MAN, LCCI fault Yari’s call on govs to prepare for possible recession
The Chairman of the Nigeria Governors’ Forum, Abdulaziz Yari, has told the newly-elected governors to prepare for another cycle of possible economic recession by mid-2020.
The recession, according to Yari, who is also the Zamfara State governor, may not end until the third quarter of 2021.
Yari spoke in Abuja on Monday at the induction of new and returning governors which was organised by the NGF.
But the Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry disagreed with Yari on the looming recession that he predicted.
They questioned the basis on which Yari based his prediction that the country might go into another cycle of recession from 2020 to mid-2021 on.
However, Yari told the new governors that their tenure might not be a smooth ride due to paucity of funds to execute projects and also pay salaries in their respective states.
He said, “As some of us are exiting as helmsmen of our various states, let me quickly remind the new and returning governors that it may not totally be a smooth ride.
“On our part, we made a lot of achievements in infrastructural development and provision of social services because we enjoyed a relatively high oil price of about $100 to $114 dollar per barrel between 2011 and the middle of 2014.
“However, by mid-2014, the price of crude oil, which is sadly the main driving force of government’s expenditure, dropped to $75 per barrel. It, therefore, became very difficult for many states to even pay salaries of their workers.
“This scenario is a wake-up call for all of you to come amply prepared to face this kind of challenge especially since we are expecting the possibility of another cycle of recession by mid-2020 and which may last up to third quarter of 2021.
“Your good spirit of stewardship will make you contain the situation should there be one.”
Yari, who has won election as a senator-elect, said as members of the National Economic Council, the new governors must work hand in hand to boost the economy in tandem with the global best practices.
He regretted that he and his colleagues had faced the challenge or managing state economies that he said “totally dependent on accruals from the Federation Account” rather than exploring what he called viable alternatives to run the economy.
He said for most of the states, Internally Generated Revenue was nothing to write home about.
“You must, therefore, look inward by boosting your revenue generation base and also utilise them effectively for the execution of projects that would touch the lives of your people,” he told the newly-elected governors.
MAN, LCCI disagree with Yari, say he is not an economist
But MAN and the LCCI disagreed with Yari on the looming recession that he predicted.
The MAN President, Mansur Ahmed, said, “I don’t know from which position he is speaking, whether he is an economist.
Although the economy is not growing as fast as we hope, it is growing nonetheless and all the projections from the World Bank and other international bodies say that it will keep growing.
“Unless something out of the ordinary happens, I do not foresee another recession.”
On his part, the Director General, LCCI, Mr Muda Yusuf, said he could not agree with Yari because he was not speaking in the capacity of an economist and did not put parameters forward to back his projections.
He said, “For anybody to make such a statement there must be parameters. The biggest driver of Nigeria’s economic performance is an external factor, which is the oil price and unless Yari has information that there is going to be a major drop in the price of oil, then I do not agree with his projection.
“If oil stays above $50, there is no likelihood of Nigeria going into another recession. That is not to say that the economy is not weak and to avoid the risk of recession, we need to address our fiscal viability, like the cost of governance, our huge debt profile, the amount we commit to fuel importation and our low level of productivity.”
Without innovation, we could slip into recession – IRCN registrar, ANAN
But the Registrar, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said except the Federal Government come up with innovative measures to stimulate aggregate demand, the economy might slip into another recession by next year.
Speaking in a telephone interview with one of our correspondents, he argued that while the decision to increase minimum wage was aimed at increasing aggregate demand, the plan by the Federal Government to increase tax to fund the wage increase would limit the potential impact on the economy.
He said that once the purchasing power of people started to drop, its impact on the economy would be felt through a reduction in the demand for goods and services.
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Eohoi said, “We have just increased minimum wage now and what will follow is an upward adjustment in the prices of goods and services. Once this happens, the purchasing power of people will drop. If nothing innovative is done to stimulate the economy, then you will see that the level of economic productivity will start declining.”
Also former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said that the stability the country was enjoying was due to the increase in oil price.
He said, “We have not been able to boost local productivity because of infrastructural deficiency. We must invest in education, infrastructure, health and others because if people have to continue to travel abroad for medical reasons, this will continue to deplete the foreign reserves.
“In 2019, we have still not been able to get the issue of power right and power is very relevant in productivity. The economy cannot be buoyant if they cannot get power right. The volatility in oil price can have impact on the economy. We need to create an enabling environment for businesses to survive.”
FG paid N1.1tn bailouts to states in three years – Osinbajo
Speaking earlier at the event, the Presidency said the Federal Government paid bailouts, Paris Club refunds and loans totalling N1.1tn to state governments in the last three years to help them tackle financial challenges, particularly payment of workers’ salaries.
Vice-President Yemi Osinbajo, who represented President Muhammadu Buhari, observed that the challenges before the states appeared to have expanded, especially with the new National Minimum Wage of N30,000.
The Presidency noted that all the tiers of government must then confront the situation individually as there was no 100 per cent guarantee that the Federal Government, already burdened by a deficit of N2tn, could offer much hope.
Govs should raise IGR to pay new minimum wage – FG
Osinbajo told the governors-elect that a possible solution was to source more IGR to augment their monthly allocations from the Federation Account.
He stated that there were also options in agriculture and technology infrastructure to open up the economic space for their people.
Osinbajo said, “States must in the next few years, earn more in IGR. We must more effectively collect VAT and increase our agricultural output, work with the Federal Government to make broadband infrastructure available all over the country, so our young people anywhere in the country can do jobs from anywhere in the world, from their villages in any corner of Nigeria.
“Each state must leverage its most advantageous agricultural produce, and working with the Federal Government’s initiatives in agricultural credit and the recently launched Green Imperative, with the Brazilian Government, it is possible for states to generate significant revenues from agriculture. After all, a lot of the relatively mind-boggling achievements of the regions in our history were without oil money, but mainly revenues from agriculture and taxes. Today, we have even more options.”
Osinbajo told the new governors that the Federal Government would treat all the states fairly and equitably, irrespective of party affiliation, adding that it would play its role in support of states as often as necessary and within its means.
He reminded the governors that Buhari, himself (Osinbajo), the 36 governors and their 36 deputies were “74” privileged Nigerians elected for executive duties out of a population of over 200million and entrusted with their destinies.
He added that having enjoyed such a rare privilege, they could not afford to fail the people by merely making excuses or complaints on why they could not perform.
He asked everyone to rack their brains and find solutions to whatever challenges there were in the next four years.
Osinbajo added, “This tremendous privilege which leadership thrusts upon us also comes with grave responsibilities. Those responsibilities are multiplied by the fact that most of our people are extremely poor.
“Large numbers are unable to afford good healthcare and malnutrition remains a major problem. Children in many of our states run the risk of being permanently mentally stunted because they are malnourished. Illiteracy is still significantly high and the number of out-of-school children is an embarrassment.
“Yet, in all these, our population continues to grow at over three per cent per annum. We will by current projections, move from 200 million to 400 million people in the next three decades. And then we will become the third most populous nation in the world.
“Most of that population will be young people under the age of 25 looking for jobs. Every one of these people, except a few living in Abuja will live in the states, your states, where you govern. They will seek schools in your states, health services in your states, food in your states and jobs in your states.”
He noted that an immediate step the governors should take was investment in human capital development, physical infrastructure, which Osinbajo said, Buhari had chosen to use in taking the country out of the woods.
Osinbajo added, “We will be working with the states on education, especially the education of girls, and we have begun some deep diving in this respect with our HDI work at the National Economic Council.
“We are doing the same with healthcare. We have already started to implement the one per cent of CRF in the Health Act and that was implemented in the 2018 budget and we intend to do so with the 2019 budget.”
Look beyond your states for aides, First Bank chair tells govs
In her speech, the Chairman of First Bank of Nigeria, Mrs Bunmi Awosika, told the newly-elected governors and returning ones to look beyond their states in appointment of their aides.
Awosika also regretted that there was no politics of ideology in Nigeria today.
She said, “Some states are richer than the other, but it is how well you use the wealth for the people that matters.”
Invest in human development, US envoy tells govs
In his goodwill message, the United States Ambassador to Nigeria, Ambassador Stuart Symington, asked the governors-elect to look for people in business in their states.
He said while businessmen looked for profits in their businesses, the same should also apply to governance.
He said, “As governors, look for people in business in your states. How do we invest in human capital development? Invest in people and earn trust. You do that at a speed of trust.”
He also called for cooperation among security agents and the civil populace, saying security should not be left to the security agents alone.
Nigeria not the only country with problems – Kukah
In his contribution, the Bishop of Sokoto Catholic Diocese, Matthew Kukar, said Nigeria should not be seen as the only country with problems.
He regretted that most of those in public offices did not get there through their track records.
A former governor of Lagos State, Babatunde Fashola (SAN), called on the new governors to balance the appointment they would make.
He also called on them to appoint from those who campaigned against them.
Fashola is the minister in charge of power, housing and works.
The Governor of Kaduna State, Mallam Nasir El-Rufai, who has also won his re-election, said there were mixed feelings in his state when he appointed a woman as his chief of staff.
He said the appointment was received with resentment “because of the religion and ethnic background of the state.”