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Recession: Atiku, SERAP urge focus on new priorities, stop to borrowings

Former Vice President and Presidential candidate of the opposition Peoples Democratic Party (PDP) in the 2019 election, Atiku Abubakar, on Sunday said that Nigeria needs to stop borrowing to avert sliding into a further recession.

Atiku, in a series of posts on his official Twitter handle, while reacting to Nigeria’s slip into another recession said the nation must stop borrowing for anything other than essential needs adding that, the more the country keeps borrowing, the more it stands the risk of defaulting.

This is just as the human rights group, Socio-Economic Rights and Accountability Project (SERAP) has written an open letter to President Muhammadu Buhari, asking him to cut the cost of governance and implement bold transparency and accountability measures in response to Nigeria’s second recession in five years.

In a statement by SERAP Deputy Director, Kolawole Oluwadare, the group urged President Buhari “to put the country’s resources at the service of human rights, and to support the less well-off to enjoy an adequate standing of living through cutting the cost of governance and implementing bold transparency and accountability measures in your government’s response to Nigeria’s recession.”

Official figures published by the National Bureau of Statistics (NBS) on Saturday, November 22 show that the economy shrank again in the third quarter of this year. The nation’s economy maintained a second consecutive negative growth after contracting by 3.62 percent in the third quarter.

The cumulative Gross Domestic Product (GDP) for the first nine months of 2020, therefore, stood at -2.48 percent just as it recorded a -6.10 percent in the second quarter. The same happened in 2016, making it the second recession in a space of four years.

Former Vice President Atiku Abubakar, in calling for a halt in further borrowing, said that “the more we borrow, the more we will need cash to make interest and principal payments, and the less cash we will have to make necessary investments in our economy and our people. If we keep borrowing, we stand the risk of defaulting, and that will make recession a child’s play, because we will lose some of our sovereignty.”

In his tweets titled ‘We Must Exit This Recession With Precision,’ Atiku regretted that the dip into another recession “could have been avoided had this administration taken heed to patriotic counsel given by myself and other well meaning Nigerians on cutting the cost of governance, saving for a rainy day, and avoiding profligate borrowing.

“For a start, the proposed 2021 budget presented to the National Assembly on Tuesday, October 8, 2020, is no longer tenable. Nigeria neither has the resources, or the need to implement such a luxury heavy budget. The nation is broke, but not broken. However, if we continue to spend lavishly, even when we do not earn commensurately, we would go from being a broke nation to being a broken nation.

“As a matter of importance and urgency, every non-essential line item in the proposed 2021 budget must be expunged. For the avoidance of doubt, this ought to include estacodes, non-emergency travel, feeding, welfare packages, overseas training, new vehicle purchases, office upgrades, non-salary allowances, etc.

“Until our economic prospects improve, Nigeria ought to exclusively focus on making budgetary proposals for essential items, which include reasonable wages and salaries, infrastructural projects, and social services (citizenry’s health, and other human development investments).

“Additionally, we have to stimulate the economy, by investing in human development and increasing the purchasing power of the most vulnerable of our population. Only a well-developed populace can generate enough economic activity for the nation to exit this recession.

“We must invest in those most likely to be impacted by the effects of the recession, the poorest of the poor. As well as stimulating the economy, this also ensures that they do not slip further into extreme poverty.

For example, a stimulus package, in the form of monthly cash transfers of ₦5000 to be made to every bank account holder, verified by a Bank Verification Number, whose combined total deposit in the year 2019 was lower than the annual minimum wage.”

Atiku proposed “a 15 per cent tax on all Business and First Class tickets sold to and from Nigeria, on all luxury car imports and sales, on all private jets imports and service charges, on all jewelry imports and sales, on all designer products imported, produced or sold in Nigeria, and on all other luxury goods either manufactured or imported into Nigeria, with the exception of goods made for export.

“The proceeds of this tax should be exclusively dedicated to a Poverty Eradication Fund, which must be managed in the same manner as the Tertiary Education Trust Fund, or the Ecological Fund.

“I further propose that a 1% poverty alleviation tax should be legislated by the National Assembly on the profits of every International Oil Company operating in Nigeria, and international airlines doing business in Nigeria, which should also go towards the proposed Poverty Eradication Fund. It is inhumane for us as a nation to increase the cost of goods and services that affect the poor, while keeping the cost of luxuries fairly stable. We must flip this, and flip it immediately.

Counseling for a stop to borrowing, he said: “The more we borrow, the more we will need cash to make interest and principal payments, and the less cash we will have to make necessary investments in our economy and our people. If we keep borrowing, we stand the risk of defaulting, and that will make a recession a child’s play because we will lose some of our sovereignty.

“I urge the administration of President Muhammadu Buhari to swallow its pride, and accept its limitations, so that they can open their minds to ideas, without caring who the messenger is. For as Deng Xiaoping said, ‘It doesn’t matter whether the cat is black or white, so long as it catches mice.’”

SERAP, in its own statement, said it is seriously concerned about the adverse consequences of the economic crisis on the human rights of poor and vulnerable Nigerians, including denying them access to essential public goods and services such as healthcare, education, clean water, and regular electricity supply.

According to SERAP, prioritising the human rights of poor and vulnerable Nigerians means providing public goods and services free of charge for those who cannot afford them.

“This is the time to prioritise poor and vulnerable Nigerians, and to ensure that any response to the recession goes well beyond bailing out large companies and banks,” the statement added.

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