The Nigerian Governors’ Forum (NGF) has told Nigerians and the newly-elected governors to brace for another cycle of economic recession about middle of 2020 to the third quarter of 2021
The chairman of the forum and governor of Zamfara State, Mr. Abduaziz Yari, raised the alarm at the opening the ceremony of induction programme for newly-elected and returning governors organised by the NGF in Abuja on Monday, April 30.
He told the incoming governors that their tenure might not be so rosy due to paucity of funds to execute projects and also pay salaries in their respective states.
Yari also told the new state chief executives to seek reliable alternative funding from the federation account.
He said the National Economic Council (NEC) had agreed that “borrowing is never a reliable alternative to solving our economic problems.”
He stressed that there was a need for the governors to look inward by boosting their internally revenue generation base to enable them pay the N30, 000 new minimum wage.
“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 per barrel between 2001 and the middle of 2014. However, by the 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 these kinds of challenges, 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. Also, as members of the National Economic Council, you must work hand in hand to boost the economy in tandem with the global best practices.
“Experience, they say, is the best teacher. Ours has been a challenging experience of managing state economies that are totally dependent on accruals from the federation account rather than exploring viable alternatives to run the economy. For most of the states, internally generated revenues are nothing to write home about. You must, therefore, look inward by boosting your revenue generation base and also utilise them effectively for execution of projects that would touch the lives of your people. You must not forget the high expectations of our people on us, now that the democracy is maturing day-in-day-out; the challenges of governance and service delivery are more demanding,” said Yari.
However, the Manufacturers’ Association of Nigeria (MAN) faulted the governor’s prediction saying the economy may not be growing at the speed expected but that even the World Bank and some other international financial organisations predicted that it would keep growing.
The president of MAN, Mr. Mansur Ahmed who stated this in an interview 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.”
Similarly, the director general of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the governor was not speaking in the capacity of an economist and did not provide proofs to back his projections.
“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.”
However, the registrar of the Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi, argued that except the federal government comes up with innovative measures to stimulate aggregate demand, the economy might slip into another recession by next year.
“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,” he said
