Recession: FG Embarks On Propaganda •Touts False Exit Date •Inflation Remains High

By on April 30, 2017

YAHOO GMail

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Buhari
Buhari

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has projected that the country should be out of recession by the third quarter of this year.

The CBN governor said these after meeting with the leadership of the Senate in Abuja last Tuesday.

Emefiele based his judgment on the current efforts by the Federal Government to revive the country’s economy.

Emefiele stated this after a closed door meeting with the President of the Senate, Bukola Saraki; and Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, Rafiu Ibrahim.

Emefiele also said the CBN would continue with its intervention in the foreign exchange market, adding that efforts by the apex bank so far had been yielding positive results.

He added that the country had started to see a downward trend in the prices of commodities, indicating a reduction in the rate of inflation.

“We are very much optimistic that by the end of the second quarter, or latest the third quarter, we should be out of recession that we are in right now,” he said.

The ruling All Progressives Party (APC) has been trying to fly this kite for some time now.

The Minister of State for Power, Works and Housing, Alhaji Mustapha Shehuri, was the first to broach the subject while inspecting ongoing national housing projects in Ilorin, the Kwara State capital.

Shehuri said, “We are slowly going out of recession. Nigerians should be rest assured that the economy is being well managed. Government is focused on revamping the economy. Corruption is being tackled head-on.

The Minister for Budget and National Planning, Senator Udo Udoma, was second in line when he was at a meeting with the Executive Secretary, Nigerian Investment Promotion Council, Ms Yewande Sadiku.

According to Udo Udoma, the Federal Government has started seeing positive signs that the economy, which slipped into recession in the third quarter of last year, had started recovering.

He, even, gave some of the signs to show that the economy was on its way out of recession as marginal reduction in inflation rate, which is the first in 15 months; relative stability in the foreign exchange market; steady increase in the foreign exchange reserves; and renewed investor confidence, which resulted in the oversubscription of the country’s $1bn Eurobond by eight times.

He said despite the positive signs, the government was still optimistic that the Economic Recovery and Growth Plan, which was unveiled three weeks ago, would quicken the recovery process.

Also, a London-based organization, World Economics, recently, declared that after a few quarters of negative growth that saw the death of businesses, the Nigerian economy has wriggled out of recession.

According to the organisation, which focuses on producing financial analysis on world economy, Nigeria’s “Market Growth Index grew to 58.5 in April as the monthly Sales Growth Index ticked up to 56.7, its highest value since 2015 and representative of rapid growth.”

Not done, the federal government’s next stop was on Saturday at the biennial convention of the Nigerian Guild of Editors in Lagos.

There, the Minister of Information and Culture, Alhaji Lai Mohammed, said that Nigeria was gradually moving out of recession.

Mohammed, represented by the Managing Director of the News Agency of Nigeria (NAN), Mr Bayo Onanuga, said that going by a recent statement by the Central Bank Governor, the country would exit recession by the end of June.

“There have been other pointers for the good news as well. For two consecutive months, the National Bureau of Statistics has also reported a fall in inflation rate.

“ The exchange rate is regaining some sanity.

“ As I said earlier, the worst appears to be over. We are clawing out of the woods of recession in weeks from now.”

The Federal Government, the CBN and the World Economics are, probably, looking at the wrong statistics.

Audited financial results of four consumer goods manufacturing giants listed on the Nigerian Stock Exchange, NSE – Cadbury Nigeria Plc, Nestle Nigeria Plc, GlaxoSmithKline, GSK Plc and Unilever Nigeria Plc – for the financial year ended December 31, 2016, showed 25 per cent rise in cost of raw materials procurement, from N96.3 billion in 2015 to N132.8 billion. 

This was coming despite remarkable decline in volume of output, capacity utilization and Manufacturing PMI during the period. Cadbury, Nestle, Unilever spent N132bn Cost of raw materials 

The results also showed that the companies spent more on raw materials when compared to total cost of sales. While in 2015 cost of raw materials accounted for 63.9 per cent of cost of sales, in 2016, despite reduced level of manufacturing activities, cost of raw materials accounted for 72 per cent of total cost of sales. 

Another pointer that the economy is still in recession, is workers call for minimum wage increase.

The President, Nigeria Labour Congress (NLC), Ayuba Wabba, said recently that the private and public employers in the country are convinced that the N18,000 national minimum wage is no longer realistic, considering the present socio-economic indices in the country. 

His statement came a few days after the Technical Committee on Minimum Wage submitted its report. 

Wabba insisted that N56,000 being demanded by congress was not out of place because of the high cost of living at present. 

Also, the leader of the United Labour Congress (ULC), Joe Ajaero, stated that an N18,000 minimum wage means many Nigerians are not able to put food the table.

“If we are receiving N18,000 as minimum wage in an economy where the dollar is exchanging at par with the naira, I bet you nobody will even come out and say his is asking for an increase in minimum wage,” Ajaero said.

“But we are receiving N18,000 at a time that you can’t pay house rent, in fact, electricity bill is more than N18,000.”

He argued that the poor wage being paid to workers was part of the reasons why the country is in a recession.

“Because if you don’t pay good wage, you can’t revive the economy,” he added.

The Managing Director and Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, explained that the indicator to which World Economics based its projections was one out of other indicators like Purchasing Managers’ Index (PMI), inflationary trend, among others.

An Associate Professor and Head, Department of Banking and Finance, Nasarawa State university, Dr. Uche Uwaleke said, “I do not subscribe to the view by World Economics that the country has already exited recession on  the basis of some indicators namely ‘Sales Managers’ Index’ and ‘Market Growth Index’ which at best represent a narrow view of economic performance. For all practical purposes, an economic recession is generally taken to mean a negative growth in GDP for at least two consecutive quarters.

“Nigeria’s economy has been in recession since end of Q2 of 2016, contracting by -1.51 in 2016 according to the National Bureau of Statistics. Only a positive growth in GDP will signal the end of recession in Nigeria.”

Prof. Pat Utomi  blamed the administration of President Muhammadu Buhari for the economic downturn in the country.

He described those attributing the recession to the fall in crude oil price as bad managers.

He said the Buhari government should have foreseen and pre-empted the situation if it had been futuristic in budget planning and management of resources.

Utomi, who blamed the current situation in the country on lack of planning and foresight, said the preparation of a good national budget could have saved the situation.

Utomi spoke as the guest lecturer at the Dr. Emmanuel Egbogah Budget Roundtable organised by the Business School of the Nnamdi Azikiwe University, Awka, Anambra State.

His lecture was titled: ‘Budget Processes in Nigeria: Challenges and Implications for National Development.’

Utomi said a good budget should contain what the people would want and envisage the implications of future economic changes and challenges.

He said “Our major problem is that we lack planning and budget discipline. In beginning of a budgeting process, it must be matched with where the people are going; but beyond revenue and expenditure, the budget has to do with discipline and execution.

“Those blaming the fall in oil price are just bad managers. That was not the cause of this recession.”

The Nigerian economy was severely hit in 2016 by the drop in the crude oil price and crude oil production, leading to the declaration by IMF that the country had been enmeshed in recession.

When the NBS said in August last year that the Q2 GDP had declined by -2.06 per cent, the federal government officially confirmed that Nigeria was in recession.











Source cattnews

Posted 30/04/2017 04:41:21 AM

 

YAHOO GMail


 

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