Nigerian professor of political economy and management expert, Prof Pat Utomi, has said the current economic crisis would have been avoided by the Federal Government, if proper policy choices were made, noting that the crash in oil prices was not enough to have resulted in recession.
Utomi noted that if government had borrowed money against its assets, devalued early and applied intelligent leadership, Nigeria would not have been at a crossroad now.
Utomi, who said this, yesterday, in Lagos at the 2016 Men Summit convened by the Catholic Men Organisation of the Holy Family Catholic Church, FESTAC Town, said the collapse in oil prices ought not to have plunged the country into crisis, if the authorities had acted rightly.
He also took a retrospective look at most factors that led to recession in Nigeria and submitted that the attitude of the present government, in the face of the dwindling oil prices, scared investors away from the country.
His words: “There is what we call the big man hamburger quotient which economists use to evaluate exchange rate. Macdonald hamburger in London is exactly the way it is in New York. How many naira will it take to produce this hamburger in Lagos and how many pounds will it exactly cost to produce it in London? This is what is called the big man hamburger quotient.”
At that time, the difference in Nigeria’s nominal exchange rate was there and because the major revenue was oil, whose prices had gone down, all that an intelligent leadership needed to do was to borrow against some assets, ensure they continue to fund things, use strong determination to make sure people don’t buy more than what they don’t need because that is part of what happened and ensure that there is confidence in the system so that people will know that the people in charge know what they are doing.
That would have made people to start transacting normally. But they said how can we devalue? We will not devalue, people who have money and who wanted to bring in money felt that these people are about to make decision that might jeopardise our money tomorrow. So they didn’t bring it.
“Even oil companies were not bringing back their receipts and Nigerians who were exporting were not bringing back, so there was a major crisis. Instead of the thing devaluing by 6 percent, it went down to what we are seeing. So it is self-inflicted and quality of leadership.”
Responding to a question on the fate that befell defunct Bank PHB, Utomi said: “A country where justice is abused. They got CBN to devalue the bank so they can get their foreign partners and take over the bank. That was what happened. Regulatory functions are well abused in Nigeria and it is still going on.”
Report appeared by Vanguard