Uche Usim, Abuja
As Nigeria officially slid into a second economic recession in five years over the weekend, a Development Economist and Chairman, Pan Africa Development Corporate Company, Mr Odilim Enwegbara has described the situation as worrisome, saying that the country may go into bankruptcy if it does not quickly exit the quagmire.
Enwegbara in a WhatsApp message to Daily Sun noted that given the kind of unproductive economic system Nigeria runs, the frequency of the recessions will begin to become shorter and shorter over time.
According to him, what has delayed the recession and has not morphed into a depression is the creative interventionist financial actions of the current leadership of the Central Bank of Nigeria, where for the first time in the history, startups, small businesses, blockbuster big businesses now get loans directly from the apex bank itself, especially in agriculture and import substitution manufacturing.
He said; “I have been saying it since 2016 that in less than five years the country will witness another but longer recession. I have also said that if care is not taken, the country could during the second recession go into bankruptcy.
“Ours being topdown, a dictatorial economic system, where the center dictates what happens in the economy, including things as minute as who gets water in any village, who gets healthcare center, who gets a new primary and secondary school, who gets road, etc., that will continue to make the economy redundant and unproductive. Because the center makes these economic life and decisions arbitrarily, the biggest investment any citizen has to make has since become in their ability to find how to get linked up with those running the central government.
“Since this is the structure in place, rather than competence and hardwork, it is mediocre and incompetence that have been the norm in Nigeria”.
He added that in the central government system where it is all about access to instruments of government, no one wants to take the kind of entrepreneurial risk taken elsewhere, especially when easy money could be made from the center.
This, he noted, became the genesis of Nigeria’s endless geometric progression in corruption, which is in the same direction with poverty, social exclusion and insecurity.
Enwegbara also listed ethnic and religious biases of the incumbent government, where to access government social infrastructure, one has to belong to a particular ethnic and religious group. “Happening on such ethnically and religiously sensitive nations like ours is why productivity has continued to suffer while economic sabotage is on the rise as never seen before in the history of Nigeria”.
He also pointed at insecurity as another factor that has further worsened the fragile economy, where herdsmen have literally and with the gut of impunity, terrorised farmers and businesses across the country.
“In such absence of businesses, remitting tax revenues and in the presence of such big government, high recurrent in the absence of high government revenues, borrowing to keep government going becomes the option.
“With such a high fiscal deficit year-in-year-out, and the corresponding borrowing, the cost of borrowing has to increase, especially domestic borrowing, where the government is fully immersed in the debt market in a way that crowds out potential real sector borrowers.
“Because of this, lenders needed high interest rates to justify lending to the government is completely dependent on debt for it to function on a daily basis.
“These high interest rates mean also high debt service obligations on the part of the government. So, increasingly, the government has spent most of its small revenues on debt service obligations and with the remaining simply on recurrent to the extent that there little or nothing left to investment in social and industrial infrastructure.
“It is this absence of infrastructure investment that has been driving the cost of doing business in the country and with the high cost of money majority of local producers are priced out of our consumer markets by imported similar products.
“So, with real sector economic activities stalemated, everyone seems to look up to government for their daily survival. In such a case, no one should expect a vibrant growing economy in place, and these are the drivers of recession in the country”, he explained.