The Daily Trust Board of Economists has said the recent 6.1 per cent slide in Nigeria’s Gross Domestic Product (GDP) has impacted negatively on income, employment and the economy.
The Board also urged the Federal Government to promote domestic intervention while creating interventions that will help to tame the prices of food stuff for the reach of low-income earners.
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This was part of the communiqué signed by the Board’s Chairman, Prof. Nazifi Abdullahi Darma, after its third virtual meeting held last Saturday.
It noted that the slide in GDP level was lower than the projections, and in comparison with some major economies like the United Kingdom (-20%), and South Africa (-51%).
However, the economists observed that for a fragile economy like Nigeria, the slightest slump in GDP has a higher negative multiplier effect on the economy.
“The fall in GDP as a result of the COVID-19 lockdown, thus has a higher adverse impact on income, employment and the economy as a whole.”
While commending the Federal Government’s interventions so far, it said they were not sufficient to mitigate the impact, especially when compared with what other countries have done.
“The Board acknowledged, however, that the impact would have been worse if not for the interventions. The Board also projected a further GDP contraction in the third quarter of 2020, when the economy will be formally in recession.”
On the recent inflation rate of 13.22 per cent, it said: “There is a challenge in the food supply chain across the country mainly arising from insecurity in many parts of the country that discourages many Nigerians from going to the farm. Food inflation is equally related to low importation of food and the protracted closure of the nation’s borders.”
It also said the increases in electricity tariffs and petrol prices, would impact both inflation and food prices.
The Board therefore advised the government to channel interventions to keep food prices within the reach of low-income earners, but commensurate so as not to discourage local production.
The economists also backed the full deregulation of the petroleum sector as it noted in July 2020, calling for incentives to promote local production of petroleum products, especially through modular refineries.
To strengthen the naira, it said the government must boost local production and export capacity. It attributed the fall in naira to over dependence on import and high reliance on oil revenues.
“Interventions in currency management by the CBN as it is presently, is unsustainable, hence Nigeria needs to focus on increasing domestic productivity with value addition.”
In the meantime, it recommended a ‘Managed Floating’ regime, whereby the Naira is allowed to find its true value with timely intervention by CBN to avoid any speculative demand that will distort the market.
On President Muhammadu Buhari’s new nine Priority Areas, it said: “The current process of developing Medium Term National Development Plan 2021-2025 and Nigeria Agenda 2050, should be ramped up, and need to incorporate international and regional development priorities, but adopted to Nigeria’s peculiarity and needs.”
The Board also advised state governments to actively promote the new development plan for an all-inclusive impact on the quality of life for Nigerians.