By Omoniyi Salaudeen
Both the domestic and global economic forecast for the New Year is not a cheering one. Domestically, Nigeria’s economy is full of uncertainty. At the global level, the latest prediction by the International Monetary Fund (IMF) is so consequential that it will require some immediate proactive measures for the government, businesses, and individuals to be able to stay afloat in the face of another looming recession.
In its latest glooming prognosis, the Managing Director of the world financial body, Kristalina Georgieva, said that “we expect one-third of the world economy to be in recession in 2023.”
And given the vulnerability of Nigeria’s economy to external variables, it is imperative for the government and individuals to prepare for the worst-case scenario.
Some prominent economic experts who spoke with Sunday Sun warned the Federal Government not to discountenance the predication or relapse into its self-comforting belief that Nigeria is immune from the global trend.
An erudite Professor of Economics at the Babcock University, Illisan, Ogun State, Segun Ajibola, while speaking with Sunday Sun, challenged the Federal Government to begin to evolve the necessary macroeconomic policy that would stablise the economy ahead of the looming economic downturn.
He said: “The management of the macroeconomic variables is in the hand of the government. And when we say government here, we are referring to the Federal Government. It is the trickle-down effect that we see at all levels, including individuals and households. So, if we are talking about how to manage those variables, they are more or less strategic approaches coming from the centre. For instance, inflation, exchange rate, subsidy, and the issue of recession are national phenomena. They are things that radiate at the centre.
“If we are looking at how to manage them generally, we have to look at strategic approach at the centre. To complicate matters, some of these issues have international dimensions like inflation. There is what someone referred to as imported inflation, which is part of our problems because we are vulnerable to imported items, including food. If there is inflationary pressure from the countries of origin of those products, they will be imported to our side. That again is further complicated by the value of our currency.
To mitigate the effects of the external variables on the domestic economy, he suggested some immediate measures the government can adopt far ahead of the imminent global economic crisis. These include curtailing the inflationary trend, restriction on importation as well as the increase in the productive capacity of both the manufacturing and agricultural sectors.
“To curtail the rate of inflation, therefore, we have to import less by producing what we eat so that we can take away the burdens associated with imported inflation significantly.
“Government should generate more power to reduce reliance on diesel so that the cost-push inflation will also be manageable.
“With the World Bank projection, we need to start asking ourselves what we need to immediately put in place so that by the time the recession is stirring most economies in the face, we will not be caught unawares. We need to enhance local production to reduce our overreliance on the rest of the world and also sustain the aggregate demands and incomes of Nigerians. We need to create incentives for the various sectors of the economy, manage the tax regime, control inflation, and the foreign exchange market. If we can correct these things now, by the time the global phenomenon comes, we would be very well prepared for it.
“In 2007 and 2009 when there was the capital market crash in the US and the government refused to heed the warning to prepare for it, when the thing got here, the Nigerian capital market collapsed.
“We need to put measures in place not to assume the posture of ‘we will not be affected.’ Let us first start with the worst-case scenario. If 1/3 of the global economy will be affected by the recession, it is very likely Nigeria will be affected too. Let us prepare ourselves for the worst-case scenario while hoping for the best,” Prof Ajibola advised.
On the part of individuals, he recommended multiple steam of income, stringent financial discipline, and a total change of orientation that allows for extravagant spending to reduce the negative impact of global inflation.
“For individuals to survive, people have to make themselves less vulnerable by evolving multiple sources of income and producing what they consume. For instance, if you can grow your cassava, vegetable etcetera, you will save yourself from inflationary pressure. We also need to change our orientation and our lifestyles. If what I can afford is an Aba-made shoe for my family, why should I force myself to buy an Italian shoe? There are so many items we can substitute with locally made ones. We need to reduce our consumption habits to reduce the inflationary pressure,” he posited.
Prof Tayo Bello, Adeleke University, Ede, Osun State, also shared a similar view, urging the citizens to embrace what he described as Personal Adjustment Programme (PAP) change or Family Adjustment Programme (FAP).
His words: “The IMF prediction that there will be another economic recession will surely come to pass because there are no statistics they have given us that we don’t know already. For instance, we still have banditry, kidnapping, and robbery going on in the country. Security is rising on a daily basis. In some states, you cannot go to the farm without paying the bandits. So, we will only be deceiving ourselves if we think that we can escape what the World Bank has predicted.
“For everybody to escape what is before us, we must do two things-Personal Adjustment Programme (PAP) and Family Adjustment Programme (FAP). During the Babangida era, we had Structural Adjustment Programme. In this case, a personal or family adjustment programme is both structural and strategic. Everybody needs to plan how to live according to the limit of his resources.
“For example, I have two cars – one SUV and a smaller car. To fuel the SUV at the current price of N250 per litre, I will spend about N25, 000 to fill the tank. What stops me from shifting to the smaller car, which will only cost me N15,000 to fuel for three to four weeks? You call yourself a big man, but you cannot go to work on public transport. What makes you a big man when your economy is not big? A bag of rice is now hovering between N50,000 and N56,000, there is no problem with that. Cook whatever you can afford.
“The Minister of Finance recently said that the Federal Government had been borrowing to sustain fuel subsidy. What kind of economic theory supports that? Whether or not will like it, the regime of subsidy is no longer sustainable. It is either the government removes the subsidy or the subsidy will remove itself. It will get to a level they won’t have money to borrow again.
“During the Jonathan era when the government increased the pump price of fuel, Tinubu criticized it and people converged on Gani Fawehinmi Square at Ojota dancing Shoky. But surprisingly, about two days ago, the same Tinunu said that ‘he would remove subsidy if he gets there because subsidy is only benefitting the rich.’ I was shocked. We have played politics with subsidy for too long. If the government removes subsidy and divert the money realised to providing infrastructure, we will spend less time in hold up because of bad roads and reduce the amount of money we spend on fuel consumption.
“Our own lifestyle is even better; we don’t go beyond our economy. I pity the young ones who are living beyond their incomes. Many of them prefer to take UBA and pay as much as N25,000. They will not stay in an apartment they can afford. They will go and look for a flat of about N1.5 million. How much are they earning? Those are some of the problems we need to tackle. Let everybody both individually and collectively go into what is known as PAP or FAP.
“It is only in Nigeria that you see people putting on security lights even in the daytime. In other climes, as you are stepping out of your room into the living room, you put off the light. It is even automated in some countries like Switzerland. As you step out, the light goes off automatically. These are some of the adjustments we need to make to stop putting unnecessary pressure on our finances.
“We need to stop extravagant spending like Owanbe and Aso ebi. I read on the Internet that a woman said she saved over N3.5 million between January and December 2022 by not buying Aso ebi. That’s a lot of money. Our consumption patterns and the way we do things should be adjusted. Once you have proper planning, 50 per cent of the problem will be solved. We need to change our attitude, we need to change our orientation.”
Chief Chekwas Okorie, also corroborating the same viewpoint, identified the colossal amount of money the government spent on sustaining oil subsidy, as well as the general ostentatious lifestyle of the people as part of the factors responsible for the dismal state of the nation’s economy, urging a drastic change of attitude.
“There has been a prediction of the worldwide economic downturn in 2023 and Nigeria is even more vulnerable than most countries because of our situation and population. We are also going into another election as well. Everybody agrees that subsidy removal is the way to go, but the fear of labour and the political implication of taking that drastic decision has made the government shift it to the incoming government. Whether incoming government or not, it is about time it is done. If the heavy amount of money that is used in subsidizing fuel is used to provide social services and amenities and expand the economy through infrastructural development, it will ameliorate the effect of the high cost of essential commodities. By removing fuel subsidy, the government will save a lot of money that can be used for other things.
“On the part of the citizens, everybody needs to cut his coat according to his means. If you have your car and you know it is more expensive to fuel it to go to work, park your car and use public transportation as it is done in other climes. When it is the weekend and your family has to go to church or mosque, you drive. In other climes, people hardly use their cars except on a few occasions like carrying family and friends when travelling together. I like what is happening in Lagos now with the blue rail project. I hope the Federal Government can do more in terms of rail transportation.
“The abandoned Port Harcourt/Maiduguri rail project which was stopped as a result of the Chinese not going ahead with the loan facilities, the government should immediately find other means of funding that project because that is one of the projects that will help the movement of goods up and down the country, including the seaport for those who are exporting. That will also save our roads from collapsing.
“People must cut down some of their excesses. Certain things we take for granted before should be put into consideration. We use many things extravagantly and turn around to blame the government. When you cut some of these things, you will see so much you can save even in one month or a day,” he argued.
The overall summary of the arguments is the need for a change in the behavioral pattern of the government, as well as individuals, as a key factor in the strategy to survive the hard economic situation that lies ahead.