Nigeria is making progress in the recovery of the economy, Abia State Governor Alex Otti said yesterday.
The governor also gave reasons for the sliding fortunes of the naira. He suggested what the Federal Government can do to arrest the trend.
Otti, a banker, commended the Central Bank of Nigeria (CBN) for the initiatives it took in the last few days, saying such policies were in good fate.
He however urged the apex bank to keep engaging experts and shareholders with a view to reviewing its policies.
The governor, whose chat on a national television monitored by this newspaper, absolved the President Bola Ahmed Tinubu administration of blame on the prevailing economic hardship.
According to him, the present administration was on the path of economic recovery.
Otti said: “On whether the policies taken so far are in order, there’s always a need to rejig and take a second look at those policies.
“This we talked about in the National Economic Council meeting last week in Abuja. This is because things keep changing. I cannot say we are where we want to be, but, I believe that we are making progress.
“Some of the initiatives taken by the CBN have led to some slight changes. For how long those changes will last that I cannot say. I believe once in while we need to look at those policies again, discus review and where necessary rejig them.”
Explaining why the nation’s economy is in bad shape, Otti said: “I believe a major problem that we have is financial discipline. We are dealing with an economy that has so much money in circulation.
“At the last count, if I’m correct, we had about N30 trillion. What happens with Ways and Means was that the quantum of goods does not equate the quantity of the money you print.
“Yet, the quantum of goods in circulation can’t equate the money in circulation; If you had N100 and the basket of goods will be N100; tomorrow, you decide to print N200, that same basket of goods will still be N200, though it’s original value is N100
“Well, may be in the short form, you may print to fix some challenges; but, when it becomes an economic policies that you just keep printing and spending money, you’re just deceiving yourself because that does not improve productivity.
“It does not improve the quantity of goods you have. This is just to break it down in a layman’s language. That is a major problem that we had faced and that is the main reason why we’re battling with inflation, unemployment and all the headaches we are dealing with.
On the forex challenge, Otti said, the market functions on the basis of demand and supply.
“So, why the exchange is going up is because something is happening between demand and supply. Anytime demand outreaches supply, prices will go up. And anytime supply outreaches demand, prices will go down.
“Anything that happens in between is about the policy options that you have chosen. What we’re seeing is that demand is increasing, but supply is not increasing.
“Now, we are dealing with forex supply and demand. We need to keep asking ourselves what to do to increase supply of foreign currency and what do we do to reduce the demand.
“One of those, or two of these, would either give us an outcome that would be better or worse. The outcome you get depends on the input.
“For the economy to recover, the governor said the nation must move from consumption to production. If the economy must recover, we must move to production.
“That does not necessarily mean that we will reduce consumption. What it means is that, we would be consuming what we produce.
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“A situation whereby we keeping importing almost everything that we consume will keep piling pressure on the foreign exchange market.”
Otti, who faulted the claim that the governors now get more money, said the rate of inflation had eroded the gains the state would have making now.
He said: “Sometimes, if exchange rate has increased say by 100 percent and inflation has gone up by 30 per cent, taking inflation alone that means that N100 yesterday worths only N70 today.
“Yes, in terms of absolute figure, monthly allocations from the Federation Account have increased, but in terms of the value the naira can afford, you’ll see that you simply lose your shirts.
“In that light, I wouldn’t agree that we have more allocations when the value of naira has seriously depreciated.”
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