At the just-concluded Nairametrics Economic Roundtable: How to get out of the Economic Crisis, last Saturday, Managing Director/CEO of Financial Derivatives Company, Bismarck Rewane stated that the Nigerian economy is not in an economic crisis but an economic situation. In his analysis he emphasised, ¨A crisis is a time of difficulty or distress … currently, Nigeria is in a mini-crisis and if not managed well, it will become a major crisis.¨
Mr Rewane explained that economic crises are cyclical and cannot be avoided, however managing them properly makes all the difference. He stated that one of the key emphases on the Nigerian fiscal situation is not government revenue but its expenses and highlighted the physical imbalance and lack of productivity in the fiscal space.
On the monetary policy of the government, Rewane stated that Nigeria is moving in the right direction but at a slow pace. Touching on the importance of how the exchange rate is determined, he affirmed that a market-determined rate can be actualised. To cap off the webinar, he contributed that Nigeria needs to stop doing dumb things, start doing smart things and start doing modern things.
Kayode Olaniyan, Technical Adviser to the Statistician-General of Nigeria, also highlighted that Nigeria has performed well compared to other countries in dealing with the shocks of covid-19. He further stated that he expects Nigeria to continue its recovery and move to a stable path of growth.
However, there was a strong plea for the government to build fiscal buffers to deal with predicted global shocks that are imminent due to climate change.
Is Nigeria in a race against time?
The UN released a report on climate change, stating that humanity is on Code-Red and governments of the world need to act now to reverse climate change. Major oil companies have committed to net-zero which is a transition to clean energy. Nigeria relies on oil and gas investments heavily and with an imminent exit, government revenues will be affected in some way.
Therefore, the government and agencies like the Nigerian Investment Promotion Commission (NIPC) have to work to reduce the ease of doing business to attract other forms of foreign investments.