The Chairman of the Nigeria Governors’ Forum, Abdulaziz Yari, has told the newly-elected governors to prepare for another cycle of possible economic recession by mid-2020.
The recession, according to Yari, who is also the Zamfara State governor, may not end until the third quarter of 2021.
Yari spoke in Abuja on Monday at the induction of new and returning governors which was organised by the NGF.
But the Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry disagreed with Yari on the looming recession that he predicted.
They questioned the basis on which Yari based his prediction that the country might go into another cycle of recession from 2020 to mid-2021 on.
However, Yari told the new governors that their tenure might not be a smooth ride due to paucity of funds to execute projects and also pay salaries in their respective states.
He said, “As some of us are exiting as helmsmen of our various states, let me quickly remind the new and returning governors that it may not totally be a smooth ride.
“On our part, we made a lot of achievements in infrastructural development and provision of social services because we enjoyed a relatively high oil price of about $100 to $114 dollar per barrel between 2011 and the middle of 2014.
“However, by mid-2014, the price of crude oil, which is sadly the main driving force of government’s expenditure, dropped to $75 per barrel. It, therefore, became very difficult for many states to even pay salaries of their workers.
“This scenario is a wake-up call for all of you to come amply prepared to face this kind of challenge especially since we are expecting the possibility of another cycle of recession by mid-2020 and which may last up to third quarter of 2021.
“Your good spirit of stewardship will make you contain the situation should there be one.”
Yari, who has won election as a senator-elect, said as members of the National Economic Council, the new governors must work hand in hand to boost the economy in tandem with the global best practices.
He regretted that he and his colleagues had faced the challenge or managing state economies that he said “totally dependent on accruals from the Federation Account” rather than exploring what he called viable alternatives to run the economy.
He said for most of the states, Internally Generated Revenue was nothing to write home about.
“You must, therefore, look inward by boosting your revenue generation base and also utilise them effectively for the execution of projects that would touch the lives of your people,” he told the newly-elected governors.
But MAN and the LCCI disagreed with Yari on the looming recession that he predicted.
The MAN President, Mansur Ahmed, said, “I don’t know from which position he is speaking, whether he is an economist.
Although the economy is not growing as fast as we hope, it is growing nonetheless and all the projections from the World Bank and other international bodies say that it will keep growing.
“Unless something out of the ordinary happens, I do not foresee another recession.”
On his part, the Director General, LCCI, Mr Muda Yusuf, said he could not agree with Yari because he was not speaking in the capacity of an economist and did not put parameters forward to back his projections.
He said, “For anybody to make such a statement there must be parameters. The biggest driver of Nigeria’s economic performance is an external factor, which is the oil price and unless Yari has information that there is going to be a major drop in the price of oil, then I do not agree with his projection.
“If oil stays above $50, there is no likelihood of Nigeria going into another recession. That is not to say that the economy is not weak and to avoid the risk of recession, we need to address our fiscal viability, like the cost of governance, our huge debt profile, the amount we commit to fuel importation and our low level of productivity.”
