OPINION: THE STATE OF THE NIGERIAN ECONOMY BY MACCHRIS ODE'AFIAN

OPINION: STATE OF THE ECONOMY; THE FOREX And RECESSION  IN NIGERIA

BY: MacCHRIS ODE’AFIAN

Yes, we have transited from technical recession to having our economy in recession. It is important we pinpoint the cause of the recession.

Is it just a case of weak demand that pumping cash into the economy via various stimulus programs on the fiscal and monetary end of policies initiative or the case of slowing capital and business investment in the last two quarters due to uncertainties in the economic environment forcing business to adopt a wait-and-see outlook on the economy?

Reflation of the economy as planned by capital spending has been felt very insignificantly because as government spends money, it borrows from the domestic market, driving up interest rate, crowding and constraining the private sector in the process.

In other to reduce fiscal deficit, government had been creative dreaming up new taxes, taking away wealth from the people in the process. By the way, what happened to the external borrowing plans?

I suggest that government do more to support Micro Small and Medium Enterprises, increase incentives for capital spending by businesses that will increase their ability to lower cost and hence profitability and generate employment.

Besides, an aggressive spending on power, resolving the Niger-Delta militancy crises will go a long way to boosting oil & gas production.

It will not be out of place if we transit from growing agriculture business to agriculture industrial basis. The government can offer incentives to companies by adding value and process their raw agriculture product to semi and finished goods. A Tax can be levied on agriculture exports with no value-addition with the proceeds used to finance incentives for value adding agriculture focused businesses.

Ours is a recession with unacceptably high interest rate regime and high unemployment. Our approach to coming out of the economic woods must therefore be thought-through. It is acceptable that companies will claim that they are cutting back on operations due to scarcity of foreign exchange. I was hoping that in the liberalized FOREX regime, FOREX can be obtained at market prices and it should be a matter of having the Naira cover.