Recession: Experts advocate effective fiscal-monetary policy

Idowu Abdullahi
Idowu Abdullahi

Some economists in the North-East have urged the Federal Government to formulate effective fiscal and monetary policies to prevent Nigeria from sliding into recession.

The experts including academics and financial analysts said the measure was imperative for building a vibrant economy and sustaining the gains recorded in the agriculture sector which enabled the country to withstand current global recession.

The experts spoke while responding to a survey by the News Agency of Nigeria on the global economic recession in Bauchi, Damaturu, Gombe, Maiduguri and Yola.

A recession is a period of persistent economic downturn or low level of productivity.

An economist in Damaturu, Yobe State, Dr Binta Yahaya, said several factors indicated that the world is sliding into recession.

She said, “in the UK and the U.S., rapid decline in productivity and high inflation rates have been reported.

“In Nigeria, there is too much money in circulation with low productivity level. Inflation is characterised by low per capita Gross Domestic Product. The GDP drops for two consecutive quarters and may last for about 10 months.”

She suggested that fiscal and monetary policies which might not have immediate benefits must be formulated to control recession.

The expert said such policies and plans must envisage natural disasters such as floods and pandemics, adding that over reliance on importation must be checked.

Yahaya noted that failure to properly manage recession would lead to low wages, high unemployment rate and borrowing.

“If you look at the current debt profile and ratio in the country, it is alarming and can lead to more recessions in the future,” she warned.

Yahaya, however, noted that all economies experience recession from time to time, but what matters is the ability to adapt through effective plans and policies.

Prof. Ibrahim Hassan, Department of Economics, Modibbo Adama University, said the Russia-Ukraine war subjected many countries to recession.

According to him, the disruption in the global food and energy supply chain, low production and the loss of investors’ confidence exposed many economies to recession.

He noted that investors were withdrawing their portfolios due to the crisis which negatively affected world economy.

“In this country; we are battling with inflation which has to do with dwindling oil revenue and lack of stable prices in the international oil market.

“Presently; there is a crisis in the currency market and it is responsible for the hike in prices of food commodities,” he said, stressing that proactive measures are necessary to guard against plunging the country into recession.

He urged the government to improve oil and energy supply to meet increasing demands, encourage productivity and boost its revenue base.

Also, a lecturer at the Department of Economy, Adamawa State Polytechnic, Yola, Jorome Jaimu, said the redesigning of the Naira note would affect the economy and escalate pressure on the Foreign Exchange in the country.

“This will not be good for the economy of the country at the moment. However, people are bringing out hoarded Naira notes printed since 2015. So, in other away it is going to help the economy,”

Similarly, a Senior Lecturer, Borno State University, Maiduguri, Alhaji Babagana, opined that insecurity and oil vandalism posed a serious threat to sustainable economic growth in the country.

The trend, he said, resulted to a comatose economy and investment constrained, low productivity unemployment and poverty.

The don listed inflation; rising energy costs, FOREX scarcity, and Naira depreciation as factors bleeding the Nigerian economy.

In the same, Mr Usman Dutse, Dean, School of Business, Federal Polytechnic, Bauchi, said the trend exposed Nigeria’s economy to frigile condition as major economic indicators showed negative signs.

“Unemployment rate has increased to about 33.3 per cent and inflationary rate 20.7 per cent with N41 trillion debt profile.

“Poverty level has increased between 43 and 46 per cent and Naira is trading N850 to a dollar at parallel market. The cost of living has gone up and the cost of production is also high,” he said.

To salvage the situation, Dutse advocated consistent economic policies, reforms and plans by the government.

“All these things are happening because of the persistent neglect or lack of consistency in the implementation of policies.

“There should be serious reform and attitudinal change from individuals, organisations and government agencies,” he said.

Corroborating the stance, a lecturer at the Department of Economics and Development Studies, Federal University Kashere, Gombe, Dr Mustapha Kabara, advocated austerity measures to cut domestic spending and ensure policy continuity to avert recession in the country.

This, he said, is part of the short-term measures to improve the economy by ensuring effective control of the government’s spending.

According to him, with the dwindling income as a result of the different factors affecting oil production, it became imperative for the government to take adequate financial measures to avert recession.

“It is also imperative for the government to ensure harmonisation of fiscal and monetary policies.
“Unfortunately, what we have is a vibrant and strong monetary policy but the fiscal policy is not working.

“Government should come up with a good synergy between monetary and fiscal policy so that the policy will be able to touch positively the demand and the supply side,” he said.

In the long run, Kabara said as the country prepares for election, it was desirable to ensure continuation of good policies of the incumbent administration for sustainable social and economic development.

“Inherited policy that are good can be fine-tune but not to be discarded as creating new ones is not healthy for the country, especially in an emerging economy like ours.”

He, therefore, suggested implementation of consistent policies, reforms and plans by the government.

For his part, Dr Abdulmajid Jamal, observed that Nigeria is moving towards self sustained economy in terms of food production.

According to him, with the country moving towards self-sufficiency in food production, it wasn’t going into recession anytime soon.

Jamal, who is a Chief Lecturer, Economic Department, School of General Studies, Abubakar Tatari Ali Polytechnic, Bauchi, decried heavy dependence of the country on importation of many items.

He said: “We are lucky becasue food is excluded from our importation. In most cases, we only import few things in food items.

“The major import that consumes our money was rice and now the economy is producing enough for local consumption. The import is far less even though it’s through smuggling.

“So, the country is moving towards a self-sustained economy in terms of food production but in terms of other things, we are not.

“We are moving towards food sufficiency but if care is not taken, we will lose that because the farmers are now heavily in use of herbicides, insecticides and chemicals.”

He noted that heavy application of chemicals would deteriorate soil fertility and make it barren not to produce effectively.

The practice, he said, contributed to global warming, devastating effects on the ecosystem and low production output.

He further attributed the inflation in the country to the importation of raw materials for manufacturing industries due to high forex.

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