Chukwuma Soludo, a former governor of Central Bank of Nigeria (CBN), says the root of the economic crisis currently rocking the country can be traced to the “bad policy of borrowing” when the country was in a period of boom.
Soludo also blamed the the treasury single account (TSA), which according to him, channelled all public sector funds to the CBN and stuffed the economy further instead of oiling it with liquidity.
Soludo said this on Thursday while speaking at the 2017 international conference organised by the department of business administration of Nnamdi Azikiwe University, Awka, Anambra state.
He said managing and exiting a recessed economy was not a rocket science, noting that Nigeria could overcome the current economic setback faster if the government put in place appropriate policies.
“Part of the problem Nigeria is having in its quest to get out of recession is poor policy,” he said.
“Huge spending by government was one of the ways of solving the economic problem, but two wrong steps by government ruined that.
“They brought in the treasury single account (TSA) and channelled funds into one account that did not allow spending… they also fixed the price of foreign exchange. These are things you do not do.”
He said the recession which became obvious one year into the life of the present administration would not have degenerated but for the inability of policy makers to rise to the challenge.
Soludo added that part of the problem was because Nigeria failed to save funds at a time when there was unprecedented boom in oil prices.
“Poor ideas transcended over superior ideas, and we went into recession which was slightly avoidable, that is why academics must be alive to their responsibility of nudging us to reality,” Soludo said.
“If you borrow at a time of boom, what will you do in a time of lack? Even my grandmother in the village knows this.
“At the same time when we had boom, we had unprecedented unemployment.
“The problem with Nigeria’s successive policy makers is that once oil goes up, we take it that it will remain so, and we continue to spend.
“But once there is a shock and oil goes down, we just think it is temporary and we start borrowing.
“Nigeria can be fixed, and what it needs to fix Nigeria is not rocket science, but we do not have the will to fix her.”
Soludo called for the diversification of the economy beyond oil to save it from shocks induced by vagaries of the international oil market.
He also called for decentralisation from Abuja to help the states and local governments live beyond “running to the centre for their existence and sustainability”.
“Another way of tackling the challenges of the country is to unbundle Abuja, trim down the exclusive list,” he said.
“We do not have to be running to Abuja for everything, that was why I was surprised when some people canvassed that local governments should be going to Abuja to take their allocations directly.”