Poor fed govt’s ideas led Nigeria into recession – Soludo

A former Governor of the Central Bank of Nigeria, Prof. Chukwuma
Soludo, on Thursday said poor ideas by the Federal Government’s policy
makers caused the economic downturn in the country.
He added that fixing the nation’s economy was not rocket science.
Soludo’s
position was contained in a paper he delivered at the 2017
International Conference of the Department of Business Administration of
the Nnamdi Azikiwe University, Awka, Anambra State.
The theme of the conference was “Managing a recessed economy; options for Nigeria.”
Soludo
noted that Nigeria slipped into recession barely a year after the
President Muhammadu Buhari administration took over power, stressing
that the inability of the country’s policy makers to rise to the
challenge plunged the economy into crisis.
He said the recession was avoidable had proactive steps been taken.
He
said, “Poor ideas transcended over superior ideas, and we went into
recession which was slightly avoidable. That is why academics must be
alive to their responsibility of nudging us to reality; the reason I
commend you for this international conference.
“Success and failure are all in the mind and only those who persist get to their destination.
“The
recession Nigeria went into was largely avoidable and for things to
change for the better, Nigeria cannot afford intellectual isolation
because there is a need for exchange of ideas among intellectuals from
various fields to put things right.
“Though economic crisis
started in 2007 when most countries were witnessing recession, the
Nigerian economy was growing because of the power of ideas of the people
in charge. Instead of sustaining the growth, we drove the economy into
this recession.
“For example, between 2010 and 2014, oil price was above $100 per
barrel but we were unable to accumulate foreign reserve. When I took
over as the CBN Governor, foreign reserve was about $10bn and we kept
growing it on an annual basis as a deliberate policy such that it was
over $45bn by the time I left.
“In 2010, I warned that if oil
price went down to below $40 per barrel, most states would not be able
to meet their obligations and that was exactly what happened. So, the
problem was that we were not saving and we were even borrowing to
implement recurrent expenditures.
“We were borrowing for consumption and for capital projects with the result that all the money we spent was borrowed at a time.
“When
the oil price slumped, some people in government even felt that it was
not going to last and continued their spending spree. Some also felt
that the exchange rate could be fixed and some of us warned that doing
so would result to high inflation.
“And when the problem
manifested, a fire-fighting approach was adopted by the CBN which
decided to give bailout to states. Because of these responses, the
economy witnessed a shock and we thought we could reinvent economic
theory and principle as a unique Nigerian approach.”
The former
CBN boss, however, expressed optimism that the recently launched
economic recovery plan of the Buhari government could lead to recovery,
especially as there was a mounting pressure on government to perform
because election was approaching.
He advised that the number of items in the exclusive list should be reduced in favour of states.
“We
do not have to be running to Abuja for everything and that was why I
was surprised when some people canvassed that local governments should
be going to Abuja to take their allocations directly,” he said.
According
to him, the first step should be to revert the control of minerals to
the states, which he said should pay taxes to the Federal Government.