africa

How Nigeria can work her way out of recession


 

“The collapse in oil prices coupled with the COVID-19 pandemic is expected to plunge the Nigerian economy into a severe economic recession, the worst since the 1980s, according to the latest World Bank Nigeria Development Update” 

– World Bank in a release on June 25, 2020.

What initially was predicted by the World Bank in June this year has now been officially confirmed by the National Bureau of Statistics. Nigeria has for the second time in five years slipped into economic recession, the worst in about 40 years. The President, Major General Muhammadu Buhari (retd.), had first hinted of this possibility during the presentation of the 2021 budget to the National Assembly on October 8, 2020.  On that day, the President highlighted a number of things such as significant increase in deficit beyond the provisions of the Fiscal Responsibility Act, following revenue pressures faced by the government; the persistent headwinds from the coronavirus pandemic; the resulting global economic recession, low oil prices and heightened global economic uncertainty.

Due to the aforementioned reasons, the President said, matter of fact, that the country’s “GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into a second recession… with significant adverse consequences.” This exactly is what the National Bureau of Statistics confirmed last Saturday when in its Gross Domestic Product report for Q3 it said the GDP, the broadest measure of economic prosperity, fell by 3.62 per cent in the three months to September.

Sincerely, the Federal Government is not standing akimbo letting the pathetic situation linger. At the 28th Economic Summit Group meeting in Abuja on Monday, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, highlighted the FG’s plan to exit the recession. According to her, some of the measures to exit the recession include: stimulating the economy by preventing business collapse through ensuring liquidity; retain and create jobs through support to labour intensive sectors such as agriculture and direct labour interventions. Other measures include, undertaking growth enhancing and job creating infrastructural investments in roads, rails, bridges, solar power, and communications technologies; promoting manufacturing and local production at all levels as well as advocating the use of Made in Nigeria goods and services, as a way of creating job opportunities.

She said the government would also pursue self-sufficiency in critical sectors of the economy and curb unnecessary demand for foreign exchange which might put pressure on the exchange rate and extend protection to the very poor and other vulnerable groups including women and persons living with disabilities through pro-poor spending. Very well said, however, we await implementation of these laudable programmes.

As I noted on “Democracy Today” on WE 106.3 FM Abuja on Monday, for a majority of Nigerians, we have always been in recession as our quality of lives had been depreciating even when we were informed of having exited the 2016 plunge in 2017. Poverty, unemployment, inflation, and insecurity have been on the increase and are set to worsen with the current economic recession. So, how can Nigeria claw its way out of these economic doldrums?

In addition to the aforementioned policy measures by the FG, there is a need to restructure Nigeria in order to significantly reduce the current unsustainable cost of governance. Grandstanding and playing the ostrich cannot help our situation. In order to reduce government overhead and running cost, there is a need to tinker with Section 147 (3) of the 1999 Constitution of Nigeria, as amended. That is the section which prescribes that the president must appoint at least a minister from every state of Nigeria. We don’t need that now.

America with over 330 million population and 50 states has only 15 secretaries, the equivalent of our own ministers, running her government. The secretaries in charge of the 15 executive departments are the Secretaries of Agriculture, Commerce, Defence, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Labour, State, Transportation, Treasury, and Veterans Affairs, and the Attorney General.

Still with the executive arm, former President Goodluck Jonathan set up a presidential committee on restructuring and rationalisation of the Federal Government parastatals, commissions and agencies better known as the Steve Oronsaye Committee in 2011. The white paper on the committee’s report was made public in 2014. Though the white paper committee chaired by former Attorney General and Minister of Justice, Mohammed Bello Adoke, had removed 90 per cent of the Oronsaye’s committee recommendations, Buhari in April 2020 directed the Secretary to the Government of the Federation, Boss Mustapha and the Head of Service, Mrs. Folasade Yemi-Esan, to implement the committee’s recommendations.

According to The Cable, an online news medium, of April 30, 2020, “At the time when the report was submitted, there were 541 government parastatals, commissions and agencies (statutory and non-statutory) in the country and the report recommended a reduction in the number of statutory agencies from 263 to 161. At present, the number of federal agencies has increased and it is estimated to be close to 1,000”. Unfortunately, seven months after the presidential approval for implementation, mum has been the word from the SGF and the HoS.  Yet, before the mergers or liquidation of these agencies can be done, there has to be legislative actions by the National Assembly. It seems political pressure will not allow this report to be implemented.

Last Friday, November 20, 2020, the President of the Senate and chairman of the National Assembly, Senator Ahmed Lawan at a retreat for top management staff of the National Assembly and National Assembly Service Commission expressed his disapproval of the call for the scrapping of the Senate and rather opted for Nigerians to vote out nonperforming senators in 2023. However, truth be told, Nigeria does not need the huge number of National Assembly for lawmaking, oversight and representation. In light of the current economic recession being faced by Nigeria, N125bn to service 469 lawmakers and the Assembly’s bureaucracy is on the high side. Recall that Nigeria is running a deficit budget and is set to borrow trillions of naira in order to service the N13tn 2021 budget.

The reality that stares us in the face is for Nigeria to take a cue from other countries. In 2012, Senegal scrapped its Senate likewise Mauritania in 2017. Last year, Italy due to the economic meltdown decided to prune its parliament. A report has it that under the arrangement, the lower legislative house will be pruned from 630 to 400 members, while the senators’ current strength of 315 will be down to 200… But the new order will not come into effect until after the next election in 2023, by which time it would have been ratified by a referendum. I believe this is the way to go for Nigeria.

As I said on Plus TV Africa on Friday night, there is a need to reduce our federal lawmakers by one third each. By this, I mean, two senators should represent each state instead of three while the number of House of Representatives should be reduced from the current 360 to 240. Alternatively, we can scrap the senate or make our legislature to work on part-time earning only reasonable sitting allowances. Nigeria cannot continue to maintain this behemoth of a National Assembly.

In addition to these cost-cutting measures, there is also the need to further diversify the economy, curb corruption and revenue leakages across the three tiers of government. It is also imperative to reduce the aircraft on the presidential air fleet to a maximum of two while there should also be significant reduction in the president’s and governors’ convoys.

At the individual level, there are lessons in this economic recession for all of us. It is high time we embraced family planning and child spacing.  While it may be unrealistic for government to legislate this into law as China did, it is expedient for couples to think out the implication of having more children than they can cater for under the superstitious belief that God will provide. Whether we like it or not, the cost of living will continue to soar and we must, like Boys Scout, be prepared for this.  This is also not the time to indulge in ostentatious lifestyle but a time to be prudent in management of personal resources. We must start saving for the rainy day. This recession will likely bring about more job losses, pay cuts, and other austerity measures. It is therefore important to save up for any eventuality. Furthermore, it is time to diversify the family income base. We all can learn new skills and find out what can bring in more revenue for family sustenance. This is not the time to have full time housewives. Men should empower their non-working spouses financially to be economically empowered in order to assist in paying the pilling bills.

Follow me on Twitter @jideojong

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