Former Deputy Governor of the Central Bank of Nigeria, Prof. Kingsley Moghalu, has said that Nigeria’s moment of reckoning has come.
In a statement at the weekend entitled ‘Nigeria’s COVID-19, Oil Price Crash and Fiscal Crisis Call for a More Fundamental Response,’ the professor of International Business and Public Policy tasked Nigeria to seize the opportunity the crisis presented to restructure and reposition its economy.
He stated, “A combination of the COVID-19 pandemic and the crash in oil prices have created a perfect storm for Nigeria’s economy – which was already fragile, even before COVID-19. I believe the government and people of Nigeria should seize the moment to commence a far-reaching restructuring and repositioning of Nigeria’s economy.”
The presidential hopeful in the 2019 general elections suggested that the country’s large pool of poor citizens, that earned it the world poverty capital title, are only poor due to the kind of politics in play by their compatriots. He attributed the country’s near absolute dependence on oil to its “unworkable constitutional structure, which creates perverse incentives.”
On the International Monetary Fund’s recently approved Rapid Financing Instrument and the expected funding from the World Bank and African Development Bank, Moghalu stated that Nigeria’s disregard of economic structure and constitutional reforms was only postponing the evil day.
He argued, “The Federal Government of Nigeria borrowing $3.4bn from the IMF under the Fund’s Rapid Financing Instrument programme and seeking another $3.5bn from the World Bank and the African Development Bank without structural economic and constitutional reforms, in an age of declining oil revenues, is to postpone the evil day.
“Our country’s moment of reckoning has arrived. The fundamental problem is: our extreme reliance on oil for revenues, no fiscal savings, and unwillingness to cut the bloated cost of governance and restructure Nigeria constitutionally to make its economy more productive, cannot be solved by borrowing for balance of payments. We need more than $7bn to solve the balance of payments challenge.”
For the economist, the implication of the IMF facility will only improve the nation’s reserves temporarily with the artificial economic recovery via the CBN’s interventions, creating a false impression of Nigeria’s economic survival.
He further warned that the country “is entering a dangerously vicious cycle.”