Recession: Peter Obi Predicts Long Haul for Nigeria, Warns Economy may Run Out of Control

Former vice presidential candidate in the 2019 general election on the platform of the Peoples Democratic Party, PDP and one-time governor of Anambra State, Peter Obi, has predicted that the present recession that Nigeria has slipped into would be worse than what it was in 2016. Obi, a businessman and financial expert, also painted a gloomy economic outlook for the country, stating that the recession would take a long time “because we were in what we can call a difficult situation before the COVID-19, so our situation is getting worse”. He warned that “Unless we imbibe fiscal discipline, extreme fiscal discipline, we are in for a bumpy situation, the one that will run out of control”.

Obi, who was guest on Sunday Politics, a Channels Television current affairs programme, resisted being drawn into taking a position on the defection by Ebonyi State governor, David Umahi to the All Progressives Congress, APC, positing that time should not be wasted on mundane issues but on a more serious problem of the economy confronting the nation. “We have just gone into recession again in two years and I can tell you this particular recession would be worse. The country is becoming physically unviable; that is our focus now; not about those who are leaving their party or those who are coming in. Our concentration now is how do we pull people out of poverty?”

Putting the blame for the recession on the President Muhammadu Buhari’s government, Obi said while the COVID-19 situation could have contributed to it, the government had not done the right things in the past “which would make it, now that we’ve gone into it, even more difficult to come out of it because if we borrowed our way out of the last one. Now that it’s globally, I don’t know where we are going to borrow the money”.

According to him, “You’ll see that our decline and coming out of it will go deeper than the others. I am not saying COVID-19 didn’t contribute… but we have gone into recession and this recession is going to be worse than the 2016 one because the monies we borrowed to pull ourselves out of the first one was not properly invested. The monies we are borrowing today to keep going are not being properly invested.

“So, what we need now is to go into a very rigorous regime of formulating, a very rigorous, I said it before, regime of implementable and measurable monetary and fiscal policies to drive ourselves out of the present situation. And it is critical that we start doing it immediately. That is why I said from the onset, let’s not talk about issue of political movement and concentrate on our economy. We have a lot of businesses that have collapsed due to COVID-19. Transporters, hoteliers, oil service, everything that were being locked down have not seen any support – monetary and fiscal – yet there is news everywhere of support but nobody is getting the support”.

Reacting to the comment made by the United Kingdom trade envoy to Nigeria, Helen Grant that Nigeria is the fastest growing economy despite the recession, Obi said “you know I’m a trader in Onitsha; I don’t listen to all those comments by the world-class people because most of them don’t actually know what is happening. I operate in the market and I can tell you, yes, the economy is thriving from his own perspective. But I am telling you that most of the micro, small, medium businesses have collapsed. Those who haven’t collapsed are actually on life support. Something needs to be done to pull them out of there.

“We now have to pull this economy from consumption to production; we have to make it a productive economy. Government must now do something; they must reduce this poverty, help to create jobs for the youths, reduce our dependence on oil as the only main source of foreign exchange. There are so many things we need to do as quickly as possible and that is why I talked about cost of governance. Government now has to turn this economy to the private sector-led. If it’s private sector-led, they would reduce all these borrowings that are not productive. If you see any economy where government borrowing is more than the private sector borrowing, that economy is a wasteful economy; it’s a consumption economy”.

He said while he was not opposed to borrowing, his position had always been against borrowing for consumption. “If you must borrow, and this is now critical that we must do that, you must borrow for production. The reason why we are in this mess is that the country is borrowing money and throwing it at consumption. We must borrow strictly for production. The economy is not productive; that is why it’s not creating jobs. That is why it’s not putting food on people’s table. Nigeria is borrowing money, the economy is not growing; the GDP is not growing, and there is something wrong.

“We now have a debt of almost a quarter of our GDP – about $100 billion. Where is the investment for $100 billion? If we invest $100 billion properly, I assure you we won’t be where we are now….What we do here is we borrow money and waste it. Because of it, you don’t see the investment and there is nothing to pay back. That is why we are using about 90 percent of our revenue to service debt because the money you are borrowing is not producing anything”.

Citing two UN reports which ranked Nigeria as the world capital of under-five mortality, surpassing India, and the second report as the highest in drug abuse prevalence at 14.3 percent as against the global average of 5.3 percent, in addition to the COVID situation, the former governor said “Look at infant mortality; it is a health issue. The COVID-19 is a health issue. Look at the drug abuse; it’s a health issue. Why do you think we are having a high level of drug prevalence? Because we don’t have an economy, so young people that would be in the productive sector are doing nothing and are resorting to drugs; young people in the productive sector, doing nothing, are resorting to crimes and all sorts of things”.

He said to deal with these issues there must be properly articulated implementable, measurable policies. “It is not just enough to say we are going to pull 100 million out of poverty. How?”

Obi asserted that with all the crises facing the country, “I think it would be unfair and I urge all politicians across the divide to concentrate on discussing issues that concern the declining of this country now” adding that “Talking about the issue of defection, 2023 elections, and everything, should be off the table now because we have a crisis situation where we have millions of people not knowing where the next meal would come from”.

In his words, “2023 is a long way. Are you sure the way we are going now, we will get there? We had 98 million people under poverty before COVID-19; I can tell you with COVID, that number has escalated. We have unemployment; I can tell you the number of bankruptcies of micro, small, medium businesses from this COVID situation is something that you cannot imagine. So, what we should do now is to concentrate on the monetary and fiscal policies to start pulling people out of poverty.

Describing the cost of governance in the country as “unacceptable”, Obi alleged that management of resources under the Buhari government is “as wasteful as it used to be”. According to him, “They preached against it but I have not seen it. These things are not something you preach; it’s something you must see. I for one, I have been campaigning about cost of governance and it’s something I’ve practiced. The cost of governance in Nigeria is unacceptable anywhere in the world.

“The biggest economy in America is California; a GDP of $1.7 trillion, four times Nigeria’s GDP. The governor of California does not use four vehicles as convoy. It’s followed by New York at $1.5 trillion; again, four times Nigeria’s GDP. Governor Cuomo goes to work by train. I am not saying we should go to work by train; but I am just giving you example. The cost of governance here is unacceptable; there is too much waste”.

Obi enumerated many areas in which cost of governance could be reduced such as traveling, and conferences abroad, amongst others. Drawing from his experience as governor, he said “Every state in Nigeria today owns a lodge in Abuja. Every state in America doesn’t own a house in Washington. This is the biggest economy. The big counties in UK don’t own houses in London. I can go on and on. I have been a governor and I know what it cost Anambra State to keep a lodge in Abuja that we paid about One billion naira to buy. I shut it down, and I rented it out…”.

Peter Obi Photo
Peter Obi, Former vice presidential candidate in the 2019 general election on the platform of the Peoples Democratic Party, PDP and one-time governor of Anambra State
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