Some key nuggets of economic policy as Nigeria struggles to survive recession

Dr. Olisa Agbakoba

By Olisa Agbakoba

I applaud the Governor of the Central Bank of Nigeria concerning the potentially transformational statement on the Foreign Exchange Policy. The impact of a single foreign exchange market will have the best possible outcome for the Nigerian economy.

 I am confident that well managed, Nigeria will be out of depression by the first quarter of 2017. Nigeria has been in recession from the last quarter of 2014 up to last quarter of 2016. A recession is characterized as a period of negative economic growth for two successive quarters as in our case. We have suffered five consecutive negative growths between Dec. 2014 to Dec. 2015.

Our situation got worse in the first quarter of 2016 when for the first time in about thirty years; the economy did not grow at all and actually contracted. The Report of the National Bureau of Statistics is likely to show a further contraction of the economy in the second quarter of 2016. So we are in depression but the good news is the new foreign exchange single market and the opening up of the petroleum industry to competition.

Even though the Government is still not showing us a direction in relation to its economic philosophy and agenda, the petroleum and foreign exchange pronouncements are clear indications that we are now moving towards a market driven, liberalized deregulated economy.

It is too early to say that we are out of the woods. There are several important critical nuggets of economic and other policy that must be made or taken by the Government of Nigeria, very quickly. The first is peace and stability. Nigeria is at low grade civil war caused by structural defects in our Federal system.

The President must address this as a matter of urgency by announcing a new balanced Federation. The process is very simple. All the president has to do is to present a bill to the National Assembly for the devolution of certain powers from the centre to the state and local governments.

Related to the problem of a fractured structure of Nigeria is the issue of insecurity. While government has done well on Boko Haram issue, many other issues create instability and impede economic investments. The President must deal with the Biafra agitations, which in my view are genuine grievances; The President must deal also with exclusion felt by the people of Niger Delta, who in my view have genuine reasons to feel aggrieved; The President must deal with mass poverty in the North, because it allows the festering of fundamentalism in the North. Boko Haram in the North is caused in part by underlying issues of hunger and poverty.

The President must have a strong public infrastructure policy to deal with our broken bridges, broken roads, no power etc. Mr Fashola has shown himself more than capable to lead an infrastructure transformation agenda that can clean out the infrastructure mess in Nigeria. The President will need to empower Mr Fashola.

Last but not the least is the need to strongly and urgently articulate the social benefits package for those Nigerians identified to be in desperately dire straits. Even though a political and economic agenda has not been set by the government, what is important is that the government is able to implement some of the critical nuggets of policy that I have identified. And I dare say there has to be a lot more elements of policy that can stimulate the depressed Nigerian economy.

We need massive stimulus not simply a reflection package of three hundred and fifty billion Naira. Again we need an effective import substitution policy. The reason Nigeria’s economy is depressed is simply because we import everything, export very little and produce nothing.

 Import substitution turns the story around. We should only import the very essentials and produce everything else in Nigeria. In this way we create millions and millions of jobs. But this policy can only work if the economic and investment ministers apply the correct fiscal and trade tariffs by building high walls to discourage useless import.

I hope that government policy will find the right balance between market liberalization and social   regulation that allows benefits, free education and the likes, so that millions of excluded Nigerians can be protected by strong government regulations and safety nets.

I once said that I was cautiously negative about Nigeria but with Governor Emefele’s statement on the single currency market, I can now say I am cautiously positive.

Dr. Olisa Agbakoba(SAN) is a Maritime Lawyer, and a Human Rights Activist