A financial and economic management
institute has blamed the President
Muhammadu Buhari led Federal Government
and the Central Bank of Nigeria (CBN) for
the Nigeria’s current economic woes and its
recent plunge into recession.
The institute, West African Institute for
Financial and Economic Management
(WAIFEM) through its director-general
Professor Akpan Ekpo said that the delay in
passing and implementing the 2016 budget
and the CBN’s monetary and foreign
exchange policy stance helped worsened the
country’s economic situation.
“There was a near absence of fiscal policy –
the economy lacks the necessary fiscal
buffers. Money and exchange rate policies
were the only voice. Rather than implementing
quantitative easing, the CBN was interested in
tightening monetary policy. When an economy
is almost in a recession, monetary expansion
would help towards recovery,” he told
Vanguard newspaper.
He faulted the CBN’s foreign exchange
framework was another policy in the wrong
direction. He said rather than implementing
a robust managed exchange rate regime, the
CBN allowed the naira, which is not
convertible, to float freely looking for a non-
existent stability and equilibrium in both the
short and long-terms.
“When a commodity is in short supply, market
forces cannot determine the ‘correct’ value.
The only source of foreign exchange for the
economy is crude oil export, hence unrealistic
assumptions under a competitive market
cannot work in the foreign exchange market,”
he added.
“The delay in adjusting the band of the value
of the naira to the dollar, when the market
provided a guide through scarcity, heightened
the crisis. If recession persists, monetary,
fiscal policies would be ineffective.”
Ekpo said the Federal Government should
place emphasis on spending on capital
projects and recurrent expenditures,
especially in the area of payment of salaries
owed workers, while also increasing its
spending on power, roads and other
infrastructure.
“I hate to disappoint Nigerians, the private
sector cannot get us out of the recession.
Government must lead for the private sector to
follow until recovery sets in. As part of
stimulating aggregate demand, the social
programmes in the budget must be
implemented urgently.
“Furthermore, government has no choice but
to borrow externally and domestically to spend
and get the economy out of the recession.
“Our economy consumes what it does not
produce, hence there is need for a re-
orientation for citizens to prefer locally
produced goods and services. Heavy tariffs
must be placed on imported goods and
services. Lending rates are just too high to
revamp the real sector.”
“Government must be strategic and think
outside the box by grafting policies and
programmes which would enable potential
investors produce and supply both domestic
and external markets. “There has been too
much emphasis on producing to earn forex; we only need a productive economy and other things would adjust.
‘’However, it must be noted that recessions are
regular occurrences in a capitalist economy,
hence the need for proper economic
management in order to minimize its adverse effects. “There is no doubt that this recession would pass away but another one would come, for no two recessions are alike. Therefore, managing an economy is not a tea party,” he added.
Comments