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What is a recession and is there way out?

Posted on: February 6th, 2017 by The Moderator 3 Comments

Tola: Taxation is already digitised. It’s actually poor adoption that’s the issue. There is a FIRS working portal for this.

The Octagon: Can we share final thoughts on 1. key ways out then current state of things. 2. How the individual Nigerian can possibly cope/adjust till we are out of the woods.

Wilson: My advice for individuals:

  1. Cut unnecessary cost.
  2. Earn dollars by getting involved in producing and exporting goods and services.
  3. Be interested in open government and ask questions. We must continue in our efforts to hold government accountable. We need to have a responsible government.
  4. Offer advice to the government in your own little way. It is clear that the government needs help in terms of planning and setting the direction for the economy. The government also lacks the urgency needed to turn things around quickly but we must keep engaging them.

Tola: For me 6 things:

  1. Govt cant do any recovery alone. Private sector must support by deepening investments in real sectors particularly on infrastructure and manufacturing.
  1. Increased transparency in policy and communication.
  1. We need to invest in our nation. Increased spending on Nigerian manufactures, less unnecessary imports. Focus on importing component of local Manufacturing instead.
  1. Individuals should do a real time analysis of their cost of living, and do some substitutions, and get involved in value creation businesses.
  1. Keep hope alive. The Q3 figures shows that if we sustain our non oil sector focus and growth and diversification, we would soon quickly achieve measurable growth that impact on GDP growth.
  1. Entrepreneurship and enterprise. Not in short term quick gains, but serious value additions. Infact I think the motto should be, how can I provide a service that ensures no one has to spend FX to secure this same service.
  1. And businesses/ individuals should export export export.

Gbane: My Advice is as follows –

  1. Government hands off pricing in any way shape or form cant stress this enough (people will not produce if they know prices of their goods and services are predetermined its harmful in profound ways.
  2. Our forex regime – eliminate the distortions.
  3. CBN needs to be truly independent, it apparently is not.
  4. Infrastructural works on a national will provide jobs and stimulate the wider economy, it will also have the multiplier effect of reducing cost of transportion of goods and services. This will lead to higher consumption and a resultant increase in production and the virtuous cycle continues.

Thanks everyone is was great reading all the insight here…there is hope for Nigeria

Seun: We can only get out if we understand the vision to build an economy out of oil and also be efficient at all levels. CBN is currently printing money to fund FG and it is unsustainable.

Tola: key issue – I think diagnosing the Nigerian problem is rather straightforward in the sense that the economic failings are evident. My own real question is how does one balance the going forward – oil income is needed in short term to revitalise economy. If you had 3 key implementation frameworks for govt today – what would those be? Practical, no emotive statement.

Seun: @Tola

  1. An additional FX buffer – There has to be a plan to bring FX (5-10bn USD). There is nothing emotional about it but we should go for an IMF loan. A better FX buffer helps our training outlook.
  1. Invest in value chain completion: Dangote will take us out of oil importation in 3 years but we need to complete our value chains in agriculture, small manufacturing and others. There has to be a plan to industrialize Nigeria.
  1. Build competitive states: a deliberate plan to build states that build economies outside oil. It might include taking out the FAAC incentive. We import fish feed, floor tiles, paper and simple things that investment in machinery can fix.
  1. Let me we add we need vertical accountability. Putting more money in states without accountability won’t work.

Wilson: Interesting points Seun. The composition of Nigeria’s agricultural sector is scary. Crop production accounted for about 90% of the sector’s output in Q3. We need to strengthen the other subsectors within the Agricultural sector as well as the value chain.

Tola: Totally. Totally. That’s my point. This is why private sector can invest in the long term with government full support. This is a major issue. Getting states to be responsible sub national entities with developmental agendas and not temporary spendings systems.

Thank you so much for the platform, and thanks everyone for your insightful conversations.

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3 Responses

  1. temie says:

    Thank you so much for this enlightening discussion. Poor power supply was not mentioned and I know from experience that this is one of the factors crippling manufacturing in Nigeria. I believe the government does have a huge role but we as private individuals would need to require the government to fulfil its responsibilities. Well done, The Octagon!

  2. Isys says:

    I’m so happy I got round to reading this. It has definitely enlightened me.
    I’ve always felt that confederalism would have been a better system of government for this country as it would have decentralized power.

    Lagos state on its own is growing outside of the whatever limitations the country maybe having. If each state can focus on developing itself without waiting for ‘national cake’ there’d be hope.

    This recession irks me. And I do believe that SME’s will form the crux of economic growth if the government will just make the process easier. It takes forever to register a company. For those into production of consumable goods, NAFDAC has no provision whatsoever for cottage companies, they spend months doing inspections and still refuse to give approval and banks don’t pay SME’s much attention. Because we pay for ‘darkness’ the cost of production for the average Nigerian entrepreneur is high because of the constant need to fuel generators, making it hard for competitive pricing with foreign brands. Yet there are so many innovative entrepreneurs struggling to stay above water in this country.

    It is well.

  3. Adedoyin Adekanle II says:

    Great conversation! In my opinion, recession is an excuse for lack of Management of the natural resources in Nigeria.

    Nature is a great example of Management, as there are processes that ensure no energy is lost. Rather it’s transferred from one form to another! There is Equilibrium! No leak! However where humans are involved, we ensure there is a tilt.

    In the advent of Oil discovery, Agriculture was abandoned. We focused on oil because of the global demand forgetting a major source of energy which is food. There was no balance! Now we’re crying for food. Guess who’s smiling to the bank? The farmers!

    Foreign investors can help but it won’t be long before we shout recession again as Nigeria would focus on that section. This is what happened with oil.

    Now are we truly an independent country? No! History just recorded our statements, our actions don’t show it. There’s no originality. We’re still a dependent nation even on a mental level and this is worse. Must we wait for foreign investors? Must we become like other nations? What happened to us investing in and managing our resources our own way, to suit our needs.

    The solution to recession is not economic policies (although they may help). It is simply strategic planning and all-round management of resources on fundamental level I.e the community. Emphasis on management. We lack this skill at the top. The people at the top are not aware of this. What of us at the bottom? We need new thinkers and doers at the bottom who would not only create a new circle of innovation but also maintain development and ensure that there’s no leak or tilt in the management circle of different energy sources. If the people at the top are not working, then we at the bottom should work our our way up.

    As a Nation, we have all the resources we need. We only have to appreciate, utilise and manage them whilst looking out for other opportunities (renewable energy). When there is proper management, there won’t be recession. There’s a lot to learn from Joseph, second-in-command, Egypt.

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