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Getting Nigeria’s economy back on track

Going by less impressive indices on the economy, coupled with recent call by President Muhammadu Buhari to Nigerians to adopt belt-tightening measures, Abdulwahab Isa itemises steps to take to get economy back on recovery track.

 

Nigeria’s economy is in the red zone, as data from local and foreign sources attest to a wobble. For instance, Gross Domestic Product (GDP) for third quarter of 2018 released last week by the National Bureau of Statistics (NBS) revealed an insignificant growth.

 

The manufacturing sector reputed as the hub of economic activities is shut down; utterly crippled by poor power supply.

 

The, hitherto, thriving industrial outlets across Nigeria’s commercial cities have been converted to eateries, worship houses and car show rooms.

 

Operators of some of these manufacturing firms relocated their operations to climes with steady power supply.

 

Within the week, the Consumer Price Index (CPI) report, National Bureau of Statistics’ monthly report on inflation, was not cheering.

 

According to NBS, in month of November, prices of goods (food index) went up. They moved up to 11.28 per cent from October figure of 11.26 per cent.

 

Recent and last GDP data for 2018 from the stable of NBS was released last week, indicating that GDP grew by 1.81 per cent (year-on-year) in real terms in the third quarter of 2018.

 

Compared to the third quarter of 2017, which recorded a growth of 1.17 per cent, there was an increase of 0.64 per cent points.

 

The second quarter of 2018 had a growth rate of 1.50 per cent, showing a rise of 0.31 per cent points.

 

Broadly classified into oil and non-oil sectors, the sluggish 1.8 per cent growth recorded were driven by activities in the non-oil sector with oil sector contracting to negative.

 

The non-oil sector grew by 2.32 per cent in real terms during the reference quarter. This is higher by 3.08 per cent points compared to the rate recorded same quarter of 2017 and 0.28 per cent point higher than the second quarter of 2018.

 

This sector was driven this quarter mainly by information and communication technology. Other drivers were agriculture, manufacturing, trade, transportation, storage and professional, scientific and technical services.

 

In real terms, the non-oil sector contributed 90.62 per cent to the nation’s GDP, higher from share recorded in the third quarter of 2017 recorded as 90.16 per cent and lower than the second quarter of 2018 recorded as 91.45 per cent. The oil sector recorded an average daily oil production of 1.94million barrels per day (mbpd), lower than the daily average production of 2.02mbpd recorded in the same quarter of 2017 by -0.08mbpd but higher than that of the second quarter of 2018 production volume of 1.84mbpd by 0.10mbpd.

 

CBN’s warning

The apex bank had sounded warning of the dangerous bend the economy had taken during one of its Monetary Policy Committee (MPC) meetings.

 

The economy, MPC said, was facing persistent challenges that require urgent fixing to avert a relapse to recession.

 

The apex bank noted that though the economy had come out of recession, it has weaker growth to contend with.

 

CBN Governor, Godwin Emefiele, thus listed measures to be taken by government to strengthen growth.

 

He said: “In this regard, the committee urged government to take advantage of the current rising trend in oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.

 

“The MPC also called on the fiscal authority to intensify the implementation of the Economic Recovery and Growth Plan (ERGP) to stimulate economic activities, bridge the output gap and create employment. The committee noted that resumption to the food supply chain in major food producing states due to poor infrastructure, flooding and the ongoing security challenges. It noted the rise in food prices contributing to the uptake in the headline inflation.”

 

The committee admonished the Federal Government to work out a lasting approach to end incessant herders/farmers clashes to avert looming crisis in the food and agriculture value chain.

 

Buhari’s confession

Last week, President Buhari at a meeting with governors drew their attention to the poor state of the economy.

 

Chairman of Nigeria Governors’ Forum (NGF) cum Governor of Zamfara State, Abdulaziz Yari, said: “President Buhari told us that the economy was in bad shape and that we have to come together, think and rethink on the way forward.”

 

Though the main agenda of the president’s meeting with the governors allegedly centred on finding a solution to the unresolved issue of new minimum wage for Nigerian workers, he, however, used the meeting to draw the governors’ attention to the poor state of economy.

 

Although Yari did not disclose government’s decision on the new minimum wage, he noted,” the president talked to us in a manner that we have task ahead of us. We should tighten our belts and see how we can put the Nigerian economy in the right direction.”

 

According to him, Buhari blamed the previous administrations led by the People’s Democratic Party (PDP) for Nigeria’s infrastructure decay despite huge petrol revenue.

 

“He (Buhari) wondered what happened in the past; that for the 16 years of the now opposition party, the PDP in power and with oil at 2.1 million barrels per day at an average of $100, many infrastructure are in bad shape,” Yari said.

 

The governor said contrary to the president’s initial resolution not to make reference to the decadence that characterised the PDP leadership,

 

“Buhari is compelled to bring those issues before Nigerians so that they can decide if it is best to bring the former ruling party back to power.

 

“He is going to open a vigorous campaign and these are key issues that he is going to raise with Nigerians so that they can weigh their choices,” Yari said.

 

Hope of revival

Government officials in commanding positions in the three tires of government must replace rhetorics with action.

 

State governors and local government chairmen must conscientiously apply the resources to projects that funds are meant for.

 

Paying salaries, clearing contractors’ obligations and paying pensions will instantly breathe life into ailing economy.

 

While the Federal Government has been able to keep fate with civil servants in terms of salary obligation, governors and, by extension, local councils leaders, are in the front line of salary default.

 

Agriculture remains the bedrock of the economy. Sadly, its potential as major economy driver is under severe threat due to unrestrained farmers and headers clashes.

 

An enduring peace between farmers and the headers is a panacea to Nigeria’s economic growth.

 

Last line

Not yet a hopeless situation with the Nigeria economy, the current gloomy picture can be changed for better. What is required is sincerity of purpose to change the current trend to positive trajectory, which entails taking hard but necessary choices such as belt tightening and other form of financial discipline.

 

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