…Urge Govts to Stimulate Growth through Mortgages, Prompt Salaries
By Nse Anthony-Uko,
ABUJA (Sundiata Post) – Analysts at FSDH have called on governments at all levels to stimulate economic growth by ensuring prompt payment of salaries and also partnering with foreign Development Financial Institutions to make access to mortgage loans easier for the public servants in order to ease the current recession in the country.
The FSDH in its monthly Economic and Financial Market Outlook report, released on Thursday, indicated that immediate causes of the recession include weak and declining consumers’ purchasing power on account of delayed payment of salaries; rising unemployment rate due to build-up of inventories and receivables; weak investment expenditure from firms and government; as well as vague economic policy direction.
The report also recommended the concessioning of major highways and railways in Nigeria should by both local and foreign private sector investors. “We have argued that there is a need for the FGN to involve the private sector to develop the transport network. This will create jobs and also attract foreign capital into the sector and other related manufacturing sector of the Nigerian economy.”
The Nigerian economy officially entered into a recession when the National Bureau of Statistics (NBS) released the Q2, 2016 Gross Domestic Product (GDP) figures. According to FSDH analysis of the real GDP, the mining and quarrying sector recorded the highest contraction in Q2 2016.
“Looking at the state of the Nigerian economy, we think the following are some low hanging fruits that the government can pluck to turn the economy around in the short-term.
“Government at all levels should pay the salaries of their workers. We recommend that government should borrow money to achieve this. This will increase the public debt in the short-term but it will also help to increase spending power, and lower firms’ inventories of finished goods. Consequently, the firms would employ more factors of production and pump money into the economy. In addition, there would be an increase in profits of firms, from which government can realise higher revenue in the form of taxes in the medium-to-long term.
“The current purchasing power of civil servants has been depressed with the current rising inflation rate. Government can partner some Nigerian banks or CBN to extend loans to civil servants to boost consumption. Government will guarantee the loans and deduct monthly repayment at source. This will achieve the same result as the strategy one above.
“Financial institutions should be encouraged and attracted to invest in the real estate sector in Nigeria to provide low income housing estates for workers. Government should also involve the local real estate firms in this exercise. The government should also provide lands while it provides funds through the development partners. Mortgage loans should be provided to civil servants to buy houses. The government should use the Nigeria Mortgage Refinance Company (NMRC) in conjunction with the Deposit Money Banks (DMBs) and mortgage banks to distribute the loans.
“Doing this will mean both the supply side and demand side are adequately taken care of.
The strategy will generate activities in the real estate, manufacturing, construction and finance sectors of the Nigerian economy. These sectors are also labour intensive and generate employment opportunities, with the capacity to increase the revenues of both the Federal and State Governments,” the analysts advised.