A former Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, on Thursday said poor ideas by the Federal Government’s policy makers caused the economic downturn in the country.
He added that fixing the nation’s economy was not rocket science.
Soludo’s position was contained in a paper he delivered at the 2017 International Conference of the Department of Business Administration of the Nnamdi Azikiwe University, Awka, Anambra State.
The theme of the conference was “Managing a recessed economy; options for Nigeria.”
Soludo noted that Nigeria slipped into recession barely a year after the President Muhammadu Buhari administration took over power, stressing that the inability of the country’s policy makers to rise to the challenge plunged the economy into crisis.
He said the recession was avoidable had proactive steps been taken.
He said, “Poor ideas transcended over superior ideas, and we went into recession which was slightly avoidable. That is why academics must be alive to their responsibility of nudging us to reality; the reason I commend you for this international conference.
“Success and failure are all in the mind and only those who persist get to their destination.
“The recession Nigeria went into was largely avoidable and for things to change for the better, Nigeria cannot afford intellectual isolation because there is a need for exchange of ideas among intellectuals from various fields to put things right.
“Though economic crisis started in 2007 when most countries were witnessing recession, the Nigerian economy was growing because of the power of ideas of the people in charge. Instead of sustaining the growth, we drove the economy into this recession.
“For example, between 2010 and 2014, oil price was above $100 per barrel but we were unable to accumulate foreign reserve. When I took over as the CBN Governor, foreign reserve was about $10bn and we kept growing it on an annual basis as a deliberate policy such that it was over $45bn by the time I left.
“In 2010, I warned that if oil price went down to below $40 per barrel, most states would not be able to meet their obligations and that was exactly what happened. So, the problem was that we were not saving and we were even borrowing to implement recurrent expenditures.
“We were borrowing for consumption and for capital projects with the result that all the money we spent was borrowed at a time.
“When the oil price slumped, some people in government even felt that it was not going to last and continued their spending spree. Some also felt that the exchange rate could be fixed and some of us warned that doing so would result to high inflation.
“And when the problem manifested, a fire-fighting approach was adopted by the CBN which decided to give bailout to states. Because of these responses, the economy witnessed a shock and we thought we could reinvent economic theory and principle as a unique Nigerian approach.”
The former CBN boss, however, expressed optimism that the recently launched economic recovery plan of the Buhari government could lead to recovery, especially as there was a mounting pressure on government to perform because election was approaching.
He advised that the number of items in the exclusive list should be reduced in favour of states.
“We do not have to be running to Abuja for everything and that was why I was surprised when some people canvassed that local governments should be going to Abuja to take their allocations directly,” he said.
According to him, the first step should be to revert the control of minerals to the states, which he said should pay taxes to the Federal Government.