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.
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.”