Governors warn of looming recession in Nigeria, reveal when economy will decline

0
135

The Nigeria Governors Forum, NGF, has warned newly-elected governors awaiting swearing-in to be prepared for another cycle of recession, and gave mid-2020 to third quarter of 2021 as circle for the looming economic decline.

The NGF Chairman and Governor of Zamfara State, Abdulaziz Yari, raised the alarm at the opening the ceremony of induction programme for newly-elected and returning governors put together by the NGF Secretariat at the State House Conference Center, Abuja.

Nigeria had officially entered a recession for the first time in more than two decades in August 2016, according to figures which showed that the economy had contracted for a second consecutive quarter.

Nigeria’s gross domestic product contracted by 2.06 per cent in the second quarter, the Nigerian Bureau of Statistics, NBS, has said. GDP shrunk by 0.36 per cent in the first quarter, amid low oil prices and slashed production due to insurgency in the Niger Delta.

Yari said the outgoing governors have agreed that borrowing is never a reliable alternative to solving economic problems and appealed to incoming ones and other tiers of government to multiply revenue generation bases to change the course of doing government business for the betterment of the people.

He reminded the governors and incoming ones that it would not be a smooth ride as they begin new administration on May 29, pointing out that while the crude oil price was over $100 from 2011-15, the price noise dived to less than 75 percent from 2015 leading to recession.

The NGF chair said, “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.”

While stressing the importance of seeking reliable alternative funding away from the federation account, Yari noted that the NGF and the National Economic Council led by Vice President, Yemi Osinbajo, have agreed that “borrowing is never a reliable alternative to solving our economic problems.”

The NGF chairman urged the incoming governors to think outside the box to boost their states Internally Generated Revenue, IGR, to enable them meet the demands of the N30,000 new minimum wage.

Leave a Reply