Nigeria’s economy in stagflation- Says Prof. Ekpo
.Calls on Buhari to change the structure of economy
By Udeme Clement
Akpan Ekpo, is a professor of Economics, the current Director General, West African Institute for Financial and Economic Management, WAIFEM. He is former Vice Chancellor, University of Uyo, Akwa Ibom State, also former Director, Central Bank of Nigeria, CBN. He spoke in this exclusive interview with Financial Business on the state of Nigeria’s economy and the need for government to change the structure of the economy for greater growth.
As economic expert, what is the state of Nigeria’s economy at present?
The good news is that President Muhammadu Buhari has been able to get Nigeria’s economy out of recession. However, the nation’s economy is currently in stagflation phase. For instance, inflation rate is still double digits. Poverty level is very high, unemployment ratio in the economy is at the crisis level, about 34 percent right now and even rising among the youths.
Looking at the alarming rate of unemployment in the country, how would you assess the economy under the leadership of President Buhari in the last three years?
In economics, there is what we call lag structure. This implies that if you put economic policies in place, it would take a while for such policies to yield positive results in terms of the outputs in the economy. Therefore, the problems facing Nigeria’s economy, which started about 16 years ago, cannot be fixed in just less than four years. As such, the infrastructure and policies this administration is putting in place would take a little more time to achieve the intended purpose.
Let us be objective in analysing the economy. For instance, the signs of economic crisis and the nation’s economy not growing optimally began since 2011. Economic experts warned government but nothing was done to current the situation in time.
Also, before the economy entered full recession two years ago, I personally warned the government that our economy was at the tip of a recession. Other economists gave similar warning, but nothing was done, until the economy entered full recession.
In terms of performance, whether we like it or not, Buhari has been able to get Nigeria’s economy out of recession. Also, this government is putting infrastructure in place, such as the railway project from Abuja to Kano and other States across the country. The school feeding exercise is still on-going, as the pupils are being feed with items from our local farmers. Agriculture is doing relatively well. Also the service sector is doing well.
Looking beyond these areas, the economy is still experiencing many problems. Government has not been able to improve power supply, the public school system is in disarray, our health sector is in nothing to reckon with, there is high poverty rate, as well as unemployment, as I mentioned earlier.
Though inflation is high, for the past one and a half years, inflation rate has gone down 18 times. Exchange rate is relatively stable.
Looking at exchange rate, some people are of the opinion that the rate is still very high. Do you share similar view?
At the moment, the exchange rate is about N362 per dollar. In reality, this is not the suitable exchange rate the economy ought to have, but the good thing is that the rate is relatively stable given the nature of our economy.
What do you think can be done to shore up the naira? The truth is that crude oil export alone would not solve the problems facing our economy now, because this is a commodity we do not even have control over the price and output. Therefore, for the government to improve our local currency, we must be ready to produce more goods for export, as this would enable us to shore up the naira.
In the same vein, we have to use our foreign exchange to boost production and not just consumption, as it is right now. The Federal government alone would not be able to address all the problems, therefore, the sub-national governments, that is, the States and local governments should be actively involved in economic growth and development.
The housing sub-sector in the country according to some experts has a huge deficit. What is your take on this?
The truth is that Nigeria has a lot of housing deficits. Many people don’t have houses. Government should give urgent attention to the housing sub-sector, because housing construction can create thousands of jobs for the citizens. Therefore, housing/construction would automatically reduce high unemployment rate in the country.
As a professor of Economics, what would you advise President Buhari to do, in order to rejuvenate the entire economy?
Let government change the structure of Nigeria’s economy from consumption to production. This means that our system must change from being only a consuming nation to a producing economy. This also implies that government would have to diversify the economy and revamp real sector for optimum growth.
Also, government can create more jobs by employing people in the Police, Navy, Customs, Immigration, Army and other security agencies, because we need security in the country. What I am saying here is that, for us to tackle unemployment crisis, deliberate government’s intervention is needed. Government should be ready to create public sector jobs. This can be done by opening up the Civil Service to create more jobs in Civil Defence, Air-force and State Security Service, SSS, among other agencies.
This is segment-2. Watch out for the next segment of the interview on, ‘Currency swap agreement between China and Nigeria’, as well as the financial sector performance under Buhari, in our subsequent report: