A call has been made for an urgent rescue mission for Nigerian states which previously depended on oil revenue.
The chairman of the Nigerian Governance Forum (NGF) and Governor, Abdulaziz Yari, made this appeal after painting a gloomy picture of the Nigerian economy.
CNBC Africa spoke to Ayo Teriba, CEO Economic Associates, on the future of Nigeria’s states facing increasing pressure to stay afloat. According to Teriba, the whole country is under pressure, however he cautioned that “we should be careful not to over-exaggerate the problem as there are some silver linings to the fiscal situation.”
He mentioned that the new regime, under Nigerian President Muhammadu Buhari, is blocking a lot of leakages which have caused a reduction in the funds available to all the chairs of government, needs to be focused on. According to the NGF Chairman, “States don’t enjoy the same financial flexibility that the federal government’s does.”
He was referring to the bond markets and the potential to borrow, as the need is imminent. Teriba responded in agreement to the statement substantiating that state should qualify for access to the financial markets. “That’s something they need to take federal government up on.”
According to Teriba, there’s no reason why the federal government should have more access.
At the last Monetary Policy Committee (MPC) meeting, the central bank governor alluded to fears of a possible recession in Nigeria. Teriba said he “disagreed very strongly” with any suggestion of a recession.
He provided context that 2015 was not a typical year for Nigeria. “We spent the first three months or so, dealing with an election. The next three months, one government was trying to hand over to the other. And since June, the new government has been trying to find its feet.”
The political landscape was muddled with policy uncertainty and major decisions were postponed. “Well, 2015 is basically a lost year … even now the cabinet is not known. So let us take that as the price we pay for political transition.”
Teriba said confidence must be vested in the government that will hit the ground running next year and that will lift the economy.