The next President of Nigeria needs to restructure debt, remove fuel subsidies, tackle security challenges, and pursue other economic imperatives.
This was disclosed by Prof. Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria (CBN) and the President of the Institute for Governance and Economic Transformation.
Moghalu stated this during an interview with Channels TV on Monday night, noting that doing everything he highlighted would be necessary towards reducing inflation and ensuring a better economy for the country.
He also urged that reducing fuel subsidies must also come with projects to cushion the effect of rising fuel prices, including a subsidized public transport system.
The current economic situation is gloomy: Moghalu stated that the present Nigerian economic situation is gloomy, citing that the economy is in a state of collapse due to high debt costs, inflation and poor productivity. He said:
“Nigeria’s economic situation today is extremely gloomy and extremely grim; I pity whoever will become the next president because he will inherit an economy that has essentially collapsed.
“Public debt stock is about almost a $100 billion, over N44trillion, a lot of people are poor, about 133 million live in multidimensional poverty, which is the most important issue that needs to be addressed.
“We also have issues of security, which affect the economy, high inflation because of food security issues as many farmers can’t go to their farms because of security issues and so, prices of food are going up uncontrollably and this is a very big problem as well, so we have issues of debt, poverty, inflation, unemployment which is 33% and high youth unemployment.
“All this makes up a very potent ingredient in a negative sense, whoever becomes the next president, will have to apart from the security which is fundamental, must focus very heavily on issues of poverty and the economy.”
How we got here: He added Nigeria got here through weak economic thinking and improper measurement of growth.
“We got here because of very weak economic thinking, a lot of our governments make one mistake, they tend to focus on just economic growth, GDP, growth, they do not focus enough on poverty, and even on the GDP growth we have not done well.
“What about GDP per capita, what does the average Nigerian earn? When you divide total GDP by population, that is what we need to do, and this is how we got here, we have not invested in education and skills, in healthcare, these are specific areas of social infrastructure, and human development, and these are basics that determine if you are living the life of a human being or a beast.”
Nigeria’s debt restructuring: He urged that Nigeria’s next President must restructure Nigeria’s debt, which must be done by competent hands to curb waste and free up more resources for social development spending.
“You have to begin debt restructuring, which is how to restructure the debt and spread it out, this is a complex negotiation and must be conducted by people who have the expertise, the first thing the next president must do is that the Nigerian economy has to be run by competent experts, not politicians.
“Debt restructuring is number one, next step is to curb the waste and corruption in the government, and if you have $1 billion stolen a month from crude oil theft that means Nigeria won’t have money to do these things.”
Need for tax reform: Moghalu said Nigeria must expand its present tax bracket and show transparency with government spending to enable more Nigerians to pay taxes.
“There are 7-8-million people who should be paying tax, and not more than 15 million pay tax, if we can get another 30 million into the tax bracket, but not high taxes, because the government is not delivering much, and people don’t trust the government.
“If the government can show it is serious in delivering basic things people require in their lives, more people paying taxes will give the FG an improved fiscal position.”
Infrastructure funding: Moghalu advised that the next president should stop using borrowed money on mega projects, but instead handle it through public-private partnerships, he explained:
“We also need to stop using borrowed money to engage in infrastructure projects, especially big mega projects that serve urban areas, this can be done through public-private partnerships so that FG can use its money to invest in rural infrastructure and also conserve on fiscal resources.
“The investment case is not there for borrowing and spending in infrastructure that does not generate enough to pay back its debt, which should be done by the private sector, let them invest and make their money, which after 25 years it returns to the government, this is the best way to go for most of the mega projects.”
Removing fuel subsidy: He added the subsidy must go as there is no economic case for subsidizing petrol consumption in Nigeria, urging that almost half of what is spent is a fraud. He revealed the racket has existed for decades.
“N4-N5 trillion a year on fuel subsidy makes FG unable to deliver its constitutional mandate on the welfare of Nigerians, from education to healthcare because they are spending their money on the wrong things.
“Any presidential candidate who does not understand is not ready to make an impact on Nigeria’s social development goals.”
He urged if we invested N500 billion wisely, the FG and states can come up with a subsidized public transport system, something that will help the poor cushion the immediate impact of the removal of subsidy.