A foremost developmental lawyer and former President of Nigerian Bar Association, Olisa Agbakoba (SAN) has noted that Nigeria needs about N100trillion to mitigate the effect of COVID -19 pandemic on her economy, even as he urged the federal government to encourage banks to lend money to investors at very low interest rate.
Agbakoba, who made his views known in an interview with National Light Newspapers in Lagos, also expressed worry that there exist several idle resources in the maritime sector, which if harnessed, have the propensity to contribute well over N7trillion to national economy annually.
On what should be considered to be more proactive steps to cushion the effect of the pandemic on the economy, Agbakoba said, “When an economy is underperforming, the fiscal policy must be expansionary, that means government must spend money to come out of the looming recession. Government should adopt proactive and pragmatic approach to escape the impending loom. Our fiscal policy must be expanded”, he said.
“When you see the cloud thickening, surely rain must come. A lot of countries especially the United States of America have said they would spend so much money to bring back the battered economy because the government is backing the recovery of the economy. Here, Nigeria does not appear to have even basic arithmetical statistics; How many are unemployed, what are the issues, then, they respond effectively. It is important that Nigeria has an expansionary policy, so that they pump money into the system. It is not even the matter of borrowing because all the monies they borrowed, none is sure of what exactly they are for. I think that is what the issues are all about.
“Nigeria has to go expansionary. I applaud CBN Governor, Godwin Emefiele for his intervention fund scheme, which he gave money to banks to give out to people across different sectors at 5% interest rate. One more thing that needs to be done is what is called quantitative easing; to pull down the interest rate. I think government needs about N100trn to recover the damage COVID -19 has done to the economy. This money will go into public works and the multiplier effects on wealth and job creation will be amazing. So, government should support people by pumping money into banks and ask them to lend to people at very low interest rate. In US, banks lend at usually free interest rate. The key thing that drives business is access to money.” Agbakoba remarked”.
He recalled that what former President Roosevelt of America did was to set up an electricity company, pump in money and asked it to create 24 million jobs. “Take Apapa for example, government can ask a contractor doing a road, employ 500 ‘Area boys’, some will be carrying head-pans, others carrying shovels; you have created jobs”.
Agbakoba, who is also former President of the Civil Liberty Organization noted that government has not shown full plan on how it intends to recover the economy.
He emphasised that if interest rate goes down, people will be attractive to borrowing, noting that it is the duty of government to use macro economics to spur spending by way of reducing interest rate to as low as 5%, saying that giving out loan at 25% is killing. He cautioned that if they don’t do that people who have great ideas will not have access to money, remarking that it is not the Dangotes that grow economy but the small businesses.
On his assessment of the potentials in the maritime sector, he reiterated that the sector can contribute over N7trillion annually. He noted that with Oil wells down, if the right policies are properly applied, maritime is the second highest economy. “There are 34 value chains in the maritime sector but for me, there are four value chains that I know of:- Law, Shipping, Banking and Insurance. Foreign shipping companies have about 2trn Dollars worth of Oil rigs. NIMASA does not have a register of them and recently, when NIMASA imposed charges on them to pay 3%, they went to court. If you calculate what NIMASA can make only on oil rigs, it is a lot of money.
“The CBN Government held a meeting on how the economy can be rebooted and the Minister of Transport, Rotimi Amaechi who is trying to float a national fleet asked the GMD of the Nigerian National Petroleum Corporation (NNPC) why is it that he does not want to help him to build a national fleet because it is the GMD that ought to enforce the shipping components of crude oil. So, Nigeria is only looking at crude oil. They don’t know that the shipping components of crude oil worth a lot of money,” Agbakoba said.
The maritime lawyer recalled how he pushed for the Cabotage Act in 2004 to promote dominance of Nigerians in coastal trade, but added that as a result of failure of Cabotage, foreign vessels control our coastal trade. “Imagine if the British Airways were to come to Nigeria and also have smaller planes that go to Port Harcourt, Enugu and cities in the Northern parts of the country, it will kill our domestic flight. I can’t understand why Cabotage doesn’t work. There is this national content policy; you can find many people who are non-Nigerians who are doing non-essential jobs aboard the vessel”.
Agbakoba, revered as the doyen of maritime law practice, also wondered why government has not created Ministry of Maritime Affairs when Aviation which is a smaller industry has a ministry.
He disclosed that like Fly America Act, he has “Fly Nigeria bill currently in the National Assembly. He optimised that if the bill is passed into law, Nigeria will be generating N10trn to N20trn. The Fly America Act, he said, implies that every person (whether a Minister, Commissioner or Senator) that originates in America that relates to public work must fly an American flight. He called on government to come up with a policy that dwells on economic nationalism, adding that we need to work on our trade policy that will make it difficult for foreigners to come in, believing that as soon as these policies are operational, you see small businesses growing.
Agbakoba however noted that Africans are very lucky that they have not been ravaged by the dreaded coronavirus pandemic as it did to Europe, a development he thinks could be because Africans are used to having Malaria and typhoid and therefore, may have developed some sort of immunity. He said that he had written the Minister of Health, and pointed out the danger of omitting traditional and herbal medicine in their search for possible panacea to the prevention and treatment of the disease.
“I am happy that they have attained the kind of traditional medicine they are looking at, admitting that the emergence of COVID -19, which broke out on December 31, 2019, in far away Wuhan city of China has dealt a great harm to the economies of the world, especially ours that is not strong at all; economy that is built around certain economic policies”, Agbakoba said.
Agbakoba’s worry is the emerging sign that Nigeria is heading towards another round of Economic Crisis, an indication of worse days to come.
Sharing Agbakoba’s contingency plans to cushion the effects of the looming recession, business analysts and government authorities, said the reason for fear of hard times to come is because the country is part of the global economy, which is facing its worst economic crisis since the 1930s. The International Monetary Fund (IMF), under the close watch of Kristalina Geogieva, had dropped the hint of the recession in its 2020 forecast because of the coronavirus pandemic and the attendant lockdowns.
The multilateral Financial Institution had predicted a 3% contraction for the global economy this year, noting that it will be worse in the developing countries. This is because it has already started manifesting in Nigeria, an oil producing country.
Recall that Hajia Zainab, Minister of Finance, Budget and National Planning, had also given an insight into the looming recession. The pandemic, she said, had resulted in drop in oil revenue due to drop in oil prices in the international market and drop in non-oil revenue due low volume of cargo traffic at the nation’s seaports.
The ministerial warning did not come to many as a surprise. As at last March, Hajia Ahmed, had started drumming it into the ear of Nigerians that the country”might go into another round of recession if the coronavirus pandemic continues in the next six months when the IMF reached out to member countries ”to take swift and sizable action to support economic recovery as the disease has not shown any sign of declining
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