Prof. Chris Onalo is the Registrar/Chief Executive Officer at Institute of Credit Administration (ICA), President/CEO of the Postgraduate School of Credit and Financial Management which is Nigeria’s frontline credit management higher educational Institution for credit professionals. In this interview, he emphasized on the need for the Federal Government to work on various indices that will bring about economic recovery. Excerpts.
Nigeria just slipped into another economic recession, how did we get here?
In the first place, in all honesty, Nigeria has always been in recession. All the indices to define robust economy were not adequate, except that Nigerians themselves are used to living in a disappointing governance, so everything goes for them. Everyone is a master of economic turnout, however it turns out to be that people quickly make adjustments and that is the history of our failed governance. But if there is any peculiarity with the reality at the moment, then it has to do with the accumulation of poor microeconomic policy that has brought heavy depression on the outlook of the economy at the moment. It is again traceable to poor response to events that happened which have impact to cripple the economy. For the sake of currency, look at the emergence of the COVID-19 pandemic, I would not say that it has had a dramatic effect on the Nigerian economy, neither would I say that we saw it coming and we mitigated against the impact it will have, because we have never seen it before. We were rather waiting for the attitude of the other countries concerning managing it. So, our response was cut and paste. So, we cannot say that covid-19 brought extensional economic disadvantages to the country. The fallen exchange rate disparity has always been there and that is occasioned by lack of genuine commitment to industrialization. Nigerians do not produce, they rely on oil economy and the international oil market has not favoured us. So, obviously the economy will continue to slide downward as long as the manufacturing sector has continued to remain in comatose. The manufacturing sector has been struggling to produce surplus and feed the local masses and possibly export. The covid-19, of course, affected agriculture. The food crisis is unstoppable as a result of the covid-19 lockdown. Out of panic, people stayed back and businesses were locked down. This created a huge gap. The normal revenue that should be accrued to the government left and right as it were, were not flowing anymore. And in joining the global bandwagon, government responded by squeezing out funds from already depressed liquidities conditions of the country in the name of palliatives and we could not see the impact of the palliatives. It is very difficult to pinpoint what impact the government palliatives have had on revitalising or sustaining the economy. In my view, I cannot say that Nigeria suddenly found herself in a recession because Nigeria has always been operating in a recessive economic environment.
The Minister of Finance said recently that Nigeria is going to be out of recession by the first quarter of 2021, do you see this happening?
As I said before, on what basis? Out of a recession when there are no jobs? As we speak one pound is over N600, while one dollar is about N470. This makes a mockery to the whole process, it tantamount to mean that we are not good economic and financial managers. I do not see the possibility of the country recovery in the first quarter of next year. This is because any economic outlook that does not reflect in the business operating environment namely, the Small and Medium Scale Enterprises, SMEs will not make progress. When things start getting better for the SMEs, that is the obvious expression that things indeed are getting fairly better and the economy is responding. As long as this SMEs that constitute the larger size of our economy are still in depression, there is no amount of economic policy calculations that will convince people that the economy is getting better. If it has not trickled down to affecting the survival of the country’s core business operators, which are the SMEs, I do not see the economic outlook coming to pass.
How does the economic recession affect the average Nigerian?
Well, you cannot have the normal prices. This means the prices of goods will go up. In recent time, consumable items have gone up astronomically in the market. The reason being that the federal government has made the mistake of allowing petroleum products to become subject of market forces and the drivers of consumption economy. People who go to the market to buy what they will sell, are faced with the high cost of transportation. Then the owners of properties, the average Nigerians that are still living in a rented apartment, are faced with a high cost of rent to pay to the properties owners. It has a cyclical effect, that people are living in a new regime of high cost of living. If you look at all this and the government now comes to attribute the high cost of living to the fact that there is an unavoidable recession that has crept in, policymakers knows that it is not real. It affects everyone, money becomes very scarce and those who are paying foreign tuition fee are also hit by the high cost of buying foreign exchange. So, it affects everyone. What you were buying at a relatively cheaper rate before, has now gone up astronomically. When government is saying there is economic recession, it means an average Nigerian has to face the challenge of high cost of living. So, it has its effects on people, the condition of the mind of people. My advice is that people should continue with their normal ways of living, like being more committed, develop entrepreneurial spirit and refuse to be bogged down by the hypes about recession because we have always been living in a recession.
What is the difference between economic recession and economic depression?
Recession is something you suddenly found yourself in, following certain difficulties that came up, but depression is more interfacial. Depression shows that the right dose of managing the economy has not been given. That is to say that the microeconomic policy framework of the government is right but has not implemented the consequential effect which will make the economy to suffocate following the non-application, non-implementation of the policy inherent in micro-economy. If you don’t do that, the economy will be perpetually depressed. Where there’s low productivity, and the industrial sectors are not operating, there is also infrastructure decay, all this continues to depress the economy daily and I think Nigerians have been living in that state of economic depression. Economic recession could be triggered by global empowerment and government that has hitherto been doing its best to keep our economy from being in a depressive condition, suddenly found certain circumstances such as the pandemic with its full swing, coupled with the #EndSARS protest, which resulted to massive destruction and looting. And then, there is another #EndSARS that had lived with us which is corruption. People looted too much money from the collective treasury without government doing anything to bring them back. Those things are the elements that keep the economy in perpetual depression and then resulting to inability to attract foreign investment, and give rise to poor operating environment.
The country seems to be more vulnerable to economic recession. What advice would you give the government to avert a future economy crisis?
The government needs to endeavour to show realistic sense of purpose in governance. The economy hasn’t been in robust condition; all the economic triggers are in their lowest elb. Where is the electricity? At this point, we are still talking about 3000 to 4000 megawatt. It doesn’t make any sense. People are still burning generators. It doesn’t make sense and we know that these are the things the government can achieve if it is the only thing the government can achieve, let government provide 24 hours electricity to its people. I tell you, Nigeria will be a super economic giant in Africa. Look at other sectors that can create subsector, all the steel running mines, Ajaokuta steel complex is still in comatose. Do you know how much money we spent on that project? Oshogbo is also there. Till date we are still saying the same thing all over again. Should we not be able to build refineries, refine our own petroleum product and sell it to the local market and then down the line to some west Africa country? Why do we have to continue to import petrol. What is wrong with us? Laws that hold everyone to behave competitively and without killing the other sectors of the economy, do we have such laws? Yes, we have the robust national assembly. The country has an adequate representative at the Senate, at the house of representatives, the question is, what are we doing there and yet the population continues to judge. Over 200 million population, what percentage of people are active? We have a young population, so it is not about the Nigerian economy doing very well and that at some point we lost out. I cannot recall when the economy of this country was doing well. Our educational system that is supposed to bring about a vibrant economy is not doing well. What about the capacity building for tertiary professional bodies? The country cannot boost of good infrastructure. These things are neither here nor there. We are simply just existing as a country but the indices that are meant for economic prosperity consciously are not laid. So, there is no advice anybody can give, because we all know this, even the younger ones, that is why they are standing up to say we cannot allow this situation to continue to undermine our future. What the End Sars protesters were agitating for today should have been done four to five generations of young people backwards. They should have been the ones doing what the present young generations are doing now. It is unfortunate that the country can’t fund our education very well. Why can’t we define what the national expectations should be from our universities so that they can produce well-prepared individuals that can manage our resources for us.
Dangote is building 650,000 barrels refinery. How would Dangote Refinery impact Nigeria economy?
How I wish we could have more names to call apart from Dangote. This is a massive economy and it is oil-driven. If we want to open up the oil and gas industry in this country, we must refine our products ourselves. We have people who are also with Dangote that could set up refineries here and there. Yes, we must commend Dangote for his effort of working to make Nigeria self-sufficient in petroleum refining, but he cannot deliver alone. Government should simply set rules that is favourable to everyone. Government should initiate policies that encourage other people to come and invest massively in the setting up of refineries. After encouraging more investors in petroleum refining, it should then moderate the industry to make sure it is fair, such that it will not be taking certain advantages of a situation that suggests on the side of one person and it is not on the side of the other person. The government should be seen as impartial, just develop the policy that would govern everybody’s conduct, then you will see more of the refineries coming up. The government cannot manage the refinery, all they need to do is to leave it to the private sector, set up a very conducive policy that provides an equal level for everybody to strive and then ensure that nobody is found wanting. This will result in massive job creation. Nigeria as a country will produce more product and will be able to export it as well. I think this is a common-sense, without government, no individual can set up a business successfully in any country. Dangote is doing very well but cannot deliver to the ultimate and total expectations of this massive country called Nigeria.
What would you say about the cost of living index in Nigeria?
The cost of living index in Nigeria is quite high. We have said the poverty level is $1 dollar per day, but you see there are a lot of economic activities that are not fully accounted for in Nigeria and in my own opinion as a private economist, I don’t want to go into what they do to earn a living, but a majority of activities in everyone’s life that earns us a living are not unaccountable. To that extent, I will say no Nigeria is living below $5 daily.