Trouble as former CBN deputy governor gives hint on when hardship in Nigeria will end

A former presidential contender, Prof. Kingsley Moghalu, has predicted that the ongoing economic downturn and its repercussions will endure for a minimum of three to five years.

The political economist attributed Nigeria's struggling economy primarily to unprecedented corruption and incompetent policy response.

During his keynote address at the Leadership Newspaper Group 2024 Conference and Awards, which took place in Abuja on Tuesday, the former deputy governor of the central bank made this statement.

Nigeria's economy is in distress

He claims that the state of Nigeria's economy today is a "Chronicle of a Death Foretold", resulting from many decisions the country has made.

Moghalu said that hyperinflation, the crisis of the value of the naira, debt distress, revenue challenges, unemployment, and extreme poverty were all consequences of an economy that had been mismanaged for a long time.

He said:

“The past ten years were particularly ruinous. They were the years of the locust, marked by unprecedented fiscal policy mismanagement, unproductive external borrowing, unnecessary budget deficits, illegal Ways & Means lending by the Central Bank of Nigeria to the federal government to the tune of N30tn, and unprecedented corruption.

“Earlier, a combination of oil price shocks and an incompetent policy response from the CBN, in the form of an attempt to fix the exchange rate, all helped give us two recessions within seven years. Many of these things happened because, as we witnessed, there was a successful political assault on the central bank's independence, with the storekeeper willingly handing over the store keys to the marauders.”

Moghalu asserted that Nigeria is in a crisis regardless of short-term measures, adding that "the crisis and its effects would be with us for a minimum of three to five years."

Hasty government policies

Regarding the latest economic reforms implemented by the federal government, the political economist opined that the choices to eliminate the petrol and FX subsidies were audacious and wise.

He, however, criticised how the administration handled the two significant policy changes that have caused the nation's economy to spiral out of control.

He claimed that the first mistake was introducing these policies hastily without adequately planning for the following morning.

Moghalu suggested that it was a mistake to unify exchange rates and continue trying to "float" the naira in a situation where there was a lot of liquidity.

He claimed that this choice was a factor in the naira's downward spiral since there was no quick tightening of the financial system to support it.

In his advice, Moghalu said the absence of strategy and a lack of philosophy and knowledge of economics called for a daring, imaginative, and well-planned strategic initiative for fundamental economic rebirth.

He said: “This project, which we shall for our discussion call Project “3-in-3”, should be aimed at the rebirth of three strategic sectors in three years.

“The project, to be scoped and commissioned within the next three months, is to be predicated on massive investment in the development of railway lines (linking all state capitals), housing (mortgage-ready and qualitative to reduce housing deficits incrementally), and agriculture (covering the value chain), to be delivered in the first phase over three years beginning in 2024."