Imperatives For Managing The Cash Crisis | Independent Newspapers Limited
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Imperatives For Managing The Cash Crisis

Posted: Jul 27, 2016 at 2:00 am   /   by   /   comments (0)

Going by recent reports, the Federal Government may not be able to fully implement the 2016 Budget due to the non-availability of cash.  This situation of course, comes with negative filter-down effects on the economy, which is best left to imagination.

Unfortunately, the truth is that there is no fast and quick fixes to the current situation, Nigerians will have to endure while the economy grows again. In the absence of savings by the immediate past administration, when oil prices were high, Nigerians just have to endure this period of low oil prices. Sadly too, this period of low oil prices may linger for some time. It is also noteworthy to mention that Nigeria is not the only country hit by the falling oil prices, other countries have similar trouble just that the country’s situation is made particularly worse owing to the mismanagement of the immediate past administration.

But the current administration needs to work on extra-shift to make the journey easier for the citizens. This is perhaps the country’s toughest moments with prices skyrocketing, even prices of basic food items have almost doubled and with little money in circulation. Inflation Rate rose to 16.5% as at end of second term up from 15.6% as at end of May 2016, with food sub-sector accounting for about 1.44% growth in inflation. Therefore, a high sense of urgency and certain imperatives must be adopted by the Federal Government, if Nigeria is to weather the storms ahead.

While the government intensifies her efforts to diversify the economy, it has become extremely important for the administration to adopt the dialogue approach with the militants in the Niger Delta. With daily production down to less than 1.5 million barrels (against budget benchmark of 2.2 million barrels) due to the incessant attacks by the Niger Delta Avengers( NDA )on oil pipeline installations, if immediate step is not taken to bring them to a roundtable, the economy may suffer irreparable damage, which will lead to chaos and anarchy.

In the face of dwindling revenue, the Ministry of Finance must adopt prioritisation strategy in the release of budgetary allocation. Priorities should be given to capital projects that will likely produce impacts early. This will yield economic reliefs and benefits for the populace. Also, funds available for capital projects that are season based, especially road constructions that may not take off until the dry season, should be made available for other high impact projects. The key principle here is ‘Capital Rationing’. Funds must be released in order of quickest returns, especially in the short term. In the long run, funds may be released to projects with longer gestation periods but with higher yields.

The Federal Government must not relent in its anti-corruption crusade. Efforts should be doubled to ensure that many of the discovered loots in foreign countries are repatriated to Nigeria. While we support the creation of a separate account for these recovered loots, we would urge the government to utilise, where feasible, some of the funds to augment the shortfall in oil revenue. It will not do the economy any good to keep billions stashed in the CBN vaults when Ministries, Departments and Agencies (MDAs) are almost grinding to a halt due to lack of operational funds.

Managing Nigerians expectations during this trying period has become a major task. The publicity machineries of the federal government including the Ministry of Information and Culture must learn how to convey bad news in a less painful way and not the condescending tone that often characterises their statements. The expectations of Nigerians from the current administration are huge, expectedly so, following the ‘Change’ campaign that paved way for the emergence of this administration.

Finally, Nigerians need a lot of patience and resilience during this period. None of the options available to the Federal Government provides an easy way out. All the options require discipline, sacrifice and change of the people’s taste for foreign goods. The current cash crisis may turn out to be a blessing in disguise for the nation, if the government and indeed Nigerians are able to make the necessary structural and attitudinal change.