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Ibadan, March 14, 2023 The First Vice President of the Nigerian Economic Society, Prof. Adeola Adenikinju, says the incoming government must take tough economic decisions in the first two years to help Nigeria recover from its ailing economy.
Adenikinju stated this in an interview with newsmen in Ibadan on Tuesday while setting the economic agenda for the new administration.
The don, who is a professor of petroleum and energy economics, said the Nigerian economy was currently beset with lots of challenges as it had headwinds that created a lot of despondencies.
He said Nigerians now lacked confidence in the system hence people were leaving the country in droves and also rating agencies have downgraded Nigeria because of the performance of the economy and the government.
“So there are lots of challenges before the incoming government and in my view, any government that would come onboard must have to take so very tough decisions in the first two years.
” It has to take the Nigerian people into confidence and share with them how bad the situation is and what it will take to get out of the hole Nigeria is in.
“The first thing the new administration must do is to decentralise the system because there is too much power at the centre. Nothing much can be achieved under the present system even if you bring an angel.
“There must be an agreement of the elites of this country that the system must be decentralised and the sub-nationals must be empowered and given more resources to be able to take initiatives to conduct government and economic activities at that level.
“So government should find a way to restructure the system as the way it is now cannot deliver dividends of democracy to Nigerians.
“States must be allowed to take initiative and must be allowed to collaborate among themselves as done during the regional governments,” Adenikinju said.
According to him, one of the decisions is that subsidy must be removed because it has created so much distortion in the system.
“It is not helping production and productivity and it is depriving the government of the ability to provide development dividends to the Nigerian people.
Adenikinju said Nigeria spent 80 per cent of its revenue on subsidies and so little was left, adding that there must be an alignment of fiscal policy, monetary policy and trade policies to work together because right now all three were not working together.
“Also, the government must address the issue of the foreign exchange market.
“While having two markets is a noble idea, it has created a huge disparity in the system and opportunity for corruption as it became attractive for people who are connected to get money at the official market and sell it at the other market; without doing anything they are making money.
“It has created loopholes, inefficiency and corrupt practices that people just take advantage of and it is depriving Nigerians of the opportunity it ought to bring.
“I do not subscribe to subsidising the (BTA) Basic Travel Allowance of $4,000 as people just go to Dubai and spend it on this or that.
“There should be uniform pricing that would allow for investment and people will be able to bring their foreign exchange into the system to expand the foreign exchange base.
“Sources of our Forex, Foreign Portfolio Investment, Foreign Direct Investment, Export Earnings and Remittances all would benefit from unifying our foreign exchange; so supply is going to be expanded beyond what we have now and it will relieve the liquidity challenges in the Forex market,” he said.
Adenikinju, who is also the Head of Department of Economics, at the University of Ibadan, said the revenue base of the country must be expanded.
“For governments that can implement developmental programmes in their countries, the revenue-to-GDP ratio is very high.
“The revenue of Nigeria is lower than what any of the four tech giants in the world spend in a quarter. It is from this revenue that the government has to pay its debts, and salaries and what is left for developmental projects is significantly small.
“Nigeria’s revenue per capita, compared to all others in the world, is about the lowest.
“In Nigeria, the government’s revenue per capita is about $120 to a person; whereas in South Africa it is about $4,000; in Britain it is about $10,000 and in America, it is over $20,000, hence those governments are performing what our government cannot do here.
“We have to look at other new ways of generating revenue for the government,” he said.
The don stressed the importance of unbroken communication between the government and the people as it builds transparency, accountability and trust.
He stated that the government must tell people what was being done daily as transparency would bring confidence and public acceptance which would eliminate rumours and propaganda.
Adenikinju said security issues also needed to be addressed because investors would not go where there was unrest and no economy could thrive where the insecurity level was high.
On fuel scarcity, the don said deregulation and a competitive market should be allowed
He said most importantly, the implementation of the Petroleum Industry Act should be ensured and the social welfare of the citizens, most affected by the removal of fuel subsidies, should be done by directly relating to them through the records or register created by the government.