•Forecasts 1.5% GDP growth for Q1
Nume Ekeghe
A former Chief Executive Officer of the National Bureau of Statistics (NBS), Dr. Yemi Kale, has urged the incoming administration to kick start its economic reforms immediately it assumes office, pointing out they don’t have the luxury of time like other new administrations who historically take about a year to settle before implementing economic policies.
Kale, who is currently a Partner and Chief Economist at KPMG Nigeria, also predicted that the Nigerian economy would grow by 1.5 per cent in the first quarter of 2023.
He said this yesterday, during an interview on the ‘Global Business Report,’ a programme monitored on ARISE News Channel, yesterday.
Kale, while speaking on his economic forecast, said: “I would be surprised if GDP grows more than two per cent in the first quarter. I’m expecting 1.5 per cent and that is even assuming the oil sector picks up.
“But if the oil sector doesn’t pick up, it might be less than one per cent because the economy is significantly dependent on cash and the informal sector has a huge cash component even those that do transactions through electronic means also had challenges as well. “So, if I see anything more than two per cent I would be really surprised.”
Speaking further on his advice to the incoming administration, he said: “Typically, in a transition year, the government has the luxury of slowing down activities, the outgoing administration winds down and the new incoming administration tries to settle into government.
“So, very little activities occur traditionally. But because of the previous macroeconomic and socio-economic challenges that the economy currently faces, they don’t have the luxury of that time this time around.
“A new government is coming in, we’ve heard what they want to do and most of the things I’ve read sound pretty interesting and sound. If it is done, then I think there are some positives for the economy. I don’t think those positives will be in 2023.”
Kale added: “I think that we have a chance to fix a lot of these macroeconomic and social imbalances and maybe also add that the global economy itself is going through a lot.
“But, that will be assuming the incoming administration focuses on the things that they say they want to do, they get the right people in the right places, give the people the free hands to do what they need to do, and access to the president so they can get things moving.
“It’s not about selecting a very intelligent minister, it’s also about allowing that intelligent minister to work as well as giving him access. If those three things are in place, we would see more positive change.”
Furthermore, he noted that the debate on subsidy should focus more on how to provide palliatives to the less privileged or a clear path and communication on its removal and its effect, stressing that there would no viable economic reason for retaining fuel subsidies.
He said: “I don’t like to look at these things by focusing on all the positives like those that want to remove subsidy will do and ignore or play down the negatives or those that don’t want to focus on all the negatives.
“I prefer looking at the holistic approach, look at the entire system and then determine what is overall best for the country because any policy, including this one will have positives and negatives.
“Some will benefit and some people would lose out from the policy. At the end of the day, it is the cost-benefit analysis to determine overall what is best for the economy.
“And for those that are going to lose, how can the government introduce palliatives to minimise the effects of the negative effects of that policy. I think that’s the conversation we should have.
“Let’s be honest, I think we’re getting to a point if we are not already there that the conversation will not be about removing the subsidy, it will be subsidy has to be removed because we just can’t pay for it any longer.
“I’ll prefer that before we get there, we can actually discuss this so that the process of moving subsidies, is well communicated and maybe in a well-phased approach.
“When you have a subsidy regime that for the first six months in 2023 is higher than your budget for health, education, and infrastructure combined, then you have to ask yourself if that is the best way.”
