ECONOMIC experts at the Vanguard Town Hall Meeting on Saving the Naira have called for the diversification of the nation’s export base; investment in infrastructure to enhance productivity and a fiscal policy on import prohibition as measures to shore up the value of the Naira. Meanwhile, Governor of the Central Bank (CBN), Professor Chukwuma Soludo, said that despite the global economic recession, the crisis also presents opportunities that could be
explored to prevent further decline of the economy
The general consensus of speakers at the meeting was that the dominance of crude oil as the nation’s main foreign exchange earner over the years and unbridled taste for imported goods has been the bane of the nation’s economy as well as the factors responsible for the depreciation of the Naira. They posited that addressing these problems is imperative to any effort, long or short term, to save the naira from a persistent fall.
Global economy in crisis- Soludo
In his opening remarks, Professor Soludo stated: “The global economy is experiencing a crisis that it has never experienced before. Even the 1929 crisis was not as severe as it is now and most developing economies are being affected in ways they never expected. We have one global economy being managed by two powers. This year’s aggregate global economy will be negative because the global capital flow is frozen.
“In the past when we had some oil shocks, the world economy didn’t go under like this. Capital market and mortgages have come down, thereby driving the economy down. Unemployment is soaring and companies are retrenching their workers. Commodity prices have crashed significantly since the 1962 national development plan. These are the challenges we have to deal with and all countries are affected.
“Globally, people are not spending, banks are not lending, despite the lowering of interest rate to zero in the US and Europe, banks are not lending. So there is a crisis of confidence, globally, consumers are resisting going and spending, and that’s a global phenomenon.
“But Nigeria is not in recession. Recession is a technical term. Recession occurs when the economy grows negative for two or more consecutive quarters at a time. That is when you can say the economy is in recession. From what we have heard from the National Bureau of Statistics so far, there has been no quarter where we have had negative growth rate, although the economy may have been growing slower than before. But in the sense of recession, no, we can’t pronounce the economy to be in recession.”
Print more Naira, I say – Jimoh Ibrahim
Business mogul and Chairman, NICON Group, Mr. Jimoh Ibrahim, remarked that “two months ago, some journalists asked me what we should do concerning the depreciation of the naira, I said let’s print more money. It may be laughable, but it is serious.
But here, two distinguished Nigerians have said that the economy of the world is one global economy, and the problem of Nigeria is money. If the problem of Nigeria is money; that was one reason I asked the Central Bank Governor go back to Abuja and print more money, since this will ease the global economic crisis. It is only in Nigeria that interest rates climb to 22 percent. The Nigerian government should follow the example of England and America where their interest rate is 0.5 percent.
“The CBN should follow the England example particularly. The idea of supplying money to bureaux de change is not proper. I think in recession, consumption must increase; let’s increase our consumption pattern. As people spend, recession will drop. This is why I am advocating that money naira should be printed.”
Public-private partnership needed to drive economy- Daggash
Senator Daggash harped on the need for public-private partnership in driving the economy, especially addressing the issue of inadequate infrastructure.
He noted that the banks alone can not address the issue of inadequate infrastructure in the country, noting that the Federal Government has the greater responsibility for developing the country’s infrastructure.
He said: “The profit of banks in Nigeria are not really huge as people think. Those profits are not adequate to tackle the issue of infrastructure development, which really the country needs. The government has a central role to play in infrastructure development; it can not be left in the hands of the private sector alone.”
Govt must provide stimulus packages – Utomi
Speaking in the same vein, Prof. Pat Utomi called for urgent government intervention, especially in the area of providing stimulus packages that will jumpstart activities in the economy.
Essentially, he noted that the package, if well directed, would help in empowering the populace, ensuring improved productivity and help in cushioning the effect of the global financial crisis in the country.
His words: “Various stimulus packages have been introduced in advanced economies and it does come in different ways. The stimulus we have seen globally is money being pumped into the banking system in US, in the UK etc. I personally won’t recommend that in Nigeria, because of the high immoral environment that we have. Are we sure that the money would be used to stimulate the economy that it is made to stimulate. But if you were to realise that there is need to put money in people’s pocket so that they can spend, so that those who are producing can produce what those people are consuming. What you should ask yourself is what you should do that will automatically put millions of people to work and put money in their pockets for doing something that adds value, such as the construction of highways and houses.
“It is a known fact that housing is desperately needed in the economy; this will also make it possible to employ a lot of people. In doing this, government should look for foreign investors that are ready to fund such investment. When they come and the projects are started, millions of people will be employed earning a reasonable amount of money. These people will now be empowered to spend, buying items of companies in the country, this will also make such companies to decide to build more factories, and employ more people, that is how you get an economy going.”
Monocultural economy is the problem – Idika Kalu
Dr. Kalu Idika Kalu however in his remarks attributed the declining fortune of the naira to non-diversification of the economy. He stated, “This issue here is not just about naira and economics, the issue is also about governance, security, the administration of justice. Like I said it is not so much the gyration of the naira that is the problem, of course, the size of the adulation borders on the level of instability and therefore the decision making that it will affect from the stand point of those who want to save his money and somebody who wants to invest his money is bordering on the underlining factor of production.
“The very factor of production, the first management of the productive process that has slowed down our ability to diversify the economy and in that point, let us get it out of our heads that we are a mono-economy. Nigeria is not a mono-economy, we have just woefully failed to diversify not because there is something intrinsic about the mono culture that we have.
“We had a period in the forties and fifties, we had an active agricultural base and we were exporting all manner of agricultural products. We had a time in the 50s when we were exporting all manner of agricultural products to West African countries
“We should have almost one hundred items we export in this country. I have tried to make that point. The reason we are not doing more than we are doing in terms of our export capacity is as a result of the non diversification of our economy mostly because we have not made sure that we diverted our investment to improve domestic production, because we have to produce before we export. And a lot of the argument at that time was just predicated on the assumption that all we have to export was oil. But yet the potential is enormous. Wood products, leather, textiles.”