20
Sat, Jul


Another recession coming, govs warn

Chairman of the Nigeria Governors Forum (NGF) and Governor of Zamfara State, Abdulaziz Yari, has warned incoming governors to be prepared for another cycle of recession.

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

He gave mid-2020 to third quarter of 2021 as circle for the looming economic decline.

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

The NGF chair reminded the governors and incoming ones that it would not be a smooth ride as they begin new administration on May 29.

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, Yari 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, the NGF chairman 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.”

He urged the incoming governors to think out side the box to boost their states Internally Generated Revenue (IGR) to enable them meet the demands of the N30,000 new minimum wage.

Meanwhile, Osinbajo has said no complaint about paucity of funds from the governors and newly elected ones is new under the sun, arguing that the Muhammadu Buhari administration has in the past three years intervened through loans, bailouts and Paris Club refunds to the tune of well over N1.1trillion.

“This represents the highest amount of Federal Government’s extra statutory allocations and interventions to States in Nigeria’s history and we are proud to say that there were no discriminations along party lines.”

Osinabajo, therefore, asked governors to boost internally generated revenue (IGR) in the next four years to reduce poverty in their state.

He said the consequences of boosting state’ IGR would mitigate the challenges of malnutrition, illiteracy and out-of-school children.

The vice president added that the Federal Government was prepared to embark on historic all-party cooperation to better the lives of all citizens.

On the minimum wage he said: “Lagos State, the highest internally generated revenue earner was earning N600 million in year 2000 when minimum wage was increased from N7,500 to N18,000, about 140 percent increase. We are confronted again with the new increase in minimum wage, and the same problems that increase in minimum wage mean, so as scripture says, ‘there is nothing new under the Sun.’

“We must confront the problem, not merely by hoping that the Federal Government can do more, because that may not necessarily offer much hope. Already, our deficit is close to N2 trillion, while debt service to revenue is somewhere in the order of 54 percent

“States must in the next few years earn more in IGR. We must more effectively collect VAT and increase our agricultural output, work with the Federal Government to make broadband infrastructure available all over the country, so our young people anywhere in the country can do jobs from anywhere in the world, from their villages in any corner of Nigeria.

“If a state is charging for right-of-way from communications companies and is hindering the laying of cables and other broadband infrastructure as an IGR measure, permit me to say that that will be penny wise and pound foolish. To tap into the millions of jobs in technology and other services that a country like India, for example, has tapped into, requires broadband infrastructure across the country.

“There is no other way of doing that except by dropping the idea that we can benefit on just the laying of cables and providing infrastructure. We must as a whole, allow a situation where broadband infrastructure is available everywhere. All the governors at the National Economic Council have all agreed on a pathway to make this happen.”

 

https://www.sunnewsonline.com/another-recession-coming-govs-warn/

Featured Video