By Mike Adeyemi
The Director-General of Kwara State Chambers of Commerce, Mine and Agriculture (KWACCIMA), Prince Ayo Fagbemi has implored the state government to prepare the economy for the post COVID-19 era.
Speaking to National Pilot at the weekend, Fagbemi said the state government must to forestall looming unemployment rate in the state.
According to Fagbemi, the COVID-19 pandemic triggered a public health crisis in Nigeria, a situation that was quickly followed by economic instability.
“The drastic drop in oil price, Nigeria’s major source of foreign exchange, only complicated the situation.While other countries like the US responded to the crisis by doling out trillions of dollars as palliatives, Nigeria offered very little relief.
“The country was also further plagued by a worsening inflation rate and civil unrest/security challenges. The International Monetary Fund (IMF) had since predicted a global recession, expected to exceed 3%.”
Fagbemi noted that “the country’s inflation has gone up to an all-time high. In reaction to that, interest rates had gone down, just as capital importation was down. In the same vein, the exchange rate and the country’s external reserves down were also down.
“Looking at the Indices, what immediately jumps out is that on the average, FAAC allocations are getting smaller. There’s a session that we had a higher share in March of 2020. But what people need to bear in mind is that these figures you are looking at are naira figures.
“And there was a devaluation in between February and March. So, because of that devaluation, the March figures appear to be higher. But if you convert everything to USD at the prevailing rates of such sharing, you will find that the money is actually consistently getting smaller.
“This again has implications in terms of social unrest, security, and the larger economy. States don’t have as much money. It means that some states including Kwara will just go straight up and owe staff. Some states will downsize, and the bottom line is that the unemployment market is going to get much larger.”
He said recession is expected to impact on people’s spending habits, noting that research had shown that Kwarans typically spend more than 50% of their incomes on food as the Kwara is purely a civil servant state.
“The nature of the situation is such that the lesser one’s income, the more likely they are to spend more on food than anything else.
“The implication, therefore, is that people would normally not have enough money for other important things such as investments. And that is not good for Kwara economy.”
Fagbemi stressed that Kwara State Government needed to come up with serious economic actions that would help mitigate the effects of the pandemic.
“The Kwara State Government should perhaps give tax waiver to business so as to help them to expand their economic of scale in addendum to CBN’s interest rate reduction.
“Federal Government should also stop or waive loan repayment by the state governments so as such rebase can be plough back for capital projects of the state and invariably brings about a multiplier effect on the e
By Mike Adeyemi