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By Olakunle Olafioye
The Federal Government has been admonished to act quickly in order to return Nigeria to the path of recovery from the current recession.
A Monetary and Development Economist and Associate Professor in the Department of Private and Commercial Law, Babcock University, Ogun State, Dr Tayo Bello, who gave this advice said that Nigeria risks more precarious consequences, should the government fail to address the immediate and remote causes of the current economic downturn.
In this interview, he speaks more on what the government must do to hasten the recovery process, advising Nigerians on how to mitigate the effects of the present recession.
Nigeria slipped into recession for the second consecutive time in less than five years. What would you say has made the nation’s economy so vulnerable?
If we don’t want to deceive ourselves, we must realise that we don’t engage in any production in Nigeria per se. Most companies that can help to generate revenue in Nigeria have all closed down. This could be identified as one of the factors that led us into recession. In addition to that, Nigeria has been battling insurgence for awhile now. The impact of this on the economy can also be identified as another factor. But talking about the immediate causes of this recession, the high interest rate in the money market has discouraged borrowing and investments. It has also reduced the real wages and consumers, on their own part, are weary of spending. They don’t even have the capacity to do that. Based on the data from CBN, this is the worst recession in the last 30 years. In the second quarter, the IMF predicted that we would have 4.4 per cent shrink in the economy, but what we have now is even more than that. To this effect, there is a decline in private capital investments and economy of opportunity is now suffering because of this downturn.
Considering the quick succession of the recession, what is your assessment of the ability of the managers of the nation’s economy?
I once told you that Nigeria had not exited recession even though the government claimed otherwise in 2018. The truth is that we are just deceiving ourselves. Nigeria is not blessed with good economic advisers now. When a country decides to borrow every time and uses credit to finance their stocks and there is delayed payments from debtors, we call it over-trading. This is capable of leading to bankruptcy and that is the path Nigeria is treading now. I doubt if we can get out of this soon. Most of the decisions taken so far are not in the interest of the economy.
What measures would you want the government to take to be able to return the nation to the path of recovery?
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Government must be very serious about mitigating the effect of this recession. Do we really know the amount of money Nigeria is generating? Or are we just playing politics with the situation or are we relying on economic measures to tackle the problem? The first thing is that we must scale down on our debts. The debt accruing to the country is alarming. Nigeria needs to create emergency savings. Savings leads to investments, investments lead to credits, productivity, employments and so on and so forth. We must learn to live within our means and create capacity building. The government should also work harder to enhance micro economy management to boost confidence because people are losing interest. We must safeguard revenues generated against looting. There is no way we won’t go into recession going by report of looting we hear every day. Also, we need to re-prioritise public spending. Public spendings should be on critical developments that we stimulate economic activities. Efforts must also be made to protect the poor. Don’t forget that one of the effects of recession is that there will be drastic reduction in the output, which will in effect lower the GDP and lower average income. This will lead to unemployment and government will be under the temptations to borrow more money. Very soon, prices of shares will start plummeting. Also there will be social problems. Look at what is happening in some parts of the country. People are being killed, kidnapped for ransom and so on. If the government doesn’t move in quickly to restore confidence, that will be the end of everything. The structural issues in the country may further compound the situation we find ourselves in now. There is dearth of good social amenities. We also have tarrif and non-tariff barrier. We don’t have uniform tariffs and there are so many obstacles to investments in the country. And to worsen it investors don’t have confidence in Nigeria again and that’s what is creating pressure on naira. That’s why you see people trying to change whatever they have to foreign currencies. If care is not taken the GDP will nosedive again and if that happens we might be inching towards depression, may God forbid, that will be too terrible for us.
You mentioned the need for the government to protect the masses. What, in concrete terms, would you want the government to do?
What do the masses need? They need to feed well, they need to have access to qualitative and affordable healthcare service; they need to live in secured atmosphere. All these will make life comfortable for the masses. They do not need to be driven in luxury vehicles; all they need is cheap and comfortable transport system. But what do you see now? You will need to pay fortunes to be able to transport yourself from one point to the other. Costs of transportation continue to go up while wages and salaries remain stagnant. What this means is that the purchasing capacity of the workers have been lowered. Government must look into all these and other things to make life more comfortable for the masses.
What advice would you want to give to the people to be able to survive the recession?
People should spend less. They need to scale down on their expenditures on outrageous things that do not really worth it. They should save more. But unfortunately, the way we live in this country is to make money today and wipe it out tomorrow. People should be very economical with their resources. For example, instead of hiring Uber or Taxify and pay N5, 000 while don’t you settle for BRT that will cost you far less than that? If your child is attending a school where you pay N500, 000 per term before now, you must start considering changing your child’s school to an equally good, but cheaper school. If you are living in an apartment which you think the current economic realities cannot support then you have to adjust by settling down for the one within the capacity of your income. They should be very careful about their health; they should check their health status very well because the way things are going now little things can wipe out any individual.
The Federal Government has hinted on the possibility of reopening the land borders that were shut last year. What is your take on this?
If I tell you that what they did about the land borders closure, to me as an individual, was based on economic stupidity. It should not have been. For example, you closed borders adjoining borders to all the neighboring countries for legal and illegal goods crossing the borders. Do you because of illegality of smuggling close the borders and stop the movement of legal good? Initially, those countries affected by the closure begged the Nigerian government to reopen the borders, but later they called off our bluffs. The effect is that it has increased the inflationary trend beyond our imagination. The inflationary trend from 11.7, I think it has gotten to 17 per cent. The reason they gave for the closure has proved to be futile. Go to the market you will see imported rice everywhere. And when you want to do such things, you don’t ban movement of goods to encourage local production. What they ought to do should have been to encourage our local production to be at international standard whereby Nigerian goods can compete and be exported to all these countries. Since the time we banned the importation of all these goods, what has happened? We even have more foreign rice in Nigeria than the locally produced rice.
You seem not to see anything positive about the borders closure. But the Nigeria Customs has always maintained that the service now generates more revenue for the government. What do you say to this?
How consistent are these figures? Are the figures consistently consistent? The figure rose initially, but what about now? Can they come out to boast about the figure again? Where did they generate that figures? Apapa or Tin-Can? Is it not from goods that are imported into the country directly. What do you say about millions of tons of other goods that are brought into the country without a dime paid on them as duty. Importantly, the government must realize one thing that when you are are banning movement in and out of legal and illegal goods will it not affect the manufacturers like Dangote? It is now that they have just decided to give exemption to them. it means the market is saturated. Dangote that used to pay company tax and everything, but the market is saturated and Dangote needs to move out. I am sure other companies will follow. That is why they are now contemplating the reopening of the borders. I am of the opinion that if they open the borders definitely things will improve on gradual basis.
