Dr. Kalu Idika Kalu, a former Minister of Finance, has decried the current economic situation in the country.
The former Minister of National Planning, as well as a one time Minister of Transport, in a chat with Daily Independent, also regretted the current hike in interest rate by the Central Bank of Nigeria (CBN), saying lack of savings of some percentages of the Gross Domestic Product (GDP) had tended to place the Federal Government at a disadvantage position, leading to the hike in interest rate.
Dr. Kalu reiterated that the Federal Government must address the current economic situation in the country, saying before the government comes up with certain monetary policies, it has to factor in its effects on the people living in the hinterlands, as the policies are not only meant for people in the urban areas as banking services are for all the people in the country.
The former minister, while speaking on the over 25% interest hike by the CBN, said, “It is a big burden on the producers; not just the small producers but even the big producers.
“We have noted people and their industries parking up and leaving the country; this is a shame because it should have been the other way round. We want to attract more investors so we must ensure that we create an enabling environment through improved mobilisation of funds to our public sector, which has one of the lowest public service GDP ratios, even among the developing countries.
“They pay more taxes and levies, and they should understandably demand or deserve more but when we are depending just on oil revenue, you can neglect developing all these other sources of revenue but conditions for service should be improving for the investors and the masses.
“This situation also smacks from non-development of a balanced economy. I say this because conditions for savings should be improving. If we have lots of savings as it was in the early days of Japan, China, Korea and some of these Asian Tigers – they were saving 25% to 35% of their GDP while we are still below 15% – the situation will improve.
“For our savings, it shows that we are less than forty percent of what we should be doing and when you don’t have savings, that is what leads to a high interest rate from the government. But as a nation, we just have to address our economic policy and not just raise interest rates.
“You apply these monetary policies because you have financial institutions spread all over the country; when you adjust the interest rate, whether up or down, you should have a fair assumption of how effective it will be because it will also affect people in the hinterland, not just for people in town,” he said.
The former minister charged the Federal Government to improve energy production in Nigeria by harnessing the country’s rich endowments, mentioning wood, coal, sun, hydro and other natural endowments as areas the country could solve energy crisis and have enough to even sell out.
“We must invest and harness all these energy sources we have been blessed with – solar, coal, oil, gas, hydro where we get energy through steam and water and with all these, we will have no business having high utility cost; you you think of what propelled America to grow so fast, they have so much resources for power that they developed high scale reserves.
“We should have tripled our energy reserves and won’t be at the stage where we are talking about 2.57 megawatts for more than two hundred million people; it’s quite a shame.
“We should not be at a stage where we should be producing less than 20% of what South Africa produces; I mean South Africa that is about one quarter of our population. We should not be far from what India and China are producing because by 2050, we will be the largest population behind India and China.
“What we are producing as energy is like what serves one narrow street in major cities in the world. The emphasis right now is to see how we can encourage production of more energy for the country.
“We should not give power production and distribution to companies who don’t know what to do because there are numerous resources to produce more than enough energy whereby the price per unit will be affordable to Nigerians.”
