Nigerian Economy: things Are Getting Much Worse Very Fast – AMCON Boss, Chike Obi

The Managing Director, Asset Management Corporation
of Nigeria, Mr. Mustafa Chike-Obi, has disclosed that the
agency will sell two of the three nationalised banks this
year.

"We believe that at least two of the bridge banks will be
sold this year. We have to make sure it is done properly.
Enterprise should be sold in June; and Mainstreet by
October," said.

The rescued or bridge banks are Enterprise Bank
Limited (formerly Spring Bank Plc); Mainstreet Bank
Limited (Afribank Plc); and Keystone Bank Limited
(Bank PHB Plc).

The AMCON boss, who was the guest lecturer at the Hallmark Public Policy Forum on Monday, gave the
update while speaking on the topic 'Emerging market
challenges and the imperatives of economic reforms'.
According to him, the challenges facing emerging
markets such as those in Nigeria had to do with lack of
adequate capital and competence with the problem of
destructive culture, adding that the country needs to
utilise its unused borrowed capacity of at least N28tn to
enable it join the league of developed countries.

He said, "When I talk about borrowing, Nigerians have
aversion to borrowing because there is a history of
wasted money. But let me give you a few numbers you
should bear in mind. When our GDP is rebased this year,
we will have a public to the GDP of roughly 12 per cent.
The international standard is 60 per cent public debt to
the GDP.

"If you look at countries like the United States, India, Brazil, they are well over 60 per cent public debt to the GDP. Some of them are even closer to a 100 per cent public debt to the GDP. So if we go from 12 to 60 per cent public debt to the GDP, that means an unused borrowing capacity of N28tn that Nigeria is not using. It is also a fact that no nation has developed with a public debt to the GDP ratio of under 60 per cent anywhere and anytime in the world. It is not possible."

Chike-Obi further stated that it was high time the country declared employment emergency, noting that the nation's unemployment rate was alarming.

He said, "Let me go into the Nigerian problem in a much
detail. I think we are in a very critical period of our
economy. I do not share the view that things are getting
better. I think things are getting much worse very fast.

"We have to confront a critical problem in Nigeria, which
is that we are a 170 million people, growing at 3.5 per
cent a year; which is roughly six million Nigerians a year.
Based on the model you wish to employ, that means you
have to create approximately four million jobs for those
people a year.

"In addition, we have a backlog of unemployed people.
Every Nigerian parent today is very concerned about
jobs for their children. And we need to create six million
new jobs a year. This problem is very exponential. If you
don't address it today, five years from now, you have to
create eight million jobs a year. At that point, I don't
think the society will hold. We have an employment
emergency in this country."

Via: Dailypost