Kano-based economist wants FG to address Nigeria’s ‘shrinking economy’

A Kano-based economist, Mohammed Sagagi, has identified seven areas of economic concerns the administration of President Muhammadu Buhari must address for Nigeria to move out of the current economic recession.

The identified areas of focus, according to Sagagi, are, the depressed public revenue, the state of the nation weak currency, high inflationary pressures, unemployment and under-employment, declining capital importation, policy inconsistency/incoherence, as well as, general uncertainty that characterised the economy.

On the way forward, Sagagi suggested that the government must go beyond focusing on the issue of the monetary policy alone, and put in place measures to scale up the nation competitiveness, occasioned by unfriendly business environment.

Although the economist acknowledged that the prevailing economic challenge in the country was precipitated dominantly by the global oil crisis, he however believed that addressing the identified problems would go a long way in mitigating problems confronting it.

Sagagi, who made this disclosure to BusinessDay on the sideline of the recent annual general meeting of the Kano branch of the Manufacturers Association of Nigeria (MAN), noted that tackling the identified challenges would help improve the nation’s investment climate as well as boost general business environment.

“The shrinking economy I am talking about is captured in the current state of our GDP, which has been on a declining trend; in the Q4 of 2014 it was 5.94 percent, Q1 2015: 3.96 percent, Q4 2015:2.11 percent, Q1 2016: -0.36 percent, and Q2 2016: 2.06 percent.

“Non-oil GDP: declining trend also: Q2 2015:3.46 percent, Q1 2016: -0.18 percent, and Q2 2016: -0.38 percent. Similar trend has characterised the oil GDP, and the contribution of the manufacturing sector to the GDP, the only exception was the agriculture sector,” he said.

Speaking specifically on the manufacturing sector growth, he said the sector had continued to experienced negative growth since 2015, except the 1 percent growth it recorded in the fourth quarter of the same year.

He noted that the total output for the sector in 2016 declined by 7 percent in the first quarter, and 3.36 percent in the second quarters, while the output in the third quarter declined by 4.38 percent.

Similarly, he observed that the national currency had been experiencing systematic decline also, as the value of the currency on BDC Exchange Rate index had gone down steadily from N150/US dollar in January 14, 2016 to over N450/US dollar today.

The expert disclosed that the shrinking economic environment had created tremendous impact on the ability of players in the manufacturing sector to carry out their operations, in particular.

On the way forward, he suggested that the government must go beyond focusing on the issue of the monetary policy alone, and put in place measures to scale up the nation competitiveness, occasioned by unfriendly business environment.

“Deepen competitiveness – enhancing supply side reforms to attract additional investments and strengthen the productive sector, initiative protection of selective and time-bound tariffs, subsidies and other incentives.

“In addition, government also needs to support the emergence of new sectors of economic activity through competitive reforms that foster innovation,” he said.