Nigeria’s macroeconomic indicators are spiralling out of control, inflicting severe hardship on the citizens,the Nigerian Economic Summit Group (NESG) has said.
The group raised the alarm in a communique issued on Sunday by Mr. Asue Ighodalo, Chairman of NESG, on behalf of the Board of Directors, NESG.
He explained that even though the economy continued to recover in the first half of the year, economic growth was dominated by sectors with low contributions to output and weak job-creating capacity, while the oil sector remained in recession for eight consecutive quarters.
Ighodalo said the headline inflation is 18.6% as it stands at more than double the Central Bank of Nigeria’s price stability threshold of 9%.
He observed that the Russian/Ukrainian war and the lingering effects of COVID-19 on the global food supply chains, have impacted negatively on the Nigerian economy, with its attendant dire consequences.
He added: “As the world faces a food crisis linked to the Russian/Ukrainian war and the lingering effects of COVID-19 on the global food supply chains, the situation is even more dire in the Nigerian context, given the compounding effects of the unchecked insecurity and inadequate efforts to mitigate the impact of climate change – specifically the severe droughts and floods affecting our farming communities.
“In addition, the unstable micro and macro-economic environment and poor infrastructure has further restricted local efforts to drive value addition and processing.The resultant effect is that Nigerians continue to spend close to 60% of their household income on food, the vast majority of our population cannot afford a healthy diet, and double digits rates of food inflation have further worsened this situation.
“Despite high global oil prices, Nigeria is not appropriating the benefits as a result of low crude oil production largely due to oil theft and pipeline vandalisation, declining investment and divestment caused by oil theft, high cost of production, and a harsh operating environment.The country’s external reserves have been declining for most of 2022 while the Naira continues to depreciate, and the country still operates multiple exchange rates.
“Amid this crisis, fiscal pressure is imploding because of declining revenues and soaring public debt.
“Only recently, the Honourable Minister for Finance, Budget and National Planning, Dr. Zainab Ahmed, alerted Nigerians that the cost of debt servicing has surpassed Federal Government’s retained revenue as total public debt continues to rise.
“Meanwhile, CBN’s Ways and Means financing to the Federal Government peaked at N19.6 trillion as of May 2022, and the country maintains an unsustainable fuel subsidy regime.
“Clearly, the growing deficit means that Nigeria would rely on borrowing to finance the 2022 budget.
“By the numbers – a bleak outlookWith rampant inflation eroding real income, the World Bank projects that an additional 7 million Nigerians will fall into extreme poverty in 2022.
“Great concern continues to trail the growing public debt stock, which grew to an all-time high of ₦41.6 trillion – about 120% of Government revenues as of 31 March 2022.” On security, the NESG observed that “despite increased budgetary allocation to defense and national security, the current state of insecurity is indicative of a nation under siege.”
“Nigerians now live in a permanent state of fear as bandits are able to hijack a train and kidnap dozens of passengers, overrun prisons and release hundreds of convicted criminals, and hold hundreds of kidnap victims for months at a time.
“Yet, despite some changes to the leadership of the national security apparatus, conditions have not improved.
“There is hardly any need to itemise the adverse impact of insecurity on food prices, productivity, ease/cost of doing business, investor confidence and national pride,” the group said.
it commended government for some of the initiatives introduced to prevent the economy from degenerating into troubling crisis.
,”Given the foregoing and following its deliberations on the domestic and external performance of the Nigerian economy in the first half of 2022, the Board of Directors of the NESG notes and commends the Federal Government for commencing the implementation of the Medium-Term National Development Plan (2021 – 2025).
“In addition, the NESG acknowledges and commends the efforts of President Muhammadu Buhari and the National Assembly in passing into law the Electoral Act, 2022, which is already proving to be a veritable tool for improving our electoral process”,it added.
“These are good legacies, but there is much more to be done.”
In this regard, the Board of the NESG proffers solutions and recommendations on how to turn around the fortunes of the Nigerian economy.
The communique recommends that, “A decisive action to tackle the Government’s revenue challenges which cannot be divorced from leakages through the large-scale crude oil theft; difficult operating environment for businesses, and lack of innovation in tax collection/administration, among others, that have resulted in low accretion to the nation’s revenue base.