Blame President Buhari, CBN for Nigeria’s economic problem – International agency

– A financial and economic management institute has blamed the President Muhammadu Buhari led Federal Government and the CBN for the Nigeria’s current economic woes and its recent plunge into recession

– West African Institute for Financial and Economic Management through said the delay in passing and implementing the 2016 budget and the CBN’s monetary and foreign exchange policy stance helped worsened the country’s economic situation

President Muhammadu Buhari

A financial and economic management institute has blamed the President Muhammadu Buhari led Federal Government and the Central Bank of Nigeria (CBN) for the Nigeria’s current economic woes and its recent plunge into recession.

The institute, West African Institute for Financial and Economic Management (WAIFEM) through its director-general Professor Akpan Ekpo said that the delay in passing and implementing the 2016 budget and the CBN’s monetary and foreign exchange policy stance helped worsened the country’s economic situation.

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“There was a near absence of fiscal policy – the economy lacks the necessary fiscal buffers. Money and exchange rate policies were the only voice.  Rather than implementing quantitative easing, the CBN was interested in tightening monetary policy. When an economy is almost in a recession, monetary expansion would help towards recovery,” he told Vanguard newspaper.

He faulted the CBN’s foreign exchange framework was another policy in the wrong direction. He said rather than implementing a robust managed exchange rate regime, the CBN allowed the naira, which is not convertible, to float freely looking for a non-existent stability and equilibrium in both the short and long-terms.

“When a commodity is in short supply, market forces cannot determine the ‘correct’ value.  The only source of foreign exchange for the economy is crude oil export, hence unrealistic assumptions under a competitive market cannot work in the foreign exchange market,” he added.  

 “The delay in adjusting the band of the value of the naira to the dollar, when the market provided a guide through scarcity, heightened the crisis. If recession persists, monetary, fiscal policies would be ineffective.”

Ekpo said the Federal Government should place emphasis on spending on capital projects and recurrent expenditures, especially in the area of payment of salaries owed workers, while also increasing its spending on power, roads and other  infrastructure.

“I hate to disappoint Nigerians, the private sector cannot get us out of the recession. Government must lead for the private sector to follow until recovery sets in. As part of stimulating aggregate demand, the social programmes in the budget must be implemented urgently.

“Furthermore, government has no choice but to borrow externally and domestically to spend and get the economy out of the recession.

“Our economy consumes what it does not produce, hence there is need for a re-orientation for citizens to prefer locally produced goods and services. Heavy tariffs must be placed on imported goods and services. Lending rates are just too high to revamp the real sector.”

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“Government must be strategic and think outside the box by grafting policies and programmes which would enable potential investors produce and supply both domestic and external markets. “There has been too much emphasis on producing to earn forex; we only need a productive economy and other things would adjust.

‘’However, it must be noted that recessions are regular occurrences in a capitalist economy, hence the need for proper economic management in order to minimize its adverse effects. “There is no doubt that this recession would pass away but another one would come, for no two recessions are alike. Therefore, managing an economy is not a tea party,” he added.

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