A former governor of the Central Bank of Nigeria (CBN), Prof Chukwuma Soludo, has attributed the prevailing economic woes facing Nigeria to the wrong choice of economic policies by the government.
Soludo disclosed this while speaking at an international conference organised by the Department of Business Administration of the Nnamdi Azikiwe University (UNIZIK) in Awka, Anambra State.
The theme was: Managing a recessionary economy: Options for Nigeria.
The major cause of the recession the country is facing, Soludo said, is as a result of what he called “bad habit of borrowing” at a period the country was in boom.
He blamed the past administration for plunging the economy into a glitch, saying the government did not act on time to save the situation.
Soludo, a professor of Econometrics, criticised the Treasury Single Account (TSA) policy, which, he said, stifled the economy further because it channelled public sector funds to the CBN.
He expressed optimism on the possibility of the country coming out of the recession. He said managing a recessionary economy did not require rocket science, noting that Nigeria could overcome the current economic setback faster if the government put in place appropriate policies.
He said: “Huge spending by government was one of the ways of solving the economic problem, but two wrong steps by the current government ruined that opportunity. They brought in the TSA and channelled funds into one account that did not allow spending. They also fixed the price of foreign exchange. These are things you do not do when a country is in economic crisis.”
The former CBN boss stressed that the recession was sown by the last administration but became obvious one year into the tenure of the present government. He said it would not have degenerated but for the inability of policymakers to rise to the challenge.
He said the recession happened because the Goodluck Jonathan administration failed to save earnings from crude oil sale when there was unprecedented boom in oil prices.
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. If you borrow at a time of boom, what will you do in a time of lack? Even my grandmother in the village knows this.
“At the same time, when we had boom, we had unprecedented unemployment. The problem with Nigeria’s policymakers is that once oil goes up, we take it that it will remain so, and we continue to spend. But once there is a shock and oil prices go down, we just think it is temporary and we start borrowing. Nigeria can be fixed, and what it takes to fix Nigeria is not rocket science.”
Soludo hailed the government’s diversification policy, saying it would save the economy beyond oil and also save it from shocks induced by vagaries of the international oil market.
He also called for fiscal federalism to help the states and local governments live beyond “running to the centre for their sustainability”.
The Vice-Chancellor (VC), Prof Joseph Ahaneku, said the theme captured the economic challenges confronting the country, which, he said, built up through decades of sub-optimal management of the material and human resources.
The VC said the conference was incisive in analysing the country’s economic woes and formulating the possible ways forward. He praised the department for organising the event in line with the school’s tradition of generating academic discourses to proffer solutions to issues of national and international concern.
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