Agbakoba: How Nigeria Can Get out of Economic Recession

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• Senator expresses concern over FG, states’ complacency

Omololu Ogunmade in Abuja and Sunday Okobi in Lagos
As Nigeria economy hits recession, a former President of the Nigerian Bar Association (NBA), Mr. Olisa Agbakoba (SAN), has suggested that the only way to get out of the bitting economic crises is by hard work and strong leadership.

While analysing the economic problems at a conference in Lagos yesterday, Agbakoba emphasised that “malignant metabolic economic syndrome; complicated by inflation, high interest rates, unemployment, weak infrastructure, oil price shock and no growth economy” are responsible for the crises.

He noted that some of the economic problems arose from unclear economic policy direction; tight liquidity-Central Bank of Nigeria (CBN) MPR at 14 per cent basis point, which he said is ridiculous; high interest on debt instruments – Treasury Bill, money deposits, among others which are disincentive to real production, as “paper profit is lucrative. High yield Treasury bills have made banks unproductive. So the government needs to develop coherent fiscal, trade and monetary policy.

“CBN focus on Forex management is encouraging round tripping and creating asymmetry, therefore, the apex bank should focus on productive value of the economy and not numerical value of the naira.
“It should fully deregulate forex market to allow level playing field and remove distortions such as round tripping. At least 20 billion dollars inflow will instantly occur.”

Agbakoba suggested that for the Nigerian economy to receive a boost for speedy growth, the federal government should implement Presidential Proclamation (like FDR), adoption of supply side and not demand side policy, but that he is “not sure about economic emergency powers. Alhaji Shehu Shagari had it and failed. Venezuala also is not working.”

According to him, the President Muhammadu Buhari government should “Reverse anti-austerity and tight money, as the G-20 nations all now agree, use all policy tools and embrace fiscal stimulus. Adopt Keynesian economic model of massive government spending on public works, reducing raging inflation at 17 percent in medium term.”

He noted that the government should also reduce MPR to single digit – five per cent – Quantitative Easing, implement 2016 budget and reflate the economy in order to “spend our way out of recession, embrace National Treatment Policy – Fiscal and trade Protection Policy as well as establish urgently a development bank.
“Prepare public sector borrowing requirement, PSBR and borrow as our debt ratio can sustain this. Develop assets securitisation and pay off domestic debt to inject liquidity in the system.

“Give Treasury Single Account (TSA) money back to the banks at single digit rates and supervise banks; recommended lending base rate five per cent.”
The senior advocate added that for the economy to be reenergises, massive legal regulatory and institutional reform in financial services sector must be accepted “as money is oxygen to economy but it’s not flowing as a result of bottlenecks.”

Meanwhile, the senator representing Lagos West senatorial district, Senator Solomon Adeola, yesterday expressed grave concern over perceived complacency on the path of both the federal and state governments towards Nigeria’s slide into recession, describing it as worrisome.

According to Adeola, if the respective governments fail to treat the issue of recession with required urgency, the situation will be prolonged and the consequence will be untoward suffering and protracted deaths for majority of Nigerians.

Noting that recession this period is not peculiar to Nigeria, Adeola said the only difference is that Nigerian leaders are non-challant and fail to provide hopes for the generality of the bewildered Nigerians that their governments are on top of the situation by rolling out implementable policies to address the plight of different groups that are hardest hit by the recession.

“I must say that one is yet to see any urgency in providing palliatives for the poor and collapsing industries and other corporate bodies leading to serious job losses and a growing sense of despair among the general population. Experience in the past shows that one of the most reliable ways to tackle recession is to spend money on productive sectors as well as welfarist spending to put money in thepockets of the poor,” he said.

The senator also regretted that so far the economic team and notably the Ministers of Finance, Budget and Planning, the Director-General of Budget Office and the Central Bank of Nigeria (CBN) Governor have demonstrated “lackadaisical approach to what is ordinarily an economic emergency.”
He said Nigerians would have ordinarily expected the team to be rolling out policy options and direction in forms of palliatives for the poor; bail out/loans for distressed organisations such as Innosson Motors and airlines which have been hit by the economic crisis.

“As we confront the unpalatable recession, one is worried to see unelected ministers of government go about in convoys of SUVs with a horde of assistants and security aides as if the recession is just a word that has no effect on their lives and ways of doing things while we elected representatives are daily confronted by helpless constituents who look up to us for solutions to their economic challenges.

“This period calls for austere lifestyles and cutting of recurrent expenditure of government at all levels to free funds for interventionist palliatives for the people and organisations that provide jobs for the people as well as diversification of the revenue base of the government,” he further lamented.

Adeola who lamented that with the World Bank and other international development agencies putting the number of poor Nigerians at about 70 million when a dollar was still exchanging for N150 before the recession, added that the number of those living below poverty line now would be almost 100 million.

He said the economic team must realise that it has enormous responsibility of providing palliatives for Nigerians and simultaneously rescuing millions of them from extreme poverty beyond the earlier plan of intervention which preceded the recession.