shopping for fresh funds

    Among the banks shopping for funds at the capital market include: Access Bank Plc, Sterling Bank Plc, Wema Bank Plc, FCMB Plc and Diamond Bank Plc, who plan to raise N35bn, N20bn and N15bn fresh capital, respectively.

    As part of efforts to expand its operation base by opening new branches, Wema Bank said it planned to issue N20bn in bonds this month.

    The bank was issuing local currency bonds after scrapping plans last year to issue a $100m seven-year dollar bond because of currency risks.

    Wema Bank obtained shareholders’ approval in May to issue bonds or preference shares this year to raise N20bn in the first tranche of a N50bn programme, but market conditions, then, deteriorated.

    The Sterling Bank Plc has disclosed its plans to raise additional N35bn tier II capital by the second half of the year.

    Some other banks which have also indicated interest to raise funds include Diamond Bank, Skye Bank

    While FCMB is looking for N10 billion to N15 billion to shore up operations from its retail investors, Diamond Bank wants to raise fresh capital and sell some assets to scale up ratios, particularly the capital adequacy ratio, which has fallen 15.6 per cent of assets by June from 18.6 per cent a year ago.

    The Chief Executive Officer of Diamond Bank, Uzoma Dozie, who affirmed the plans, said the move will ensure it meets all regulatory requirements both in the short and long terms.

    “We are doing a capital management plan and that will determine how much capital we want to raise, tenor and size,” Dozie said during analysts’ conference call.

    While giving a status report, the Chief Executive Officer of FCMB, Ladi Balogun, said its capital adequacy ratio was close to the regulatory limit of 15 per cent of assets at mid-year, and that it was undertaking the capital raising to provide an additional cushion.

    “For the Tier II, we would be looking at anywhere in the range of N10 to N15 billion. It’s really going to be targeted at retail because we feel that the rates from institutions will be high,” he told an analysts’ conference call.

    Wema Bank Plc is raising N50 billion tier two capital through bonds to enable it deepen its market penetration and profitability, its Managing Director, Segun Oloketuyi, has said.

    Speaking in Lagos recently, the bank chief said N20billion would be raised in the first few weeks while the remaining N30 billion would come in the near future.

    “We will increase the drive of the ongoing cost containment initiatives and leverage on technology to increase efficiency across our channels and platforms. The bank will also be raising additional debt capital in the next few weeks to further give it the necessary leverage to drive growth,” he said.

    Also Access Bank Plc said it is seeking approval this month from shareholders to raise up to N100 billion ($505 million) fresh capital.

    Herbert Wigwe, the chief executive officer of the bank had said then devaluation of Nigerian’s local currency, the naira and falling oil prices would negatively affect the fund raiser.

    “The naira devaluation will probably dampen foreign investor demand for Access Bank’s N68 billion ($385 million) rights issue. Falling oil prices would hurt appetite for the issue too,” he said.

    Experts’ perspective on new IPOs

    Analysts suspect that any public offering or rights issue packaged at this moment would fail. This is because investors are already weary and have little or no money to spare for investment.

    Teslim Shitta-Bey, a Lagos based financial analyst said: “Unfortunately, some of the banks are in dire need of capital to shore up their capital adequacy ratio. It is also clear that some of them which have indicated interest to raise additional funds to maintain reasonable stature around the prudential requirement.”

    Speaking on the matter, the Chief Executive Officer, Financial Derivatives Limited, Mr. Bismarck Rewane, said the solution to the challenges facing Skye Bank was for it to raise additional capital.

    ‘’I’m not optimistic at all. Banks are in more trouble than we can imagine,” a former managing director of one of the big banks who declined being named in print, said.

    IPOs not foolproof

    Interestingly, IPOs were very common in 2007 and 2008 before the market witnessed a downturn. Since 2008, companies have been avoiding IPOs, embracing mostly rights issues and bonds. But that seems to have changed because in the last few years it has been difficult to pull through any of this.

    According to FBN Capital Limited, the investment arm of FBN Holdings Plc, in 2014, Nigerian banks issued Eurobonds running into over $2bn, aside other dollar-denominated foreign loans, more than the $2bn they raised in 2013.

    However, a few rights issues have helped some companies to raise capital. But there is deep fear that this may not be able to continue given the severe illiquidity in the economy. After all, the Central Bank of Nigeria a recently raised Monetary Policy Rates from 12 per cent to 14. “This is further tightening of the economy that is in a depression and does not help,” many industry analysts have said.

    David Adonri, Managing Director of Highcap Securities Limited, believes that that the capital market is depressed and cannot provide succour to any company, not only the banks that want to raise funds through equities.

    “The primary market is not active to support any IPO or public offering now,” Adonri said the problem with the banks is not the ability to raise funds. It is the misapplication of the funds.

    Like Adorin, the Chairman, Renaissance Shareholders Association of Nigeria, Ambassador Olufemi Timothy said: “This is not the right time to float rights issue or public offering because the economy is in recession. The disposable income of consumers has been depleted by general rise in prices of goods and services. It is common knowledge now that state governments are not paying salary to workers, contractors are being owed and no meaningful economic activities are going on. So, how can an investor save and invest in the capital market.”

    Also Chairman, Professional Shareholders Association of Nigeria, Mr. Godwin Anono said: “The retail investors do not have confidence in the market any longer as regulators do not protect their interest in the market. The retail investors have been short changed. If the retail investors cannot go the market to buy and sell, will the foreigners come to such market? So the companies which are about to raise money will find it difficult. Only few companies paying dividends consistently will succeed.”

  • Recession: Sokoto withdraws students from foreign varsities

    Recession: Sokoto withdraws students from foreign varsities

    Sokoto state government has given approval for the transfer back home of 39 of its citizens currently in various schools in Dubai, the United Arab Emirates.

    In today’s exchange rate, the move will enable the government save over N500m from the policy.

    The government said this signals change of priorities in the payment of scholarship to study abroad.

    “The transfer/relocation of the students was necessitated by the need to conserve funds and apply same to more critical areas in the education sector,” the state Governor, Aminu Waziri Tambuwal, said this Friday in Sokoto when he received the report of the committee instituted to advise government on the issue.

    He added that admissions have been secured for all the students in Nigerian schools, while arrangements have been made to ensure that none of them misses a grade level upon their return home.

    “As at the time we sent the children to Dubai to study last year, the state government was spending over 400 million Naira per annum to maintain them there. The last administration had good intentions when it sent them to Dubai to further their studies, but the current financial situation of the state can no longer allow us to continue with this burden.

    “We explained to the parents and guardians of the students that as at today, Sokoto state government spends over 500 million Naira to maintain 17,000 of its citizens on scholarship in various schools in Nigeria. So having to pay N400 million for 38 students in Dubai was weighing heavily on the scarce resources of the state.

    “We thank them for their understanding,” the Governor added.

    Earlier in his remarks, Chairman of the Transfer/Relocation committee of the students, Deputy Governor Ahmad Aliyu, said government decided to bring them home due to the high cost of maintaining them in the UAE.

     

  • How to steer economy out of recession, by experts

    How to steer economy out of recession, by experts

    To experts, recession is not a death sentence. for the economy. They argue that its pains could turn to gains for the economy within a short period if the Federal Government takes the right approach.  SIMEON EBULU, TAOFIK SALAKO, NDUKA CHIEJINA, CHIKODI OKEREOCHA, OKWY IROEGBU-CHIKEZIE AND DANIEL ESSIET 

    REACTIONS yesterday trailed the Nigerian Bureau of Statistics (NBS) Second Quarter Report that the economy has sunk into recession. The reactions came from stakeholders in the economy, including manufacturers and analysts.

    In the report, released on Wednesday, the NBS said the economy contracted by 2.06 per cent to record its lowest growth rate in three decades. It held that the economy shrank by 0.36 per cent in the first quarter to hit its lowest point in 25 years.

    But the Federal Government seems to have risen to the challenge, promising to do its best to restore the dwindling economy to a growth trajectory within the shortest time possible. It has insisted that the present situation fared better than the prediction of the International Monetary Fund (IMFs).

    The Vice president (North West Zone) Manufacturers’ Association of Nigeria (MAN), Ibrahim Usman, traced the recession to the dwindling prices at the global oil market. He urged the Federal Government to develop infrastructure to attract investment in the system, noting that in other climes, the governments drive the economy, giving it direction.

    The MAN chief, however, admitted that there cannot be a quick fix out of the recession.

    Usman, who is the Executive Chairman, Powerseal Nigeria Limited, called on the government to quickly resolve the Niger Delta militancy issue, even as acknowledged the government’s inroad into agriculture as the right thing to do

    He noted that affordable consumable good s and food items would ease the impact of the biting economy on the citizenry.

    Getting out of the current economic log-jam, he said, will require the diversification of the economy from oil and attracting Foreign Direct Investments (FDIs) in the solid mineral sector.

    He said: “We must bring in investors to process our minerals locally by adding value before exportation. As a nation, we must not make the same mistake we made with the oil and gas sector where we export crude and import refined products.

    “The government must create an enabling environment by ensuring that peace and security prevailed in the country. No investor would want to invest in a country where there is little confidence in the safety of his investment.”

    Also, the economic think tank of Financial Derivatives Company Limited led by Bismark Rewane, after reviewing the NBS report, expressed optimism that “the lower-than-expected figures for July signalled a possible tapering in the rate of increase in consumer prices which might improve market sentiment,” stating that “market players are expected to react accordingly.”

    The Chairman/Chief Executive Officer (CEO) of Pan Africa Development Corporate Company (PADCC), Odilim Enwegbara, urged the government to leverage on its expansive revenue base and spend its way out of the recession.

     

    Govt should inject funds

    His words: “To help our economy, the government needs to pump trillions of naira into infrastructure projects and trillions of naira into social intervention policies so as to make more money available to the citizens to boost their purchasing power, which if it happens will make these cash-strapped citizens start consuming, not imported goods and services but mostly locally made goods.”

    By consuming locally made goods, Enwegbara pointed out, more money will get into the hands of local traders and artisans, thereby stimulating the economy.

    He urged President Muhammadu Buhari to inject a minimum of N3 trillion annually into the economy to take the country away from recession.

    Enwegbara said: “Buhari’s social intervention policies too should, besides making the school feeding programme a priority, monthly stipends of not less than N10,000 (instead of N5,000) should be given to millions of our poor families, widows, the elderly, mentally and the physically challenged should be promoted with the rigor it requires.

    “Injecting huge liquidity into the economy, besides being the secret magic wand, flooding the economy with new money undoubtedly is what is needed to kick-start the economic recovery, especially when driven by grassroots-led economic growth.

    “Economic empowerment of majority of our citizens by increasing the purchasing power of the economically excluded is the magic wand. By empowering the marginalised and excluded millions, the deep-seated economic malaise will finally be resolved.”

    Dr. Ogho Okiti, the President and CEO of Time Economics Limited, canvassed a policy that will address the parameters that drag growth down except the oil prices, which he admitted the government has no control over.

    “This include the aggressive implementation of the 2016 budget as we have seen in the last few weeks, but he cautioned that there is no quick fix”, he said.

    Arguing that while the policy could deal with the immediate growth concerns, Okiti said it could not provide the basis for a medium and long-term recovery.

    “This will come from what is done to agriculture, attracting investment, cutting existing waste in government, and attracting very cheap international finance for investment purposes”, he said.

     The CEO of International Energy Services, Dr. Diran Fawibe, said the problem would have been half-solved by identifying the cause

    According to him, Nigeria found itself in this situation because it is a mono-product economy, underscoring the need to intensify its diversification efforts.

    Fawibe who identified the government as the biggest spender in any economy, argued that “when this does not happen, it results into negative effects on other sectors of the economy.”

    He described as unfortunate that the Federal Government no longer has the money to spend because of the tumbling crude oil prices and vandalism of oil facilities by militants.

    According to him, the development has squeezed other sectors, making recession inevitable. He condemned the reliance on imported fuel to run the national economy.

    Fawibe argued that the 35 per cent of foreign exchange spent on fuel importation could have been used to give a lifeline to the manufacturing sector.

    He said government must start rebuilding confidence in the economy to attract FDIs, adding that the parallel forex market should not be allowed to determine the naira value.

    The flexible exchange rate regime introduced by the Central Bank of Nigeria (CBN), he said, should be sustained.

     

    Diversification

    must be intensified

    A telecoms expert, Bayo Banjo, urged the government to ban the importation of all food items, suggesting a six-month grace be given before enforcing ban.

    Banjo, who is the CEO of Disc Communications, said the raw materials for which there are local substitutes should also be banned.

    He cited India as a country that depends on broken down ships for its steel needs, lamenting that Nigeria spends money to clear it waterways of grounded vessels.

    Banjo urged the government to assemble real economists and not businessmen to proffer solutions to the problems of the country. According to him, the capitalists at the corridors of power will advise against their business interests.

    He said it will be disastrous if the country misses the opportunity of turning its economy around with the sincerity of President Buhari and his deputy Prof Yemi Osinbajo.

    Also speaking, the President of the Association of Telecoms Companies of Nigeria (ATCON), Olushola Teniola, urged Nigerians to endure the pains of the recession so as to enjoy the gains later.

    He said the government must encourage the information communications technology sector (ICT) and other sectors including mining to contribute to grow the Gross Domestic Product (GDP) and forex earnings.

    Besides, he said the government should stop further devaluation of the naira and put in place policies that will attract FDIs and discourage capital flight.

    On tax system and reform, he suggested that more people should be captured into the net. According to him, the 10 million people that currently pay tax cannot sustain the economy because the figure is just 40 per cent of the population.

    “At least, 80 per cent of the taxable adults in the country must be brought into the tax pool so that government can have money to spend on infrastructure”, he said, advising the government to invest its external borrowing on capital projects.

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

    The Director-General of the Lagos Chamber of Commerce & Industry (LCCI),  Muda Yusuf, spoke of the need to restore investors’ confidence with sustainable and consistent policies.

    Yusuf called for government’s stimulus spending to fast-track growth in the economy, including the speedy implementation of the 2016 Budget.

    The LCCI chief noted that the energy issue has remained a sore point as supply remained epileptic and cost of gas high.

    He said: “The Premium Motor Spirit (PMS) is now N145, diesel N200 and LPFO is not cheap either and how are manufacturers or the real sector expected to survive in this situation.

    “The government should do everything possible to ensure that GENCO’s have enough gas supply and the entire power sector is rejiged for efficiency.”

    He said millions of barrels of crude oil being lost to militancy and oil being sold below $50 per barrel have worsened the situation for the country.

    Yusuf called for a review of the nation’s trade policies, reiterating the need to check the depreciating value of the naira which he said is affecting the cost of goods and services.

    The LCCI chief also called for the reduction of import duties on some critical services in the economy for the inflation to come down as it is cost-driven in addition to cutting down import duties on critical inputs on production and services.

    The Country Manager, Harvest Plus, Dr Paul Ilona urged the government to take a critical analysis of the situation.

    He told The Nation that the government should identify the root cause of the problem, pointing out that from his lay man’s view; the drop in oil revenue has contributed to the recession.

    According to him, Nigeria is facing the challenge of a mono-economy, adding that the oil situation revealed that the economy can go down once something happens to oil price.

    “As oil prices have collapsed”, he noted, “the economy is crippled overreliance on one industry, in this case, the oil sector. The situation has become apparent that the economy had become incredibly imbalance.

    “The key priority is for Nigeria to boost its growth rate; implement structural reforms to elevate the level of growth over the long run.

    “In the long-term, he said the government needs to reposition the economy to become more diversified with investment in agriculture and the real sector.”

    Dr. Temitope Oshikoya, the CEO of NEXTNOMICS, said although the figures “look very bad, but when you break it down and you look at the non-oil sector, you will realise that actually, the non-oil sector did not do too badly.”

    Blaming the recession on the downturn in the oil sector, Oshikoya said. “So, when you also look at the oil sector, you will realise that the price of oil is low, at about February or so, the implication is that it was oil production that was the main problem. There was a lot of setback on the oil production.

    They had 2.2 million barrel per day. I am not sure if they still have more than 1.5 million per day. So, the problem, in 2014 and 2015, oil prices was the major problem, oil prices was going down. But it was in February of 2016, oil prices had gone up, it has doubled up but Nigeria did not benefit from that ostrich trajectory.”

    He said attention should be directed to the Niger Delta issue with a view to resolving it.

    Oshikoya said: “On the Niger Delta crises, something needs to be done to enhance production, and you know, the oil issues is more of a political issues but , it is also an economic issue.

    “So, we need to have peace in the Niger Delta and increase oil production to be able to get more funding There should be more urgency to tackle it.”

    Executive Vice Chairman of Capital Assets Limited, Mr. Ariyo Olushekun, said the government should implement policies that will empower people and further encourage them to spend to stimulate economic activities.

    According to him, the duration of the economic recession will depend on the policy choices and combination by the government and its key agencies, especially CBN.

    Olushekun, a former president of the Chartered Institute of Stockbrokers (CIS) and council member of the Nigerian Stock Exchange (NSE), said the apex bank will need to review its policies in favour of economic stimulation rather than tightening while proactively implementing policies that will help to curb the negative sides of the cycle.

    “The CBN has not been rather pragmatic and proactive in dealing with issues, it has been more of reactive to issues”, Olushekun said.

    According to him, the recession will affect nearly all companies except the well-positioned ones that could weather through the tough macroeconomic situation and take advantage of the economic stimulation package of the government.

    Head, Research and Investment Advisory of SCM Capital, Mr. Sewa Wusu, noted that while the negative effects of the recession might be biting, the tough situation presents opportunities for the government to strengthen the economic foundation.

    Wusu said: “Recession should give us the opportunity to go back to drawing board and recalibrate our economic structures, by implementing policies that diversify the main economic revenues and grow the domestic productive base.”

  • Recession hits art sales

    Recession hits art sales

    In the last one year, the visual art sub-sector of the creative industry has been in a recession –no thanks to high cost of art materials, foreign exchange rate, dwindling sales of art works and drop in hosting of exhibitions and auctions, among others. Operators, however, see opportunities in the recession. Assistant Editor (Arts), OZOLUA UHAKHEME writes. 

    •Now ideal time to buy artworks, says Austen-Peters

    LAST March, according to the Diamond Bank-sponsored report, published by the Foundation for Contemporary and Modern Visual Arts, the value of artworks sold at auction in Nigeria declined for the second consecutive year from $1.77million in 2014 to $1.37million last year.

    The report says of the over 107 exhibitions – 69 solo and 38 group shows –  organised in Nigeria last year, 64 were held in galleries. This was before the economy went into recession. But the story seems to be different this year, given  the economic downturn. Eight months into the year, can the Nigerian art market hit the mark or surpass last year’s sales?

    Terra Kulture, a leading art, culture, lifestyle and educational centre in Lagos, is noted for its rich programmes. Its calendar is filled every year, leaving no room for impromptu events.

    But, this year has been tough as costs of overhead and maintenance of facility have gone up. In particular, sales of artworks have not only dropped considerably, it has become difficult for master artists to sell at its yearly art auction because of high prices.

    Terra Kulture Proprietor Mrs Bolanle Austen-Peters said the sale of artworks has dropped significantly to about 30 per cent since the recession, noting that hosting of exhibitions has not changed because the gallery calendar is filled up. Apart from that, she said, sale of works during such exhibitions has been affected.

    She said unlike before when works by art masters attracted good prices, selling such master pieces has become a big challenge at exhibitions and auctions. “Even auctions are suffering huge deficit in sales and there is less focus on sale of masters and expensive works,” she added.

    According to Austen-Peters, artists’reactions to the slump have been slow as most appear to be either unaware or have chosen to ignore the decrease in sales. She, however, assured that the prices would bounce back because, after every depression, things get turned around. “So, for collectors, this is the perfect climate to buy art,’’ he said.

    “Most artists shore up their loss of income by engaging in multiple sources of revenue generation,” she noted.

    To Quintessence Gallery Manager Moses Ohiomokhare, hosting of exhibitions and patronage of works have dropped by 50 percent, because of the recession. This, he said, has affected the supply chain, which could be depressing for the artists and other stakeholders.

    “The depressed economy has impacted negatively on art works. Purchase of artworks has dropped considerably, and this has also affected our supply chain. The artist is discouraged and has no incentive to drive his desire to work. Some have resorted to selling privately at far below their works’ worth. Our overhead has also gone higher– fuel, generator maintenance, transportation costs and other domestic costs. The artist needs support. There has to be a new public understanding that art is not for the wealthy. We must rescue our cultural institutions through funding, privately and publicly,” he said.

    He said artists needed to express themselves as custodians of our culture; and such social responsibility should be encouraged as they have always documented our folk tradition and civilisation.

    Artists, he said, are creative people and operate an exceptional economy, which needs to be encouraged through funding by governments.

    Ohiomokhare observed that as an alternative, some artists have taken up employment in communication agencies, schools, and other allied institutions to keep body and soul. “Some are still hanging there and are positive that depression could also yield something positive after a while,” he said.

    He urged artists to explore opportunities in the slump and be inspired to work for the future.

    “For example, murals should be funded by governments in public spaces – sculpture, murals and other art forms to keep the artists going and also generate public interest in art,” he noted.

    Continuing, he said: “All over the world, art enjoys support from government and private institutions. Nigeria cannot be an exception. Support must not be selective. Funding has to be dedicated by various governments to sustain our creativity. The future is bright because Europe, Asia and the Americas now see Africa as the new land to explore. Our art is vibrant, and institutions like Bonham have promoted our art through art auctions in the international market.”

    Founder/Chief Executive Officer (CEO), Green House Art Empowerment Centre, Olambe in Ogun State, Princess Theresa Iyase-Odozi, identified exchange rates, cost of art materials, scarcity of funds, flooding of local market by relatively-cheap foreign art prints (particularly from Asia) as some of the factors  aggravating the recession in the sector.

    “At present,” she said, “the state of the economy has affected not only the art sector but the entire nation. Nigeria has depended on crude oil for too long. The crude oil has been more of a curse than a blessing.”

    She said, hitherto, art had been perceived as luxury good only to be enjoyed by the rich, and that with any drop in the number of the rich, the art market would suffer.

    According to her, apart from the cash crunch being experienced by the artists, many have gone commercial, thus, affecting their creativity and the quality of artworks.

    On how her centre has been coping with the challenges of the recession, she said: “As a gallery and an NGO, we tend not to depend on the sales of art works to fulfill our mission. GreenHouse Art Empowerment Centre sets out to promote Nigerian art and artists. This is seen as the best avenue to support the government and help the society. Last year, we hosted 12 artists with Prof. Bruce Onobrakpeya as the lead artist and keynote speaker. GreenHouse exhibitions are organised to promote both the artists and art. We make statements with our exhibitions and are not profit-oriented.”

     She urged artists to diversify, improvise, create new initiatives and be occupied to overcome the challenges. She added that the artists can also consider paid jobs, such as art-teachers or  art facilitators, consultants to individuals, companies, stakeholders and the government.

    She described this period as one when artists should look inward and ask themselves some pertinent questions: What quality/type of works do I produce? Are my works of art for commercial, personal, providential, documentary or historical purposes? Who are my clients? How can my works impact the society positively?

    “If these questions are properly answered, then our works of arts would have achieved the optimal value that should be attached to them. Thus, this period of economic recession, should indeed be ‘reflection period’. This is a period when the nation needs their artists not the oil barons.

    During this recession, artists should be prepared to serve and help humanity with their talents/gifts. In times in which we are, some artists should get paid jobs while those with additional skills should go into production as the nation now looks inward for “Made in Nigeria” goods/products,” she said.

    One of Nigeria’s contemporary artists Duke Asidere noted that despite the recession, his art has received good patronage. He however noted that he had to sell some of his paintings at reduced prices. “I have had to give some reductions or reduced my prices once in a while … There are always layers of business relationship… I have clients who don’t have to buy art from me, to support ones effort… I also deal with art dealers and a gallery run by a very good friend.  He supports me. He buys outright … I also have clients I can call anytime I feel pressed for funding,” he said. According to him, his work is completely driven from within.

    “I have determined and defined what money is… Money does not attract me the way it does to a lot of people.. I do art every time I am inspired,” Asidere added.

  • Insurers: recession takes toll on premium, profit, others

    Hard times have hit the insurance industry as premium income has gone down, whilst claims cost and operational expenses have risen astronomically, thus taking its toll on margins, the Chairman, Nigeria Insurers Association (NIA), Eddie Efekoha, has said.

    Efekoha, who spoke at his investiture ceremony in Lagos, lamented that the performance of most insurance stocks on the Nigerian Stock Exchange (NSE) has been so flat that financial analysts have stopped including most insurance companies in their forecasts.

    He said generally, businesses are facing greater threats principally as a result of dwindling revenues, poor infrastructure, lack of power, inflationary trends in all sectors occasioned by the decline in the value of the naira. He listed insecurity amongst  other challenges as impediments facing insurers, adding that importation and local manufacturing are currently at low ebb.

    He said the insurance sector was directly impacted by these disruptions, adding that these times demands internal cohesion and collaborative action. “It therefore behoves on all of us as industry players to respond quickly to the changing dynamics of the market space so that we can remain relevant and bestow a worthy legacy to the future generation of insurers,” he advised.

    He said it was in the light of these developments in the local market that he decided to commit his chairmanship to address the theme-Sustainable Market Development Through Stakeholder Engagement.

    He said: “Essentially, all the programmes we will be executing will find space under this central theme. Very often, insurance as an instrument for financial intermediation is misunderstood by policy makers; it is therefore necessary to enter into constructive engagement with relevant stakeholders. This will include the need to share knowledge with judicial officers–magistrates and judges on the workings of insurance business and to fully equip them to be able to respond adequately to the rising cases of fraudulent claims in the market, among other adjudication issues.

    “We will engage with the legislators in the process of making laws that affect the economy at large and insurance industry in particular.  They are major stakeholders whose support the industry would require at all times. The various bills before the National Assembly require concerted efforts to push through the industry position. It is only with the active engagement with the lawmakers that the industry can protect its business interests.

    “On tax matters, we are all witnesses to the lingering issue of the heavy tax burden imposed on the insurance industry by CITA 2007. This further strengthens the need for us as an association to continually engage with the tax authorities with a view to amicably resolving all the issues and avoiding areas of future conflict.”