A former presidential candidate, Prof Kingsley Moghalu, has said that the current economic hardship and its effects will last for a minimum of three to five years.
The political economist blamed ‘unprecedented corruption and incompetent policy response’ as the primary factors behind Nigeria’s distressed economy.
The former Central Bank Deputy Governor stated this during his keynote speech at the ‘Leadership Newspaper Group 2024 Conference and Awards,’ which was held in Abuja on Tuesday.
According to him, Nigeria’s economy today is a ‘Chronicle of a Death Foretold,’ and a combined consequence of the choices we have made as a country.
Moghalu said that hyperinflation, the crisis of the value of the Naira, debt distress, revenue challenge, unemployment, and extreme poverty were all consequences of an economy that had been mismanaged for a long time.
He said, “The past 10 years were particularly ruinous. They were the years of the locust, marked by unprecedented mismanagement of fiscal policy, unproductive external borrowing, unnecessary budget deficits, illegal Ways & Means lending by the Central Bank of Nigeria to the federal government to the tune of N30tn, and unprecedented corruption.
“Earlier, a combination of oil price shocks and an incompetent policy response from the CBN, in the form of an attempt to fix the exchange rate, all helped give us two recessions within seven years. Many of these things happened because, as we witnessed, there was a successful political assault on the independence of the central bank, with the storekeeper willingly handing over the store keys to the marauders.”
Speaking further, Moghalu asserted that Nigeria is in a “crisis regardless of whatever short-term measures are taken, and the success of those measures or lack of it, this crisis and its effects would be with us for a minimum of three to five years.”
On the recent economic reforms of the Federal Government, the political economist said that the decisions to remove the petrol subsidy and forex subsidy were bold and correct.
He, however, criticised the government’s management of the two major policy reforms that have triggered a wave of economic hardship in the country.
The first error, he said, was the precipitate nature of the introduction of these policies without a thorough preparation for the morning after.
He stated, “Nigerians should first have been educated on the economics of why these subsidies had to go, and on what steps the government was taking to mitigate the anticipated impact; that is, with a subsidised mass transportation system across the country.
“The forex reforms at the central bank should have benefitted from prior, in-depth consultations with institutional investors who are the movers of global capital and in the absence of robust revenues from oil, influence forex liquidity through capital importation.”
Moghalu, who is the chairman of the Advisory Board and Board of Directors, Africa Private Sector Summit, posited that the exchange rate unification and a further effort to “float” the naira in an environment awash with naira liquidity was a mistake.
This decision, according to him, contributed to the naira’s race to the bottom because it was not accompanied or preceded by an immediate monetary tightening
In his recommendation, Moghalu, who blamed the absence of nationhood, bad governance, Ad Hocism-Absence of Strategy and absence of philosophy and knowledge for Nigeria’s economic woes, called for a bold, visionary and engineered strategic project for Fundamental Economic Rebirth.
This project which we shall for the purpose of our discussion call Project “3-in-3,” should be aimed at the rebirth of three strategic sectors in three years.
He said, “The project, to be scoped and commissioned within the next three months, is to be predicated on massive investment in the development of railway lines (linking all state capitals), housing (mortgage-ready and qualitative to incrementally reduce housing deficits), and agriculture (covering the value chain), to be delivered in the first phase over three years beginning in 2024.
“Project 3-in-3 should target to create 5 million new direct and indirect jobs. It will create two new thriving economic sectors. The purpose is to stimulate productivity in agriculture and housing, two sectors that do not depend on foreign exchange, and depend on locally available resources across the 36 states. That resource is land.”
Moghalu’s comments came on the same day President Bola Tinubu challenged the notion that the Nigerian economy is in distress, highlighting the unprecedented opportunities for growth and development in the country.
The President said this when he delivered a speech at the Leadership Conference and Awards 2023, held at the Congress Hall of the Transcorp Hilton in Abuja, on Tuesday.
“I should start by respectfully challenging the notion that the Nigerian economy is in distress. Distress suggests helplessness, being at the mercy of something we have no control over. But that is not the case here.
“We are in challenging times, no doubt, but these times have also been marked by unprecedented opportunities, to reset course and to build a new and sustainable economy, away from the rent-seeking and the waste that was once the order of the day,” Tinubu, who was represented by the Minister of Information and National Orientation, Mohammed Idris, said.
