The Senior Economic Adviser of the Africa Economic Development Policy Initiative and the initiator of Bring Back Our Girls (BBOG) project, Dr Oby Ezekwesili, yesterday, joined the league of prominent Nigerians opposed to the sale of Nigerian National Petroleum Corporation (NNPC) and Nigerian Liquefied Natural Gas (NLNG).
The former Education Minister in a statement made available to Daily Sun, Monday, said “I am opposed to the sale of any productive assets like the NLNG because there seems to be no clear economic vision and rigorous analytics to serve as the anchor for such a major policy thrust. We need well deliberated policies from our government including the plans for revitalisation of the programme of privatisation being run by BPE to properly situate public debate of economic structural change agenda. After all, even in our country, there is now proof that the economy can relatively respond to deliberate, well thought and rigorous analysis of context and sound policy options in resolving growth and development problems.” But for the refineries, she said that the government can proceed urgently through the Bureau of Public Enterprises (BPE) to sell them off, because, according to her, they are acesspit of corruption in the petroleum sector, stressing that their sale would amount to fiscal savings and should therefore be supported by all.
Exekwesili however, regretted that at the inception of this administration, on May 29, 2015, when the economy showed signs of strait, the government did not act fast to prevent the present economic situation.
“The parlous state of the Nigerian economy on May 29, 2015 should therefore have instructed an incisive and urgent macroeconomic stabilisation programme to realign price levels in the economy. If a menu of sound monetary and fiscal policies that the economy needed on May 29, 2015 had been provided, it would have sent the right signal to players that there was no cause for alarm. Had the government made quick and necessary adjustments that corresponded close enough to the level of impact that a 40 per cent sharp drop in government oil revenue necessitated, the story would most likely be less negative today.”
She further noted that “With inflation- nay, stagflation- now at high double digits of 18 per cent , with the decline of foreign reserve from $37.3 billion at end of 2014 to $25billion in September 2016, with an “administrative-floating ” exchange rate regime that still creates enormous opportunities for corruption and rent seeking arbitrage, with a high interest rate that poses a stress for the financial sector because of deteriorating bank asset quality as well as for limited access to credit by the real sector, with a continuously declining aggregate demand, with a shrinking gross domestic product, with 2016 budget deficit level of $11billion that still has unclear sources of financing;
what more do we need before citizens stepped up a demand for the government to retrace its steps from its string of unsound economic policies?
According to her, “the most critical challenge that needs resolving is how to convince the Federal Government to urgently retrace its steps back to three critical things it failed to do since May, 29, 2015, including failure to launch a deep fiscal consolidation programme, implementing monetary policies that failed to adjust to reflect new realities, and inability to present the most ambitious structural reforms ever that can materially improve the productivity and competitiveness of all potential existing and new sources of economic growth.
She said “The third action could achieve the four decade-long diversification goal and help build a resilient economy that is insulated from the volatility of oil prices in the future.
These three broad actions were and still remain the key things mandatory for the economy to regain the lost macroeconomic stability that will drive growth recovery, move us to economic development and shared prosperity”
Ezekwesili also urged the government to stimulate the economy through spending. “It is good economics to stimulate economy through increased government spending in a time of recession. So, there is a place for the stimulus spending proposed by the government. However, the economic vision that will arrest the macro imbalance in the short run must be deeper than the proposed plan to “spend, spend and spend”.
In view of the ugly signs of the economy, Ezekwesili, called on Nigerians to demand that the government applies good economic policies to bring the economy out of the woods.Government spending has been the albatross of our economy” the former Minister of Education, said, but insisted that Muhammadu Buhari government should do the first thing first. Change should begin with those who promised Change!” she said.
“The Federal Government should do the right first things.
After all, if massive government spending were to be the solution that can fix our economic failures, then they should never have happened in the first place based on our public expenditure record.
The evidence that backs this is that it was a modest range of such sound economic policies that helped deliver an average of 5-6 per cent growth of our economy on a sustained basis over a long period of nearly a decade and half. It was only recently at the end of 2015 that growth dropped to below three per cent” she said.
“There is a new level that our post 2014 oil-shocked economy must find for stability in order to stop tottering reason and so we do need a string of policy responses that can enable this happen quickly. Such responses would have helped the economy absorb the shock, reassured investors and consumers, and thereby helped reasonably retain investor confidence. But that did not happen. The attendant fiscal pressure and the delayed right policy response were severe enough that by the end of 2015, economic growth sharply declined to 2.7 per cent.
“It was a major mistake that the economy did not get the timely and right type of policies that could have helped us avoid the calamitous collapse into negative growth in the last two quarters of 2015 that finally led us into a recession. The signals of statist economic policy preferences did in fact worsen matters and set off the wave of uncertainty that dented investor confidence in the economy. So, it is accurate to conclude that both the preceding and the successor governments conspired by their actions and inactions to throw the Nigerian economy into the deep rut from which it must be rescued to avoid social implosion” the senior economic adviser, said.
“All the sobering data are indicators of hugely deteriorating macroeconomic indices. The more such indices deteriorate, the harder it is for growth to resume. The macroeconomic stability that poor choice of economic policy helped to unravel within one year had itself taken many years of arduous work to achieve. When therefore one hears the rather simplification of the economic recovery antidote being espoused by the government as “we shall spend our way out of recession”, it heightens anxiety. When one further hears that the sale of assets- especially some productive ones – is being proposed as key contribution to the Budget 2016 deficit financing options of the government, the immediacy of opposing such intention becomes self evident.