Economy: Brace Up for Tough Times, Salami Tells Nigerians

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Ugo Aliogo

The Chief Executive Officer, Kainos Edge Consulting and an Associate Professor at the Pan-Atlantic University, Dr. Doyin Salami, has predicted that the next four years will be difficult for the Nigerian economy.

He, however, pointed out that it would signal the beginning of reforms in the economy.

Salami, who is also a former member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria, said the key question is to find out what condition would the next four years leave the country.

According to him, Nigeria has economic strategy based on spending her way out of recession, “but we had not undertaken the reforms that are expected to see.”

He was however optimistic that the exchange rate would be stable this year, adding that with the new government, nothing significant was likely to happen in the economy before the inauguration of the President Muhammadu Buhari for a second term.

Salami, who disclosed this in Lagos, while speaking at the Members’ Evening of the Institute of Directors (IoD) with theme: ‘Where do we go from here,’ however, argued that at its current value, the naira exchange rate is not sustainable.

He said three things to look out for in 2019 are international oil prices, international capital movement and international interest rates, adding that if oil behaves either on the quantity side or the price side, forex would be adversely affected, “in 2019, there is need to make a decision about what happens to forex.”

“Whether we like it or not, the next four years we will be difficult. The next four years will signal the beginning of reforms, but the quick question is this, at the end of that patch, are we going to be the better for it or worst of? Whether we like or not, pain is coming?

“The key question is in what condition does it leave us? Nigeria had an economic strategy based on spending her way out of recession, but we had not undertaken the reforms that are expected to see. Whether we like or not pain is coming? The key question is in what condition does it leave us? Nigeria had an economic strategy based on spending her way out of recession, but we had not undertaken the reforms that are expected to see,” he explained.

The Kainos Edge Consulting CEO further explained that there are a number of ways to examine the exchange rate; adding that it could either be in the short term or medium term respectively.

He explained: “But economics is very clear that in the medium term, especially when you are looking at two currencies, the naira and the US dollar, you consider the inflation rates of those countries, the difference between them is a difference that must be made up by the movement in the exchange rate, in other words, you are looking at Nigeria with inflation rate of about 11 percent and the US with an inflation rate less than two per cent.

“The population is growing at between 2.8 and 3.8 per cent and agriculture is currently at 2.5per cent, then you don’t need to be a genius to figure out that the prices of food are headed northwards, there is a lot of dead capital in agriculture, the land which people could use which are not available for people to use because the title is not available for people who own the land.

“There are major competence gaps, ranging from pre-production, to farming and processing, and storage. The part that needs to change is that Nigeria can no longer afford not to depend on single season cropping. The Nigeria food basket has become more sufficient and our deployment of technology has to be more spot on.  We are the lowest users of agriculture on the continent.”