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Paul Alaje: Wale Edun Needs To Redirect Nigeria’s Economy From Consumption To Production 

“When you’re consuming and you’re devaluing, you’re only digging your own grave.”

Nigerian Economist Paul Alaje has said the newly sworn-in Minister of Finance and Coordinating Minister of the Economy, Mr. Olawale Edun, has the responsibility of utilising fiscal policy to transform the Nigerian economy into a production-oriented one.

In an interview with ARISE NEWS on Tuesday, Alaje said that Edun occupies a unique and important position in which, after the president, people will want to speak to the minister to know how he is utilising the fiscal policy to largely help the country in reducing poverty, hunger and deprivation.

However, he stated that changing the economy is not a one man job, hence, Mr. Wale Edun should liaise with NNPC, minister of state for petroleum and other key stakeholders to sort out what each entity needs to change the orientation of the economy into a producing one.

Alaje reiterated that the DisCo’s proposed increase of tariffs should be rejected since it could lead to the closure of companies and industries, hence, he asked if Edun can provide such support again for the power sector.

Following President Tinubu’s nationwide broadcast where he stated his plans for SMEs, Alaje stated that both the money and target number is small saying “how can we be targeting 500,000 out of 40 million (SMEs),” also noting that the equivalent of the proposed N1 million is, today, about N500,000.

He said, “I think the president should do about N5 million for not less than 10 million SMEs.

“Give 52% as grant to businesses that are export-oriented, and let them also have a minimum of two employees, so if you’re targeting 10 million, you’re saying you want to engage 20 million extra people.

“What will happen to unemployment, it will crash significantly. What will happen to exports, it will increase. What will happen to foreign reserve, it will improve and you have supported production.”  

Consequently, policies will come around this proposal, according to Alaje, with the presence of the Ministry of Finance and Ministry of Trade.

He added that the Minister of Blue Economy has the duty of transforming the current difficult state of exportation to “a walk in the park.”

Alaje spoke of a major disconnect between what is happening in the older generation and the generation today, hence, the age bracket of political leadership in Nigeria should be brought down. He tied this into looking at the quality of education in Nigeria and integrating a fresh perspective of technocrat and production-oriented schemes reflected in the new generation.

JP Morgan had reported that Nigeria’s net external reserves were at an all-time low of $3.7 billion at the end of last year due to a mix of foreign exchange forwards, securities lending, currency swaps, and outstanding contracts.

Alaje said that “With this report published by JP Morgan and the report shared by the big two out of the major audit firms in Nigeria and around the world, Nigeria will also be looking at borrowing money shortly.

“Our position now is really weak.

“The coordinating minister of the economy needs to talk to the acting governor of central bank to come out, to let us see why we have an audited report that said otherwise as at December last year. Does it mean that a lot has changed in such a time or do we need to re-investigate.”

He also stated that the average Nigerian spends their income on marginal propensity to consume; marginal propensity to save; marginal rate of taxation, then “the big elephant in the room,” that is, the challenge that marginal propensity to import poses, which is the proportion of income spent on imported commodities.

“When you’re consuming and you’re devaluing, you’re only digging your own grave,” he said, “How the poorest and the richest spend their money in the country, marginal propensity to import is about 0.75 which is huge, so you shouldn’t be devalued, you should rather look for means of defending your reserve.”

Alaje said that the Nigerian economy is in a horrible position of debt and that an institution needs to be created around the maritime sector. He said the sector is losing approximately 50 billion dollars simply due to lack of implementation of some of the policies that have been passed which can generate significant revenue. 

“How do we implement these policies? What are the bottlenecks? How do we promote exports if we don’t have a functional port and we don’t spread our port all around the country?” he questioned.

Frances Ibiefo

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