Experts Outline Strategies to Cushion Imminent Recession

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A team of financial sector experts presage an impending recession in the third quarter of 2020 owing to the coronavirus pandemic which is presently crippling the global economy.

To cushion the impacts of the recession, they recommend, incentives and initiatives should be put in place to stimulate domestic private sector investments and Foreign Direct Investments (FDIs).

They also noted that Nigeria needs to diversify its economy, and exploit other sectors such as agriculture, manufacturing, Small Medium Scale Enterprises (SMEs) while providing the requisite infrastructure for their operations.

These experts spoke at an advocacy dialogue Webinar, organised by the Centre for Financial Studies (CFS) of the Chartered Institute of Bankers of Nigeria (CIBN), titled: ‘COVID-19: Tough Choices for Banking and other Businesses’, advised banks to maintain a diversified portfolio and effectively leverage digital and technology solutions to keep their operations running.

The Managing Director and Chief Executive Officer, Stanbic IBTC Bank, Dr. Demola Sogunle, stated that  Nigerians needed to be merchants of hope while appealing to fiscal authorities to explore initiatives that would attract domestic investment and also FDIs.

Sogunle charged the government to properly utilize its idle assets and ensure the oil subsidy is backed by law to prevent frequent policy changes.

The MD also admonished the Federal government to deploy creative means in ensuring other sectors contribute to the Gross Domestic Product (GDP) to reduce the country’s dependence on oil. He also enjoined states at the sub-national level to look inward.

He advised the government to implement fiscal policies that benefit SMEs and devise innovative ways to invest in the nation’s creative industry, analysts, big data, and artificial intelligence specialists, among others.

Speaking on how financial institutions can create value despite the pandemic, Sogunle said banks need to decide whether to fully automate their processes or stick to manual operations because the future of banking is on digital platforms.

The Director General, Nigeria Employers’ Consultative Association (NECA), Olawale Timothy, stated that employers should be conversant with legal provisions and labour law issues before taking decisions in the world of work, especially regarding health and safety.

Timothy further noted that NECA expected businesses to voluntarily comply with rules recently reeled out for businesses to follow. He charged the Central Bank of Nigeria (CBN) to widen its scope of consultation and to always engage professionals like NECA and the CIBN before reaching any conclusion or decision that would affect the nation’s economy and its citizenry.

The Chief Economist/Director Research and International Cooperation, Afrexim Bank, Dr. Hippolytee Fofack, stressed that most economic crises that have affected African countries were exogenous. For instance, the 2008/2009 financial crisis indicated that Africa has been at the receiving end of global shocks.

Fofack said it is important to put in place strategies to prevent systemic and direct transmission of global shocks. “As long as we diversify, we would be able to strengthen the Naira. We should also change the dynamics of FDI to long-term called patient capital, which would help ensure the stable flow of foreign reserves.”

He pointed out that the channel of remittance, through which revenues are remitted to the government, is a problem, adding that only a small part of revenues get to the government.

He reiterated the need for the government to support intra-African trade by 50 percent and ensure collaboration between African-member states. Chief Executive Officer, Nigerian Economic Summit Group (NESG), ‘Laoye Jaiyeola, said for businesses, tough choices would also have to be made regarding digital assets as well as working remotely and increasing internal control.

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