Last Tuesday, in faraway Bali, Indonesia, the Deputy Director, Research Department of the International Monetary Fund (IMF), Gian Maria Milesi-Ferretti observed that Nigeria’s economy is not presently doing well.
Addressing journalists at the annual meetings of the IMF and World Bank, Milesi-Foretti said that the aggregate growth rate of Africa is holding down the continent’s three largest economies which include Nigeria, South Africa and Angola because of slow growth. “The aggregate growth rate for the continent is held down by the fact that the three largest economies are not performing up to their full potentials,” he said.
The Tide notes that the assertion of the IMF’s research director is coming few weeks after the Central Bank of Nigeria’s Monetary Policy Committee (MPC) had at the end of its two-day meeting at the bank’s headquarters in Abuja said the economy had started showing signs of weakness. CBN Governor, Godwin Emefiele said the committee was concerned that the exit from recession may be under threat as the economy recorded growth of 1.95 per cent and 1.5 per cent during the first and second quarters of the year, respectively.
According to him, the slowdown emanated from the oil sector with strong linkages to employment and growth. He also listed some of the risk to output growth to include late implementation of the 2018 budget, weakening demand and consumer spending, risking contractor debt and low minimum wage.
Therefore, the IMF’s research director’s contention that the economy would do much better once these economies are on more solid footings, particularly Nigeria and South Africa, because they are really large and affect a number of countries in their neighbourhood, was in order.
The IMF had, at the beginning of this year, projected that Nigeria’s economy will grow by 2.1 percent in 2018 and 2.3 percent in 2019. On its part, the World Bank had 2.5 percent growth forecast for Nigeria.
Also, the IMF projected that inflation in Nigeria would increase to 13.5 percent next year, contrary to the 1.8 percent obtained in the year. We are fortunate that we have a world body as useful as IMF to forewarn us of inherent dangers in the bad implementation of economic policies, but the nation seems not to take these warnings seriously.
It is time we go back to the Federal Government’s Economic Recovery and Growth Plan (ERGP) which has been acclaimed by the world bodies, including IMF, as a good post-recession road map to guide us to future survival and sustainability.
As severe as the nation’s economic problems are, it can reverse itself if the government can put the right policy in place. The slightest thought of taking Nigeria back to 2016 recession is too frightening, and so, urgent steps should be taken to strictly implement the 2018 annual budget which has been a subject of disagreement between the legislative and the executive arms of government.
The Federal Government should take advantage of the current rise in the price of crude oil to revamp and return the nation’s oil infrastructure and other sectors of the economy in order to bring Nigeria back to its footings.
The gap between the parallel and official forex market rates should be bridged to avoid inflationary shock, while reversing the declining trend in the GDP which is required in sustaining the current momentum in the implementation of the government ease of doing business, as this would help bring down the operational cost of investors.
The economy should be opened up to benefit more local investors. The harsh tax policy should be reviewed to encourage the private sector. The policy as it is now discourages local investors, leading to folding of companies and huge job losses.
On a final note, we concur with IMF’s recommendations that fiscal consideration should be accompanied by tight monetary policies to reduce inflation.