Fresh Options On How To Save The economy from Recession

A lecturer at Pan Atlantic University, Dr. Austin Nweze, has advised President Muhammadu Buhari to explore the options of crashing interest rate, stimulating local production, sustaining the ban on the importation of products for which there are local substitutes and rework the fiscal and monetary policies of the economy.

Speaking in Lagos at the weekend, the Political Economist said recession does not happen in an economy overnight, arguing that it must have given policy makers enough warning before unleashing its venom on the economy.

Nweze blamed the government for applying a wrong therapy to the bad policies past administrations  by rejecting some of their policies, arguing that the government should be a continuum.

He also argued that what led to the suddenness of the recession was the wrong policy choices made by the administration, especially in its fight against corruption.

He said that the concept of the “unholy trinity” of interest rate, forex and inflation work together and regretted that government, through the CBN has been pursuing a policy of ‘inflation targeting’which he said is not the right approach to adopt as a nation, especially in the face of volatile oil prices and dwindling economy. Interest rate, he argued, has a way of affecting the economy.

He said: “What I expected the government to do was to crash the interest rate to a manageable level. During the global financial crises, many developed nations such as Britain and the United States, operated a zero interest rate. What this does is to give money to businesses at a cheaper rate for them to expand. This would lead to employment of more people and then production will increase.”

He added that in the long term, both factors would merge somewhere and would trigger a drop in inflation because production would have increased. 

He said for now government is just embarking on a wild goose chase. 

“They are just looking for quick fixes to get out of the recession, whereas they should not bother about getting out of recession hurriedly because recession must run its full course. For us to get out of this recession, we are looking at 2018 to 2019.”