Romanus Ugwu, Abuja
Business mogul, Jimoh Ibrahim, has cautioned the Federal Government to put adequate measures in place to cushion the effects of world economic recession expected before December this year.
Ibrahim revealed that balance sheet of the leading economy in the world, America, “is having a deficit of about a trillion dollars in import while China is coming to Africa with money for investment.
Speaking with newsmen last weekend in Abuja, the billionaire businessman said it was high time President Muhammadu Buhari took his anti-corruption fight to Ministries, Departments and Agencies (MDAs), by merging ministries as part of preparations for the unavoidable world recession.
“We don’t have to be prepared for it or not, it is something that will break out anytime from now and you have to get ready and it is good that we are predicting it now before it happens and not many people know and maybe the Federal Government may not know that another world recession is coming, but it is going to happen before the end of December. This recession has a very interesting phase; the phase of massive failure of government as opposed to company failure.
“The last recession in 2008 companies went down, G-Electric, Fourth Foundation, Lehman Brothers and so on, but this time round it is going to be both government and companies that will collapse.
“So, the recession is coming, it is unavoidable. America’s balance sheet is having a deficit of about a trillion dollars in import and China is growing heavily and coming to Africa with money,” he said.
Asked what the Federal Government should do to prepare for the impending recession, Ibrahim said, “preparation in Nigeria depends on the system, which is not just about the President. We have been having corruption fight but we have to take the fight to the Ministries because a lot of corruption goes on in these areas.
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“EFCC is doing a very good job but maybe they will have to divide themselves into two sectors; public model corruption and systemic model corruption whereby no matter the small amount of corrupt you do, the EFCC will investigate and invite you the way we invite the big guns, which means silencing corruption in the system and the upper ones will sustain themselves in a standard that is acceptable and by the end of the day you get a level.
“When you clean up corruption at the upper level and the system is still eroded in corruption, then you might have to come back to fight the system again and before you finish that, the upper one cleaned might have graduated again,” he said.
While commenting on Nigeria’s foreign debt, Ibrahim said, “no economy in the world has that; that is a fantastic opportunity. That could be seen as a great news as opposed to being seen as a bad news. But the problem here is where the sadness is; when Nigeria goes out to borrow money, it may not get it even though it has a fantastic matrix, which is 20 per cent GDP to debt ratio but that won’t give you money which is sad.
“Matrix is GDP to revenue. The lender wants to know what is your capacity to pay back the debt and maybe it is about 8 per cent. Will you lend to someone whose capacity to pay back is about 8 per cent? The answer is no.
“Again, where the great challenge is now is GDP to reserve. Take away $33 billion CBN reserve from $42 billion, you will probably have about $10 billion or thereabout, so GDP to reserve is not very promising. For me as a lender, I will not give you money if your GDP to revenue is not positive and your GDP to reserve is not interesting.
“Now, if you compare UAE GDP to debt ratio, it’s high, so debt is about $146 billion and two million people and GDP to revenue is about 70 per cent guaranty that you can go to sleep and you will get back the money.
“So for me, I think it is about matrix but with the synopsis I am looking at in the doctrine level now in the Nigerian context, would you say that five of our abandoned projects are worth the size of our debt?
“Let me name them straight away – Ajaokuta, $5 billion; Adeja Dam project, $3.5 billion; Okopia power plant was done about $1.8 billion or thereabout; these are yanks of abandoned projects.
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“So how many abandoned projects do you have? If I look at your economy in real sense, I see about 11,980 abandoned projects out of 12,000, about 62 per cent projects that have been abandoned from 1970 to the present day and it gets terrible when we miss this; it is not about doing new things and running new infrastructure.
“The real point for Nigerian context is what do you do with your abandoned projects? Are you going to borrow money to commence another abandoned project? So, if you have a great number of 11,000 abandoned projects, there is a huge pop for anybody who is in government to work because even if you have no timetable of your own, you pick these abandoned projects and complete them.
“Once you do that, unemployment will disappear, inflation will go down and then what happens, your matrix will begin to go up like GDP to foreign reserve, GDP to revenue and current account balances.
“If government completes abandoned projects, it creates jobs, gets inflation out and then people live very well, reduce poverty and have a better economy but if you take 11,000 abandoned projects right now and at the same time you are spending $200 million on new projects, which is what our budget is every year, then obviously there is a mismatch. This mis-allignment will stop whether you like it or not.”
