BY BUKOLA IDOWU and OLUSHOLA BELLO, Lagos
As Nigerians bask in the euphoria of the country’s exit from recession, economic analysts have warned that the nation may relapse into recession except the government takes stringent measures.
Data released by the Nigeria Bureau of Statistics (NBS) last week broke the cheering news of the country’s exit from recession.
But in their reaction, some economic analysts insisted that government must continue to implement its fiscal and monetary economic recovery plans to save the country from receding into recession again.
The experts who spoke in separate interviews with LEADERSHIP noted that though the economy showed a little sign of growth Q4 of 2020, which was why Nigeria exited recession, the growth was sluggish, meaning that care must be taken to protect the economy from relapsing into recession.
The director-general of Lagos Chamber Of Commerce and Industry (LCCI), Dr Muda Yusuf, stated that the country’s recovery prospects in the year 2021 will depend on five key factors, including effective management of the pandemic locally and globally, widespread vaccine rollout, direction of global oil market, fiscal and monetary policy direction, and ease of doing business reforms.
He added that accelerating the pace of economic recovery requires fiscal and monetary authorities to be well coordinated to promote growth-enhancing and confidence-building policies that would encourage more private capital inflows into the economy.
The LCCI DG said, “Investment-led growth strategy is critical for inclusive and sustainable economic growth. Strong commitment to key reforms will not only boost output recovery but will also put the nation on a path of macroeconomic stability.
He recommended the review of the foreign exchange management framework to expand the scope of market mechanism in the determination of the exchange rate.
He said, “Clarity in government’s policy direction is critical in deepening investor confidence. There is also a need to mobilise efforts in making the business environment more conducive for MSMEs and large corporates by addressing structural bottlenecks and regulatory constraints contributing to high cost of doing business.
“I am of the view that government needs to prioritise public spending to support critical capital development expenditures in road, railways, power, health, education, among others.
“Government also needs to intensify diversification efforts through efficient utilisation of excess crude oil proceeds to develop the non-oil sector, privatise idle public assets to help the economy unlock liquidity needed for strong economic growth and improved revenue mobilization, deepen deregulation efforts in the downstream oil industry, and proper harmonisation of fiscal and monetary policies is necessary in the course of stimulating domestic output and stabilising prices.”
On their part, analysts at Cowry Asset Management Limited said, “We believe Nigeria’s economy remains well on track to see a convincing recovery amid return to economic activities, the administration of the COVID-19 vaccine, strong crude oil prices and the numerous stimulus packages.
“We nevertheless expect the Nigerian authorities to take necessary measures to strengthen the fragile recovery. Meanwhile, we expect the general price level to increase further in the next few months as the sowing season begins when food stockpiles are expected to decline even amid the disruptive insecurity in food producing parts of Northern Nigeria. Also, core inflation is expected to continue its ascent, driven by higher pump prices given the sustained rally in crude oil prices.”