Nigeria Exits Worse Recession in Two Decades
. HOW AND WHY DID WE GET INTO RECESSION?
– We wasted $480billion which accrued to us during the oil boom era between 2010-2014
– Despite the oil boom we had no tangible savings in the excess crude account
– Corruption ruled every aspect of government up until June, 2015
– We did not prepare for the rapid decline in the price of crude oil starting June 2014.
– When price of crude oil fell from an average $100 to $26 in January, 2016, our economy went into a tailspin
– We had always depended on exportation crude oil for 70% of our national income
– We had always depended on exportation of crude oil for 90% of our foreign exchange spending
– Starting from October 2015, the bombing of our oil pipelines by Niger Delta militants gravely reduced the quantum of money available to Governments across the three tiers of government to manage the country. This aggravated the inability to pay salaries as inherited from the GEJ Federal Government.
– Reduced national income which is a result of the combination of reduced oil production and fall in price of crude oil impacted on industry capacity because of lack of foreign exchange to purchase raw materials and equipment.
– Because salaries were not being paid in both public and private sectors, consumers did not have enough to back their purchases, this led to reduced transactions and purchase of goods and services. This, in turn, affected the production capacity of manufacturing companies and services leading to reduced productivity.
– Products and services were produced at higher costs because of increased cost of power, bad roads and fuel. This increased costs triggered high inflation rates reflecting in high prices of food, goods and services.
– Despite huge money made during the oil boom era, the govt under GEJ did not invest in road construction and other forms of infrastructure leading to huge infrastructure deficit.
– After spending #11 trillion in 16 years, the three PDP governments of those years were only able to deliver less than 3000 magawatts of electricity for the use of Nigerians with grave effect on our economy.
– Before now, we depended on food import for our feeding needs and spend more than $23billion buying foreign foods annually. We empowered farmers in other countries.
– We depended on importation for most of our needs inclusive toothpick thereby wasting scarce foreign exchange even as we fund employment of labour in the countries we import from.
– We did not empower our industries to produce to capacity, we thus use our foreign exchange to keep industries in other countries running when we import from them.
– In short, we consumed what we do not produce
WHAT DID THE BUHARI ADMINISTRATION DO TO GET US OUT
– Integrity: The government applied transparency as basis for all government transactions and businesses. This helped in efficient collection of revenue and income with more money being collected and saved despite low oil price.
– The Federal Government made sure to provide money to support States and Local Governments Council Areas to pay salaries and allowances debts to workers. This helped the economy to stabilize in the face of reduced cash flow and helped stimulate the needed demands that drive industries production capacity.
– To encourage local production of some target items and also protect them from competition from imported versions, the Federal Government banned 41 products from accessing the official foreign exchange windows. This measure helped to protect local producers of the banned items and conserve scarce foreign exchange for domestic productive use.
These banned products include: Rice
Palm kernel/Palm oil products/vegetables oils
Meat and processed meat products
Vegetables and processed vegetable products
Poultry chicken, eggs, turkey
Tinned fish in sauce(Geisha)/sardines
Cold rolled steel sheets
Galvanized steel sheets
Roofing sheets among others.
This ban has helped in ramping up local production of some of these items and saving scarce foreign exchange from being used to import frivolous luxury goods.
– President Buhari then commenced the diversification of the national economy so that we don’t continue to depend solely on oil for national income and to conserve our foreign exchange.
– President Buhari initiated the Anchor Borrowers Programme to facilitate commercial banks’ lending to farmers of rice and wheat and other agricultural products. At the moment, Nigeria saves $5billion, money which we would have otherwise spent importing rice.
– The mining sector which was abandoned before now is being given new impetus for production. For the first time since the 1970s, the mining sector is recording impressive figures on our GDP.
– Our hitherto abandoned refineries are now working at 50 percent capacity and would improve better. Meanwhile, Federal Government ensures a well organized petrol importation regime which reflect in the no fuel queue across the street. Even now, price of fuel is falling.
– Our industries are now producing at more than 60% capacity. Eleven of the dead 33 fertilizer plants have been resuscitated while four others are to be revived shortly this has profound impact on agriculture.
– President Buhari has guaranteed local contractors, manufacturers and business people some forms of engagements in supplies of the needs of the Federal Government. All supplies to the Federal Government must have 40% local contents. We are moving away from importing everything. In fact, all vehicles to be purchased by the Federal Government must be Nigerian made. This invigorates local production across industrial sectors.
– President Buhari made sure the very poor, unemployed and traders and artisans should be taken care of. Though not all can be touched but at last count, 200,000 unemployed youths have been engaged as N-Power volunteers, earning N30,000 every month.
– More than a million people living in abject poverty are being given N5000 to activate their lives while school pupils across 24 states are being fed every afternoon in Public Primary Schools for free, this has led to more school enrollment.
– Traders and artisans now know they can get between N10,000 and N100,000 from the Federal Government through the Bank of Industry to start or expand their businesses
– Despite shortage of foreign exchange, the President Buhari’s government has been able to crash the Naira to dollar rate from N516 to N360.
-Now, manufacturing companies can get all their dollar needs just as travelers and those that want to pay for school fees and medical services abroad can freely walk into any bank to buy their foreign exchange without encumbrance.
– We can see the improvement in electricity supply. For the first time in the history of this country, we are generating 6,700 megawatts of power just as government is compelling the power distribution companies to deliver efficient services to Nigerians. The distribution companies must supply metres to customers.
WHAT ARE WE DOING TO MAKE SURE WE DO NOT RETURN TO RECESSION
– Federal Government continues to ensure transparency in the conduct of all it’s affairs.
– The Federal Government is creating an enabling environment to make business thrive in the country. This include faster goods clearance at the ports, speedy registration of companies, removal of bottlenecks in getting license for exploration from government and others.
– Starting with the Lagos-Ibadan standard rail gauge, the railway revolution is just commencing in Nigeria. President Buhari has ordered that all state capital cities must be connected with the modern standard rail gauge. This is beside the old narrow gauge that would now be managed by General Electric. All these, put together, will reduce cost of movement of goods and people. It would also reduce the wear and tears on our roads.
– More electricity power. For the first time in more than 45 years that different governments had been talking of the Mambila Power Plant, President Buhari is turning talk to action. The Mambila Power Plant is set to take off with the allocation of $5.6billion for it’s realisation. The coming of the Mambila plant plus the many others like the Guara hydro plant and the Afam 1&2&3 thermal plants will provide more than 15000 megawatts of electricity power to Nigerians. This will enable Industrialisation and comfort living in the country.
– Bridging housing deficit. The President Buhari’s has set off a determined effort to bridge the huge housing gap in the country. Already, the Federal Ministry of Power, Works and Housing has commenced building of 2736 housing units to be supplied direct to Nigerians directly. This is part of the two million public-private one trillion Naira housing delivery project that is already in the works. A sum of N100 billion has been budgeted in the 2017 budget for its realisation.
– Our dilapidated roads and highways will soon give way to modern, double lanes highways. The Federal Ministry of Works, Power and Housing has a budget of N311.5billion to execute this in the 2017 budget. Already, works have commenced on some strategically important roads including the second Niger Bridge abandoned at concept stage by the last PDP administration.
– Increased funding opportunities for entrepreneurs and business people with the Nigeria Development Bank (NDB). The NDB will join ongoing efforts by the Bank of Industry and other development banks to provide loans to qualifying entrepreneurs and business people at single digits interest rate. The NDB, will focus more on the small and medium scale enterprises. This would trigger further productive activities in the economy. A sum of $1.3billion has been secured for the capitalisation of the bank.
CREDIT TO WHOSOEVER WROTE THIS. THANK YOU SO MUCH.