Lagos, Feb. 9, 2023 – The Nigerian economy has suffered at least five self-inflicted crises this new year due to wrong policy ‘mis-steps”.
This is the agreement of experts whose views were expressed in the latest edition of Proshares’ “Analysts Note”.
Proshares is a research and market information service company in Lagos.
The experts listed these crises as fuel scarcity as reflected by petrol distribution glitches and the unprecedented creation of a local black market for the purchase and sale of the local currency, the naira, following the central bank’s (CBN’s) currency redesign policy.
Others are the tumbling national productivity on the back of disruptions to physical mobility, financial instability brought about by the after-effects of the federal government’s naira redesign policy and policy-induced uncertainty about the future of the country.
“Analysts believe there is a total disconnect between the government and the governed as the priority of politicians misaligns with the needs of citizens.
“The poor statecraft has heightened anxiety among citizens, leading to collective anger.
“Nevertheless, analysts note that on burning national issues, there are short-term fixes that could reduce the severity of citizens’ pain.
“The old and the new currencies should be allowed to cohabit for a period.
“Economists realise the need for this considering the impact of the velocity of money on nominal national output.
“Economists at the CBN may wrongly believe that creating currency flow disruptions would slow the inflation growth rate,” they said.
The experts said the likely effect of the currency redesign policy could be a reversal of growth in real output, already projected to settle at 3.2 % by the IMF.
“The Proshare outlook projection for real GDP growth in 2023 was 2.9%, but the disruptions to consumer spending, investment, and production could see growth melt to 2.8% down from an estimated 3.0% in 2022
“Recognizing the need to reduce socioeconomic tension on the cusp of national elections, the Lagos State Government has offered a 50% discount on public transport.
“Analysts believe that in the heat of concerns about fuel price increases the FGN should gradually reduce the outlay on petrol subsidy and use the proceeds to purchase mass transit buses that use Compressed Natural Gas (CNG).
“Apart from creating a more efficient pricing template for petrol, the use of CNG would grow the domestic gas value chain and reduce the cost of local mass transportation,” the expert said. (GBN)
