PMB or GEJ, Who Is Responsible For The Nagging Recession? -By Abdullahi Garba Ramat

Granted that PMB is one of the best president in the contemporary history of Nigeria, granted that he is fiscally vibrant leader driven by his zero tolerance to corruption, also granted that he has Nigeria and Nigerians in mind while trying to take us to the promise land in the pace of progress geared by his quench for the Nation development and him being chauvinistic citizen, but as per economic policy concern, it’s exactly the loop where he is found wanting.

While no one is against anybody’s pursuit of their personal aggrandizement, I make bold to say that the interest of the nation far supersedes any and two wrong  doesn’t make right. we therefore will not and can not keep quit while some prebendal politician hold us by  jugular! that’s our fundamental right and responsibility as its in consonant with participatory democracy where you and I are also stakeholders.

The strategy require to cobble Economy is multicipital, and multidimensional while flexibility, alteration and variation remain constant, it therefore comprises of fundamentals to analyze, diagnose and access from their faces of value, not otherwise, these fundamental are simple, they are not Nuclear Technology or a complex fuzzy logics to be solve, they are also definitely not a grand project requiring eternity to implemented.

We are no doubt in a state of economic decline; wide spread decline in the GDP called RECESSION which many Nigerians don’t understand, the only language a commoner understand is that he goes to the market and buy things at a price comparably less than what it used to be during the previous Government, Recession as a necessary evil comes with more devastating effect on the nation economy and partly unity and security as well, for the catastrophe behind such period is nothing but hardship which may give birth to anything but positive to any nation!

PMB got on the throne may 2015 only to meet an economy that is  fast sliding into Recession, according to many analyst; looking critically at the slope Nigeria economy has taken since before 2015, there was nothing any leader could do to avert it completely, we can only try to suppress it to lesser level.

There are already some factors and reports indicating high risk that of even the biggest energy-demand-driving countries( Chin, US, Japan etc) to slide into Recession and drag the entire global economy along which many developing and underdeveloped countries will bear the most brunt of whatever catastrophe it comes with, but for Nigeria we are already in Recession and unfortunately we run out of solution even before the recession began. What is the way out and forward?

What is the way out and forward Schematically there are  five major policy option we can embrace in our policy making as to get out of the Recession, these include but not limited to;

1- Selling off assets and subsidies removal

2- External and local borrowing
3- Slashing spending
4- Drawing from SWF ( Sovereign Wealth Fund)
5- Diversifying the economy

The first option has already been taking and to no avail only to have compounded the problem (yes compounds the problem) with little progress to which the leaders remain the major beneficiary, basically subsidy is remove to increase Government saving while slashing its spending, in Nigeria to petroleum the highest subsidy always goes, for that we started by removing petroleum subsidies all in a bid to avert the recession but the removal result in higher cost for companies and individuals. This means lower profit for companies and less disposable income for individuals. Hence companies pay less companies income tax, education tax and IT tax. Also companies and individuals now consume less and therefore pay less VAT.

If the savings from subsidy removal is not well utilised to develop infrastructure, and create employment, then the lower consumption by individuals would mean less income for businesses with the attendant effect on further productivity, profitability and income taxes.

Individuals and households will experience reduction in their disposable income, which will in turn result in a drop in savings and funds available for lending to businesses. This could lead to higher cost of funds for businesses further resulting in lower taxable profit for CIT purposes. Also firms may cut down on jobs, which will further result in reduction in personal income tax. Under extreme pressures on disposable income and profitability, tax avoidance and evasion would likely intensify resulting in further loss of tax revenue to the government and higher cost of enforcing compliance, that’s exactly the situation we are in now!

In country with local refineries, eliminating subsidy did not increase the energy prices due to low oil price globally, but for Nigeria subsidy removal led to rise in oil price which lead to increase in many commodities’s price simply for the avoidable yet scandalous reason that we lack local refining capacity to meet up our daily consumption demand, so we rely on export.

To be continued……