Recent reversals in the economic outlook for Nigeria, including cuts in growth forecasts for the economy by the two Bretton Woods institutions, are worrisome as they portend grave consequences for the economy, the Nigerian Employers’ Consultative Association (NECA) has said.
These downward trends should spur the government to intensify efforts aimed at diversifying the economy away from dependence on oil revenue, Mohammed Yinusa, president of NECA, said yesterday at a media briefing in Lagos.
Yinusa recalled that the International Monetary Fund (IMF) cut its growth projections for Nigeria to 1.9 percent, from 2.1 percent, pointing out that the country’s economy is not doing well.
Similarly, the World Economic Outlook report released in July had projected growth rates of 2.1 percent and 2.3 percent for 2018 and next year, respectively, while the World Bank recently cut its growth projections for the country by 0.2 percent to 1.9 percent. The Bank cited as its reasons for the reduction in crude production levels, contraction in the agricultural sector on the back of the herdsmen-farmers crisis that has affected economic recovery.
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A continued slide in the price of oil, Yinusa warned, could derail the implementation of Nigeria’s 2018 budget, which was premised on oil price of $51 per barrel. It could also snowball into challenges in the supply of foreign exchange, as this is sourced primarily from oil receipts, he pointed out, saying this would hurt local businesses.
While admitting that the reversals of growth projections are “worrisome,” he admitted that they portray “a true reflection of the economic reality on ground.” He warned that Nigeria could face challenges in the areas of deficit financing, cash call payment, microeconomic performance, project financing, and political uncertainty.
NECA, “as the voice of business,” Yinusa said, “is also worried about the looming foreign exchange shortfall to support economic activities, especially as it affects the importation of required raw materials for the sustenance of production in the real sector of the economy.’’
Yinusa also lent NECA’s voice on the contentions surrounding the African Continental Free Trade Agreement (AfCFTA), which plans to create a continent-wide free-trade area, saying Nigeria must exercise caution in acceding to the agreement.
He described AfCFTA as “a neo-liberal policy initiative, aimed at opening our seaports, airports and other businesses to unbridled foreign interference.”
President Muhammadu Buhari refused the sign the AfCFTA document in March this year in Kigali, Rwanda, citing its potential impact on the local industries. Yinusa echoed the views yesterday, noting that while the agreement is a good idea on paper, it has potential for negative and damaging consequences for local businesses and the local economy.
“We reject the ratification of the AfCTA, until issues of market access and enforcement of rules of origin, among other concerns are addressed,” he said. “Nigeria, with its huge population, cannot allow itself to be used to create import-duty havens for the regional and global businesses. This will spell doom for our local businesses” he noted.
On the inconclusive discussions on a minimum wage for the country, the NECA boss advised governments to accept the proposed 30,000 per month.
“We believe that the N30,000 recommended is a fair wage that could lift workers’ purchasing power, increase total demand and ultimately stimulate economic activities,” he said.
Yinusa argued that in discussions on minimum wage, “It is not uncommon to hear outcry of inability to pay from one quarter or the other.”
While the claim of inability to pay could be real, he noted that employers, including the government, should undertake “wholesale restructuring and financial re-engineering that will enable it comply with the laws of the land.”
Discussions between the organised labour and government broke down last month, after many state governments claimed they are unable to pay the N30,000 minimum wage, up from the current one of N18,000. Yinusa linked this with the current debate over restructuring of Nigeria’s structure, saying that restructuring should made to improve the viability of states.
He likened Nigeria’s current structure to the existence of “one large National Distribution Centre with only one major supply point and seemingly endless collections outlets that are either not enhancing inflow into the NDC or making negligible input.”
He argued that states that cannot sustain themselves should be encouraged to “merge and remerge as a healthy productive centre rather than the existing over-reliance on the centre.”
In the run-up to next year’s general elections, restructuring has become a major campaign issue. While the main opposition party, the People’s Democratic Party (PDP) supports it, president Buhari says that those calling for restructuring plan to destabilise the country. Atiku Abubakar, PDP’s presidential candidate, has pledged to restructure Nigerian within six months, if elected.
“We should aim for a political structure where the federating units will contribute to the centre, thereby assuming the status of multiple centres of productive economic activities and development, as it was in pre-1966 military coup,” Yinusa said.
Yunusa drew the attention of the authorities to the traffic gridlock that has paralysed activities in Apapa for months, saying that the solution lay in implementing prescribed interventions such as opening up other ports outside Lagos, especially Warri and Calabar ports, relocation of the petroleum products’ tank farms from the Apapa axis, fixing bad roads, and adoption of an e-control method to the gridlock as suggested by researchers from the University of Lagos.
Yinusa decried Nigeria’s steep decline into poverty, noting that while in 2014 India was rated as having 33 percent of the world’s poor, four years later, “it came as a rude shock as Nigeria overtook India as the country with the largest number of people living in extreme poverty.”
According to him, data has shown that for every minute, six Nigerians slip into poverty, while six out of 10 Nigerians live in poverty.
He noted that Nigeria’s Human Development Index value for 2017 was 0.532 (highest is 1), which placed the country as 157 out of 189 countries that were assessed. According to him, the country should give adequate attention to such critical indices as health, education, and income/standard of living, which will ultimately lift the citizens out of the poverty scourge.
