Professor Pat Utomi has blamed current economic recession on faulty policy and regulations of President Muhammadu Buhari’s administration.
Utomi who spoke in Lagos at the weekend said Nigeria’s economic challenges goes beyond the fall in oil price at the international market.
According to him, “Oil, even though it is special in the sense of the revenues it contributes to foreign exchange, constitutes not more than 15 per cent of our Gross Domestic Product. If price factors go south in 15 per cent of GDP, it shouldn’t drag the entire economy into recession.
“But we made the wrong policy (and it is on record that I said in September last year that this is what will happen from what we are trying to do. This is foolish. I was accused of all kinds of things, but what we said has happened).
“About September last year when this ‘we will not devalue’ thing happened, there was a gap of about six percent between the nominal exchange rate and the purchasing power parity, which is the true exchange rate.
“Now, if you want to buy McDonald hamburger, which is exactly the same in London as in New York and Lagos, how many Naira will it take to produce it in Lagos, how many pounds to produce exactly that in London, how many (dollars) in the United States? This is called the big marker – hamburger quotient – which the economist uses to evaluate exchange rate.
“And that time, the difference between Nigeria’s nominal exchange rate (because your major revenue, which is crude oil, is coming south), all that an intelligent leadership needs to do is borrow some assets, ensure that you continue to fund things, use some devaluation to make sure people don’t buy what they don’t need, then watch out for what happens.
“Confidence would be in the system that these people know what they are doing; people will continue to transact their businesses normally. But when someone says ‘we will not devalue,’ people who have money will say ‘ah, this nation can make decisions that can jeopardise our money tomorrow.’
He continued: “Even oil companies were not bringing back their receipts, Nigerians who were exporting were not bringing back (forex), and there was a major crisis, and instead of the thing devaluing by six per cent, we are down by what we are seeing.”
Utomi who was the Vice Chairman of liquidated Platinum Habib Bank (Bank PHB), said the personal interest of the Yar’Adua family consumed the then thriving bank.
