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Whatever the arguments, the economy is in dire straits

All the critical stakeholders have had their say on the controversy over whether the Central Bank of Nigeria (CBN) printed additional N60 billion for the three federating units to share last month. The fact, however, remains that the Nigerian economy is in dire straits. Buffeted by mounting public debt, crushing poverty, galloping inflation, weak naira and worsening unemployment, the nation’s woes are more than a handful. Bedevilled by these challenges, exacerbated by the COVID-19 pandemic, the nation deserves effective strategies by fiscal and monetary authorities to steer the economic ship out of the present doldrums. We have had enough of empty rhetoric.

Edo State Governor, Godwin Obaseki had stirred the hornest’s nest when he recently alleged that the federal government printed about N60 billion to augment the distributable revenue shared among stakeholders by the Federation Account Allocation Committee (FAAC) last month. “When we got FAAC for March, the federal government printed additional N50-N60 billion to top-up for us to share. This April, we will go to Abuja and share. By the end of this year, our total borrowings are going to be between N15-N16 trillion,” Obaseki had told his officials at a public session.

Quite naturally, this claim has not gone down well with both the federal government and the Central Bank of Nigeria (CBN). First to repudiate Obaseki’s claim was the Minister of Finance, Budget and National Planning, Zainab Ahmed. “The issue that was raised by the Edo State governor for me is very sad because it is not a fact. What we distribute at FAAC is revenue that is generated and in fact distributable revenue is public information. We publish revenue generated by FIRS, the Customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC,” said Ahmed.

Having cleared the air on Obaseki’s allegation, there is no denying the huge trust deficit between the government and the governed at practically all levels. Despite several rebuttals, including by the National Economic Council chaired by Vice President Yemi Osinbajo (with all the governors), not a few Nigerians still believe Obaseki because our leaders have often breached the social contract with the people. All factors considered, we do not believe that the allegation by Obaseki can be supported by any empirical fact. But we nonetheless call on the CBN and the fiscal authorities to look beyond the governor’s allegation and effectively respond to the pressing economic challenges confronting the nation. This is because there are indeed worrisome developments.

The CBN backstopped a total of N2.8 trillion in support loans to the federal government in 2020 following the latter’s failure to meet its revenue targets due to the impact of the fall in oil prices and Covid-19 pandemic. The support came in the form of Ways and Means, a provision in the CBN Act that allows the government to borrow from the apex bank. At N2.8 trillion, the CBN basically lent the government 52.8 per cent of its current year revenues or 62.2 per cent of 2019 revenues of N4.5 trillion. This seems to be a clear contravention of the act which states that the outstanding amount should not exceed five per cent of the previous year’s actual revenue. The provision also requires that the loans be repaid at the end of the year, failure which the CBN will no longer be able to lend to the government in the following year.

There’s nothing to show that the loans have been repaid even as the implementation of the 2021 budget had commenced. These are some of the actions that often lead to allegations like that of Obaseki.

New Release: The African Economic Congress 2020 Report.