•Says only oil sector exited recession
Despite all the measures deployed by the managers of the Nigerian economy, economic recession defied them all as it has persisted, thereby forcing most manufacturers to close shop and leaving the citizenry worst-off.
The foregoing was the views expressed by members of the organised private sector (OPS) who spoke with The Nation on the vexing issue.
Firing the first salvo, the former Director General of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), who is also a consultant to the United Nations Industrial Development Organisation (UNIDO), Dr. John Isemede, stated that the country cannot be said to have exited recession with the figures being released for the economic performance of the first quarter (Q1), which recorded growth of 1.95 percent, and the second quarter (Q2) is 1.5 percent.
He pointed out that growth figure dropped, which indicates that the economy is crawling, and not near to being healthy, arguing that the situation is like the country being on a cliff, which is either going up nor down.
Isemede said, “This is an indication that Nigeria is not fully out of recession, and would likely go into depression this time around, if right recovery policies are not put in place and properly managed.”
He explained that the nonoil sector that accounts for over 89 percent of the economy with key sectors including manufacturing, agriculture, telecoms, amongst others is still in recession due to lapses in policy reforms towards jobs creation and manufacturing.
“The real sector is still wrestling with serious productivity challenges arising from the constraint of infrastructure, particularly power and logistics. It is imperative that efforts are geared towards investment and policies focusing on improving logistics and enhancing the power sector. The manufacturing sector also slowed from 3.39 percent in Q1 to 0.68 percent in Q2 as a result of massive infrastructural deficit, and logistic challenges. The Apapa gridlock, access and cost of credit, weak purchasing power, multiple taxation amongst others are points to ponder.”
Echoing similar sentiments, Dr. Frank Jacobs President of the Manufacturers Association of Nigeria (MAN) noted that the economy is not fully out of recession, warning that the economy can still slip back into recession except urgent policy decisions are taken.
“Technically, Nigeria has exited recession, but the economy of the country is still vulnerable. The macroeconomic indices and structural reforms need urgent attention to contain vulnerability and support sustainable private sector-led growth.”
Jacobs however recommended that the major policy reforms must be considered urgently to ensure sustainable growth, as well as effective implementation of the Economic Recovery and Growth Plan (ERGP).
”We recommend strong implementation of the ERGP to boost local and foreign investors’ confidence in the Nigerian economy and generate additional investments, which appears critical to building a sustainable recovery. We are of the opinion that government needs to adopt specific, targeted and effective policies to attract and promote private capital investments in the Nigerian economy, especially infrastructure and industry,” Jacobs stressed.
The chief executive officer of Erisco Group, Chief Eric Umeofia, stated that Nigeria is not out of recession until the country starts manufacturing what it consumes and also manufacture for export.
“I do not trust their judgment. What we have is artificial growth. Until we base our GDP growth ratings or measurement on manufacturing, we would not get it right, and I will not accept or believe their judgement,” he deadpan.
“I would prefer a system whereby our oil would be set aside as reserve and not the economic driver, with the overall economy depending on the volume of oil exported and the price of the oil, which is not stable. China, Korea, and Malaysia do not have oil, but their economies are doing very well. I refer the Nigerian experience as international manipulation.”
Umeofia pointed out Nigeria will truly exit recession when the CBN start funding manufacturing in the actual sense, and on a single digit window, stressing that CBN should realise that funding agriculture alone cannot perform the magic of growing the country’s economy.
“Until the system does the right thing, by putting the right policy measures in place, and enforcing it to support the President in trying to revitalise the economy, growth would be farfetched. All the growth indices they are publishing are nothing but fallacies. The economy is still depending on foreigners, they are only coming to manipulate imported goods as if they were manufactured in Nigeria,” he lamented.
The Director General of Lagos Chamber of Commerce and Industry, LCCI, Muda Yusuf, observed that from the technical view, the country has exited recession as growth has been recorded for more than two consecutive times, but from the empirical position, which varies from sector to sector, some are yet to recover from the effects of recession, hence produce below capacity and in most cases close down.
The manufacturers that are complaining are talking in terms of business position, which has not improved in the area of patronage, he stressed.
“Also, the macroeconomics perspective is the aggregation of the GDP, and we should be concerned with the micro and macroeconomic issues, such as forex, and reduction of taxes on imported raw materials and reduction in the interest rate to encourage investors and manufacturers, which will invariably improve the GDP growth,” the LCCI boss noted.
The Chairman, Policy Committee of MAN, who was also the former Chairman of Electrical Group of MAN, Engineer Reginald Odiah, noted that the country is not completely out of recession, but just lucky that more money is generated through the sale of crude oil.
He said: “Nigeria is just lucky that oil price is on the increase; otherwise, manufacturing is consistently dwindling. If you look closely at it, most businesses have closed down. I am not seeing clear policy direction and political will to bring the country out completely out of recession completely. The government is just focusing more attention on the 2019 general election. We just need to make one more mistake and the country would plunge back into deep recession.”
The Chairman of Apapa Branch of MAN, Olukunle Obadina, stated that the government reforms in the manufacturing sector is not deep enough to accelerate growth in the sector, as growth has remained stunted over the years.
Obadina said, “These challenges could be attributed to many factors, ranging from funding challenges especially availability of long-term funds, high interest rate, foreign exchange availability, poor support infrastructure, multiple taxes and levies by various tiers and arms of government, policy summersault/inconsistency, absence of core industries that would produce raw materials, insecurity, to absence of inadequate support to encourage the growth of small and medium scale industries. The manufacturing sector is the engine of grow of most economies and a catalyst to economic development, as it continues to provide a pathway from subsistence agriculture to rising incomes and living standards.”