With the elections over, it is imperative that all efforts are galvanized and utilized to rescue our nation and economy in crisis. As an economist and teacher, a good assessment of all the socio-economic variables clearly reveal that we are in a wrong and appalling direction. Not only are we in a crisis, we are in a serious one that will get worse if urgent steps are not taken. While our total debt has skyrocketed to about N22.43 trillion from N12.12 trillion in June 2015 when PMB took over, there is no significant infrastructural development with about 22million Nigerians currently unemployed. Not only is FDI rapidly decreasing, our foreign exchange management remains blurred and open to manipulation and abuse. As we lament our sad emergence as the poverty capital of the world, we have added another negative laurel as the 6th most miserable country in the world with life expectancy at just 55 years. Regrettably and as a friend cautioned, even the 55 years life expectancy will reduce if the increasing insecurity especially the pervasive kidnapping, killing and violent clashes between herdsmen and farmers are not urgently curtailed.
With such multitude of socio-economic problems, the government in their actions and inactions surprisingly behaves as if the economy is in a ‘steady state of growth’ with little or nothing to worry about. There seems to be increasing absence or limited appreciation of the enormity of the problems. And as such, the required innovation and urgency to robustly galvanize the other tiers of government and the private sector to attract high FDI flows seems to be lacking. There is no other place that this absence of creativity is apparent than in our budget financing since 2016. It has been borrowing and borrowing and borrowing! And for the 2019 budget, it is still more borrowing! More borrowing for an economy that uses about a quarter of her entire budget for debt servicing! A country that has used over N5 trillion to service her N22triilion debt since 2016 in addition to another N2.14 trillion for the same debt service in 2019. By the end of 2019, Nigeria would have spent over N7 trillion naira for debt service alone. As we spent only N943 billion for debt service in 2015 in comparison with N2.14 trillion to be used this year, it seems that all that is being done by PMB’s team to fund government activities is just to borrow and borrow and borrow as if the money will not be repaid!
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With the way we are borrowing, it seems that other suggestions on how to diversify the economy and raise revenue as indicated in the Economic Recovery and Growth Plan (EPRG) are proving unachievable. Given the current disappointing economic outcomes, it is clear that the EPRG is not meeting the expected targets in the five key areas: stabilizing the macroeconomic environment; achieving agricultural and food security; improving transportation infrastructure; ensuring energy sufficiency and driving industrialization. This, we cautioned, will be the case as the EPRG did not take into proper cognizance of our socio-economic, cultural and political institutional peculiarities. As the EPRG has somehow mutated into Next Level, it is pertinent that a deep and critical review of our economy is urgently undertaken if we are serious to avoid worsening economic crisis and imminent recession.
A key prerequisite is the need for PMB to quickly announce his new economic team that will take Nigeria to the Next Level. While I am aware that there is an existing one, our economic realities do not suggest that they have done a good job and as such there is need for a rethink of the members. A particular mistake that must be corrected is the need to add many erudite and tested economists. An economic team populated mainly by lawyers, accountants and other non-economists cannot and will not be in a position to properly articulate robust monetary, fiscal and supply-side economic policies to rescue Nigeria.
In line with the concept of forward guidance, as the CBN governor is the head of a key policy front of the government- the monetary policy, it is important that the renewal or non-renewal of his second term is clearly addressed. This will help to manage the uncertainty and risk emanating from the lack of clarity on his continued stay in office. Confirming that his tenure will be renewed will help the private sector and the economy know that his monetary policy stance will be maintained and as such plan accordingly. If his tenure will not be renewed, then his replacement should be announced and the person expectedly should outline his/her monetary policy orientation to enable for adjustment in case it will be different from the current one. It should be appreciated that we are already in the second quarter of the year and further delays in these key policy areas such as the CBN governor, economic team and economic policy of the government will only escalate our dire economic situation to nobody’s advantage.
*Franklin Ngwu
*Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.
