By Yemi Kolapo, Published: Friday, 16 Apr 2010
The Federal Government must immediately begin to spend on key developmental projects to take the country out of recession instead of focusing on banks‘ contribution to recovery, experts have said.
The experts, who spoke in separate interviews with our correspondent on Thursday, said the banks, under the current circumstances, could not do much to help because there were no profitable lending outlets.
Chief Executive Officer, Proshare, online financial analysts, Mr. Femi Awoyemi, said the credit crunch in the economy called for urgent spending by government on specific growth projects, adding that ”when government starts spending, there will be trickledown effect.” He said Nigeria was a consumer-based economy, which meant that a recovery would depend on purposeful spending from the centre, adding that this would give rise to the needed trickle-down effect that would spur growth.
According to Awoyemi, ”The banks are not lending, fine. But who will they lend to? They have genuine reasons not to lend where the fundamentals are not favourable. ”Government has to spend its way up to a limit out of this trouble. We need to spend on projects that create value. Secondly, the country must put an end to negative news to encourage investment and heal the markets.”
To the Chief Executive Officer, Economic Associates, an economic research firm in Lagos, Dr. Ayo Teriba, the 2010 budget is expansionary enough and should help the country through the current phase. He said, ”With a budget of N4.6tn at the federal level, it means that state and local governments will also be spending about the same figure. This means that we have spending plans of about N9tn in 2010. That should be enough.
”What the nation needs at this time is specific project intervention, whether by concession or direct government spending.” Stressing the need for productive spending, an economic consultant, Prof. Kayode Familoni, said many countries of the world had spent their ways out of the recession that came with the global financial crisis with stimulus packages.
Familoni noted that government should urgently provide the enabling environment for businesses, including banks, to thrive, saying that ”if it has not thought of a serious stimulus package, it should do so now. Banks alone cannot do the job.” He said the 2010 budget would have been able to help if there had been enough capital development projects, adding that “unfortunately, I’ve not seen that in the budget.”