In spite the Federal Government announcing to the world that the country has exited the second recession in five years, making it the second during the administration of President Muhammadu Buhari, the fact remains obvious to the world that Nigeria is yet to sail out of its economic woes. The inflation rate as at March 2021 stood at 18.26% with unemployment rate soaring to 33.3% in a country with youthful population. Our economy is sinking yet what the government continues to play the ostrich and pretend to Nigerians that there is no cause for alarm.
Last week, the Governor of Edo State, Godwin Obaseki, alleged that the Federal government printed about N60 billion to augment allocation shared to states in March. He also expressed fear that the rate at which the Nigeria borrows, the debt burden of the country would exceed N15 trillion by the end of the year.
Whether the claim by Obaseki is true or not, the reality on ground tilts towards his assertion. While politicians may want to discredit the messenger for playing opposition with the state of the economy, Sanusi Lamido Sanusi, a former governor of the Central Bank of Nigeria also raised that alarm that Nigeria’s external debt to revenue generated by the county increased to 400 percent in 2020 compared to 8% it was, in 2011.
In responding to the allegation by the Edo state governor, the Minister of Finance, Zainab Ahmed, described it as “very, very sad, because it is not a fact.” She argued that the FAAC allocation of March was sourced from revenues from different agencies of the Federal Government. She said that what was “distributed at FAAC is revenue that is generated and in fact distribution revenue is a public information. We publish revenue generated by FIRS, the Customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC.”
The minister also explained that the country’s debt profile is still within sustainable limit and that the country needs to improve on revenue to enhance capacity to service the needs of running government on day to day basis and to service the country’s debt.
Governor Obaseki’s fear, like most Nigerians, is fueled by the dwindling revenue coming from crude oil, a pointer that the economy can no longer rely on oil, but the government refused to see beyond the fortunes of crude oil. The Federal Government truly has various initiated policy to diversify and promote development of other non-oil sector of the economy but more needed to be done.
By now, considering the current reality of the state of our economy, we expect that the government would not only be proactive in implementing policies that would boost the economy but also declare state of emergency in dealing with the situation.
Meanwhile, while the Federal Government has its share of responsibility, Governor Obaseki and his colleagues have their burden of responsibilities on the current state of the economy. The debt burden of the country is shared by both the state and the federal government. It is unfortunate that the governments at both levels have little to show for the borrowing.
Our view therefore is for the FG to implement fiscal consolidation processes to manage public expenditure and also implement policies geared towards improving ease of doing business and the business environment that would provide support and boost non-oil revenue for the country.