•Atiku: hard times on the way More prominent Nigerians are painting
a gloomy picture of the economy, with
the naira dropping many points and
oil prices crashing. Northern States Governors Forum
(NSGF) and Niger State Governor
Babangida Aliyu yesterday raised the
alarm that states may collapse by
January – if steps are not taken to
address the on-going financial crisis. Former Vice President Atiku Abubakar
simply advised Nigerians to brace for
hard times. States are finding it difficult to meet
their obligations, Aliyu told the
Governing Council of the Federal
Polytechnic, Bida in Minna. “I am afraid the way things are going;
states may collapse in the next three
months, if urgent steps are not taken
to address the situation,” the governor
warned. The governor, who was speaking
against the financial situation of the
state, following a request by the
Governing Council for the
government’s support in hosting the
18th Nigeria Polytechnics Games (NIPOGA), said the government had
many constraints due to the country’s
financial crisis. To Aliyu, a forum, such as NIPOGA,
should be encouraged because it will
promote unity among the country’s
diverse nationalities; but he lamented
that the state has no funds to assist as
it would have desired. Aliyu however promised that the state
and the 25 local governments would
join efforts to ensure that the games
succeed. The chairman of the governing board,
Colonel Theophilus Bamigboye, told
their host that the polytechnic would
be hosting the games between
December 6 and 13. Over 4,000 athletes are expected from
36 polytechnics and colleges of
technology to compete for honours in
15 games. All Progressives Congress (APC)
presidential aspirant Atiku said in
Abuja that more Nigerians were likely
to lose their job as a result of the
devaluation of the naira by the Central
Bank of Nigeria (CBN). The former Vice. President said in a
statement entitled “CBN’s desperate
measures- Nigerians should not face
desperate times” that the new
measure by the CBN has the potential
to affect small and medium scale businesses, especially those that rely
on foreign exchange and reduce their
capacity to expand and create jobs. Atiku accused the government of
engaging in frivolous spending,
careless borrowing and poor savings,
pointing out that “this extravagance
and inability to put enough away to
absorb and cushion potential shocks in global oil price fluctuations shows a
high level of negligence and lack of
vision. ”Excessive government borrowing
and higher bond repayment prices
with higher interest rates have also
significantly contributed to the present
problem. It is also alarming that the committee
admitted in the Communiqué that the
depletion of the foreign exchange
“does not seem to have any bearing
on the genuine foreign exchange
need of the country”. This is probably the most sincere admission of the
Bank to its incapacity to discharge a
critical aspect of its mandate. ”The Bank needs to fine-tune its
policies, such that while targeting
currency speculators on the one hand,
we can boost investors’ confidence on
the other to forestall dreadful capital
flight. ”Most importantly, we need to
deliberately intervene for SMEs whose
operations require Foreign
Expenditure so as to ensure that
people can keep their jobs. We cannot
afford to worsen the already bad unemployment rate. There is need to
suspend all non-essential business
regulations that will hamper the
growth and sustenance of small
businesses until such time that the ECA
reaches a certain threshold. ”Unfortunately, there has been poor
disclosure of true state of the country’s
finances. This has made it difficult for
anybody with good intention to
diagnose and prescribe corrective
measures. This has also led to constant mistrust and constant squabbles
between the Federal government and
the states at FAAC meetings resulting
from haphazard and arbitrary
allocation of funds to states. “It is gratifying that the Monetary
Policy Committee of the CBN has now
resolved to take some measures. The
reality is that these actions may have
come too late. The increase in CRR
(from 15% to 20%) and MPR (from 12% to 13%) will obviously increase
the cost of borrowing. “This will affect small and medium
businesses and reduce their capacity
to expand and create jobs. While the
banks and speculators are legitimate
primary targets of the CBN action, the
challenge of protecting small scale businesses must be equally
addressed. ”The movement of the mid-point of
the critical window of the Foreign
Exchange Market from N155 to N168/
US$ has officially devalued the Naira.
In essence, the Naira has depreciated
by 45% within a space of 6 years. “The CBN’s action is only a first move.
The Naira may have to be further
devalued as stated in the CBN
communiqué which claimed that
“unlike in previous episodes the
current downturn in oil prices is not transitory but appears to be
permanent” ”The continued volatility of the Naira
can only spell disaster for the
economy. The Naira already trades
outside the new band, meaning that
all Nigerians will suffer. Small and
medium businesses who were already starved of funds will now have even
more difficulties accessing funds. This
leads to less revenues for businesses,
and less revenues means less potential
for job creation. “Businesses may now have to cut jobs
to balance their books. This is the last
thing Nigeria needs when we should
be creating more jobs. We are facing a
potential economic crisis and the
Federal Government needs to change its ways”. He stressed that planning on a bench
mark of $78 dollars will make
nonsense of the 2015 budget from
the beginning and mag force the
nation to borrowing again, saying
“the proposed crude benchmark of $ 78 is already too high and this needs
to be reviewed. We should no longer
continue to build our castle in the air
when other countries have reduced
their benchmark to below $70.
Planning on a benchmark of $78 will make a nonsense of the 2015 Budget
from day 1 unless we resort to
borrowing again.
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