Former deputy governor of the Central Bank (CBN), in charge of Finance System Stability, Professor Kingsley Moghalu, has said contrary to claims by the Federal Government, Nigeria is not out of recession yet.
Instead, Moghalu said the country’s economy is going through “economic contraction” which, according to him, will take Nigeria more years to overcome.
After Nigeria slid into recession in 2016, in September 2017, the federal government formally announced that the country had exited recession, following a growth of 0.55 percent in the Gross Domestic Product (GDP).
In an exclusive interview with Daily Sun, the ex-CBN deputy governor said: “I think that the recession we have just come out from was the worst in nearly 30 years. It was, in reality, much more than a recession. I think it was a very momentous economic contraction that will take us many years to get out of.
“The ultimate test of an economy, in my view, not just as an economist, but, as a citizen, is not infinitesimal movements in GDP figures but in the state of welfare of the common man and woman. I think if we take that test, it is very clear that Nigeria is in a very unfortunate situation.”
Asked what Nigeria needs to do to get out of recession, Professor Moghalu replied: “There are two important problems we have in Nigeria right now. One is, of course, the question of jobs. We should do everything possible to improve the growth in jobs because that is what gives people spending power to resuscitate an economy. Number two is the power situation. I believe in power for all and power for all, of course, is a statement of many dimensions. It is a statement of the right that Nigerians have to have electric power as a very basic infrastructure in their homes. We just saw the collapse of the National Grid and all that and, I think these things are indication that there is deep systemic decay in Nigerian governance.
“So, in terms of jobs, I will say that we need to create jobs by doing the following. One, I believe that government should scrap the N5, 000 a month so-called social intervention programme. That is money down the drain; it is in economics what you call ‘an exhaustive transfer.’ An exhaustive transfer is just dishing out resources that do not themselves create any economic growth. What does N5, 000 a month do for somebody who is unemployed in a month?
“If you take N500 billion that they are budgeting yearly for that scheme of doubtful impact and create a venture capital fund, side by side with the private sector, say if they bring that N500 billion and the private sector brings in N500 billion, you could have a N1 trillion Venture Capital Fund together with the private sector. That is what will create jobs because jobs are created by businesses and robust economic activity across sectors. But, that Fund must be run by the private sector, so government is an investee in the Fund. If you allow the government to run the Fund, politics will come in. Funding of small businesses for start-ups businesses will become politicised, it will no longer be done on the basis of the business case, which is what a venture capital fund will do…”
