 Welcome back, you're still the breakfast and plus if you're African we joined by IndieBusy and Wokoma, Professor of Economics, Director Center for Economic Policy Analysis and Research, SEPA, and also Dr. Biodu Adedikbe, who was a founder and Chief Consultant of BAA Consult. Gentlemen, very good morning to you. Good morning. Thanks for having me. Alright, and the world, fun nice to have you. The World Bank has said that global headwinds are slowing Africa's economic growth as countries continue to contend with rising inflation, which is hindering the progress of poverty reduction. The institution also said the risk of stagflation comes at a time when high interest rates and debt are forcing governments to make difficult choices in order to protect jobs purchasing and development gains. Now the findings are contained in the World Bank's latest Africa Pulse report. It's a bioanalysis of a near-term regional macroeconomic outlook. Now the growth in Sub-Saharan Africa is expected to decelerate from 4.1% in 2021 to 3.3% in 2022 due to the slowdown in global growth including flagging demand from China for commodities produced in Africa. Joining us to provide analysis of this as it affects West Africa's largest economy in Nigeria. We'd like to invite or welcome once again our guests. We'll start with you and the busy work of my professor of economics and director center for economic policy analysis and research. What are your thoughts on this latest research report by by the World Bank? Any surprises there? Not much of a surprise in my opinion because like this song says the answer is blowing the wind when you see something that is there coming up. For two critical reasons number one is like the problems that you have on the continent have always been there in terms of challenges to production. In stationary trends in various countries domestic circumstances, particularly for Nigeria, and that we have the Ukraine, Russia, what that is the other factor. So if you go by what had been there before, the situation in Nigeria for example, Nigeria has had serious problems, fiscal challenges, fiscal in this evening, we have the debt problem, we have the problem in terms of production caused by security, we have the problems so we can only produce enough and it affects the prices which had been there before the Ukraine crisis. So the report by the World Bank is in my opinion is not surprised, it has been increased or made worse by the crisis in Russia and Ukraine because of supply of food and so on to the third world, which is also making the situation in Africa worse. So when this report came out, in my opinion, it's a kind of double jeopardy, a dampening of economic growth and also an increase of inflation which is what they have to contend with. Interesting. Dr. Biodio, I did a quick. In times past it was thought that African economies like Nigeria's were immune, or I'm looking for a right word now, to the effects of global crisis, for instance, the war between Russia and Ukraine. We can look at the first Gulf War, we can look at the second Gulf War, we can look at the war in Afghanistan and all these other wars around the world and even the subprime crisis in America at the time when the real estate market and the stock market and some things went down there, you know, really didn't feel the effect as much on the African continent and Nigeria in particular. What is different this time? Were those views valid? If so, what is different this time? Very, very good observation and thank you very much for that. Now, in those instances in the past, the African economy was not yet as integrated with the global economy as it is today. So when we had, for example, what you mentioned, the global financial crisis 2008-2009, some things happened. Number one was that we're not fully integrated in the global system. Then secondly, Nigeria in particular, we had a very solid college war chest in terms of our external reserves which was able to be lost out, so to say, of the emerging of the economy because that period, a lot of foreign investments through that of Nigeria, net capital outflow, to be specific, in 2008-2009 was four billion dollars a month here and now now for seven consecutive months. Now as of today, Nigeria is a lot more integrated into the global economy, same with every other country in Africa. But I want to bring this perspective to it. Now, the problem we see today of the risk of startflation did not start this year. It began in 2020 with the global pandemic, that's the COVID-19 pandemic. Now, many governments around the world, and that is talking about fiscal authorities, the monetary authorities, both stimulated the economy in terms of fiscal stimulus. Most governments around the world borrowed massively to stimulate the economy on the one hand. The money policies around the world also were accommodative, meaning that one interest rates were reduced. Then in some countries, they also went by what we call quantitative easing. That means central banks creating money, college in economics, text halo, all right? Then in some countries like Nigeria, the central bank went beyond the traditional tools and also went pragmatic by intervening directly in some sectors. That went all around the world. So by the beginning of this year, all the world has been in that report. Some of us have been talking about it. Now, those activities stimulated economies. So 2021, most economies grew very strongly. In fact, the global economic grew at an estimated of 6.1% in 2021. Of course, look at Africa also, over 4%. Now, projections made on 2022, 2023. And then we said with those stimulus and accommodative monetary policy, there was likely to be a trigger of inflationary pressures. And if our wind growth now slows down and inflation continues to rise, we are likely to see stagnation. So for some of us, we've seen this since the beginning of 2022. And I've been talking about it. So what the World Bank has done is just to issue a formal report to confirm what we projected will likely happen globally. What now compounded it, as Prof rightly said, was the Russian-Ukrainian war and expectedly so, because between Russia and Ukraine, the supply about 25.1% of grays consumed globally. So when there's a war between them, that means as much as that volume, let me say, proportion of supply of grays to the global market will be out of the market. So naturally, that will cost shortage. And not only that, the war disrupted supply chains. It affected the movement of groups and services. And now China, as rightly mentioned also, which has been what we might call the powerhouse of growth for the group of economy is slowing down because of crisis in real estate sector in China. And of course, also the challenges with COVID-19, that policy of zero COVID, which makes China lock down some areas that ordinarily should be producing and supplying the rest of the world. So all of these are not surprising, but it is the combination of the aggressive stimulus of economies in 2020. And then now growth is slowing down. And if there's any pressures triggered by those fiscal stimulus and accommodation policy are now coming, it's like saying, the chicken has come up to roost. That's how we're expressing today. All right, so let's get back to Professor Andubisi. Professor Andubisi, are you still with us? Yeah, I'm with you. All right then. So I mean, in clear terms, and what will this mean now for 2023 if, you know, the World Bank forecasting or forecast is that it's lowered its expectation from 3.3 percent to 3.2 percent. What does that really mean in our reality for 2023? Well, what it means for the country or for the ordinary person, for the world, for the country or for the fiscal authorities, or for those that imagine the economy, it means that there's work to do. There's work to do in terms of being able to look in words and see what can be done. Because until the problem in Ukraine, Russia is attended to. I don't think this thing will go down as quickly as we want it, because not only about food prices or food, Russia supplies virtually Europe with gas and the oil. You know, Russia is not producing. And the price of gas and the oil generally in Europe has gone very, very high. Even the U.S., they have very, very high gas prices. And that also is because that affects transportation and also it is part of the factor that is triggering the inflation. And of course, the factor of contagion, which is once you trade with a country or you have any dealings with that country, you are affected by contagion. It's like contagious. That's the problem they have will be transferred to you. And that is actually what is happening. So for Africa, we trade with China. We trade with Europe. We trade with the U.S. So we can't avoid contagion. And the fact is that how do we manage it? The implication is that you need to begin to put your house in order so that the overall effects of the minimized, what you can control, the endogenous factors, what you can, what's within your reach, put your economies in order. Capital flows into your economy definitely will be affected. But if you put your house in order, the little that is going around will actually find its way to your borders. And a place like Nigeria, we have a lot of problems that we need to address. The level of oil debt is so high. There's a lot of, you know, lots of revenue, lots of income in the country. Like I mentioned earlier, our problems are basically domestic. The ones you can't control, they are out there, the Russia, Ukraine, what's happened in post-COVID-19, the massive ingestion of capital into the world, economy parallel in the U.S., and so on. But what it is within our control is what we can be able to add to talk about. How is our level of production in Nigeria? How have we been able to address the issue of security? How have we been able to make the best of our oil resources? These are issues that even if you solve the global challenges, those ones are still going to be there. So what it means is like we need to put our house in order and make sure we address the issues, we confront them. But before Ukraine, a Russia crisis, Nigeria also had a rising level of inflation. So we don't need to attribute the whole thing to the global phenomenon. Before Russia and Ukraine had their problems, Nigeria was having a increasing level of inflation. And if you look at the multi-policy of the CBN, they have been, for the past few meetings, increasing the NPR because we need to take a look at what are the causes of inflation in Nigeria, which actually are things that can be handled. How many people go to farm? Agricultural pollution has actually fallen in. How many people go to farm and they are sure they'll come back safe? People don't go to the farm because of fear of being kidnapped or being raped or being killed. So these are issues. Being able to address the issue of production in basic commodities, cash crops, food crops, address the level of production. That's the issue of security should be addressed. To address the level of demerit in the oil sector, we need to address that to able to make sure that the economy stands. Address the issue of borrowing for consumption. When you borrow, you talk about oil subsidies, so high. So we need to address all those issues. If we address the domestic issues, then the effect of the global economy on us would be minimal. All right. Interesting. Over to you, Dr. Biodo Adelikbe. Professors have spoken about the two anchors of this report, the effect of the global Russia-Korea crisis and the global headwinds on the Nigerian economy. Particularly, it talked about gas prices, skyrocketing in different parts of the world, we are well aware of what's happening to the pound in the UK right now with the mini-budget tax cuts going on there. People are going through a lot, they say it's the calling cost of living crisis. Now here, when we're talking about immunity to these global headwinds, profits talked about gas prices. Should we really be in this situation or should Nigeria be really benefiting and reaping from the increase in oil and gas prices globally? As compared to, say, a country like Ghana who does not have as much and is having a struggling inflation, which is even worse than what Nigeria is facing right now. That's number one. I wanted to also shed some light on what he raised about food insecurity. As they said in this report, one over one in five people in Africa suffer from hunger and this food insecurity security has further been increased by COVID and then the current global crisis with reliance on grains from Russia and Ukraine. So should we also be very dependent on these countries for such agricultural products? All right, thank you so very much. Now the first issue, which again, as right we said, is a group of phenomena and that is talking about the price of food wear, the price of gas, let's just put it generally, the price of energy has gone up significantly around the world. Now Nigerians are not produced ordinarily to benefit from this as an energy exporting country, so to say. Unfortunately, we cannot take advantage of that for the fact that there is oil theft that is so massive. So prices have gone up, of course, is softened in recent weeks. Peter Peck clause is taking the question now to cut supply by one million barrels per day, which hopefully we show of the price of food wear. But even at that, Nigeria is not benefiting from it because we are producing at probably about 50 percent of our capacity at location of one point eight million barrels per day. We are producing probably around one million barrels per day. That is leakage of about eight hundred thousand. We are ordinarily condensing thousand hundred thousand would have been added to that to take us to two point one million dollars per day. Unfortunately, here we are quite checked as the prime Nigeria of the opportunity of that. That is one side. The other side in the fact that Europe is in dire need of gas ordinarily as a gas-rich country. Nigeria should have stepped up to fill that gap. Unfortunately, we have not managed our gas resources and plan effectively. In the sense that when we're talking about the LNG, and this is what most people don't even put in mind, every assignment you produce, you assign a contract long term to supply the buyers. So in the case what you have available is already a long dot in existing contracts. So unless you now want to ramp up production or develop new phase, which we are not capable of doing very quickly. So that means again, the gap created by Russia locking no stream one, which means they are not supplying gas to Europe right now. Nigeria also is unable to take advantage of that. Now coming to the second issue, food insecurity, yes, is a global phenomenon. All right. And of course, different countries at different levels. Now very few countries are food secure, but different countries around the world experience food insecurity at different levels. But the question for us is this, which brought me reference to earlier on. I had signaled this as an issue to our government in Nigeria five years ago, and that we needed to take a very firm position and not see those who disrupt agricultural production as mere bandits or whomever. Plainly, if you look at the meaning of the word terrorism, it means whoever makes you unable to go to where you normally go for your normal economic activities is by all means a terrorist. So if what we are, the government is doing today in terms of security operations, we had done five years ago, we probably won't have concerns about food insecurity as we have to do. But good enough, the sudden business that we can see the impact. So let them intensify that so that people again, the confidence, especially small-holder farmers, will return to their farms and start producing. So that means we ramp up low production of cash crops and food crops. Right. Let's quickly bring in Professor Ondubisi as we begin to close the conversation down. Professor Ondubisi, the senators actually okayed $73 per barrel for, I mean, we're talking about the oil price now, a projection for 2023. And the senators also approved $3.6 trillion as subsidy on petroleum products for 2023. And on other parameters that has been improved or approved, there's new projection for borrowings at $8.437 trillion, including domestic borrowings, which is subject to approval of the provision of details of borrowing plan by the National Assembly. However, the conversation might just still go on. But my question here is, do you think that we're in sync with the current reality with all of these projections? Is Nigeria really in sync with the current realities of the world? And not forgetting the fact that the oil prices have gone up, but there might also just be a cut in terms of the output by, you know, OPEC? Yeah, thank you very much. When you have an annual budget, you make an estimate of what you think the following year will look like. It's a plan. It's an annual plan on your finances, your revenue projections and how much you want to spend and how the income will come. So you get to assume, okay, let's assume $73 per barrel will be the average price for next year that we can use to plan the expected revenue because it's a plan. So that is based on the perception of the planner. So it's now forced to look at the global economy and then begin to assume that hopefully, do we think that the operas will stay that long if the Ukraine-Russia problem is solved between now and the end of this year? I don't know whether that price can be sustained. That is number one because the increasing price of crude oil is because of what is happening largely in that part of the world. So we need to be sure that the price, the benchmark price used for the budget is realistic. To me, I have some little questions about that because whether the problems in Russia and Ukraine will not be solved by next year. Then the other projections about the level of economic growth that is being expected and other issues. To me, we need to, like I said earlier, to address the domestic issues in terms of the leakages to our revenue. There are humongous, the leakages are humongous. And then the other area which Gomez should do, should look at to be for revenue is in terms of taxation. If you look at Nigeria, the tax-to-GDP ratio in Nigeria is among the lowest on the continent. It's not tax symbols who are already paying. But there are people who are not paying, they are fair share of taxes. Then people who have private jets. I remember I paid the fair tax, you know, the right taxes. So the area of taxation, to expand the tax net, these are areas that we can, the government can look at in the budget to get to be free more revenue. Address the issue of oil tax, tax security. All right. Then even if the price, yes. Just with the, yes, go ahead. So if only the price of crude goes up higher than the three, that will be excess crude money, which will be good for us. Let us focus more on the domestic factor. In my opinion, that is the way forward. In planning the years budget, putting the price above 70 or 80 or now that will be depending on what happens globally. Our focus in the budget, in my opinion, should be on those factors within our control. Enhance your level of taxation, not on those, I'm just repeating myself, on those who are already paying, but those who are not paying. Okay, Prof, we're out of time. Sorry, sir, we're out of time. Prof, sorry to interject. We're out of time. I just really quickly want to ask Dr. Beaudo, just in a sentence or two, sir. Do you think the increase of the CRR, the cash reserve ratio recently by the CBN, or should I say, yeah, the monetary policy community will do anything to help this increase in inflation, also the increase in the interest rates? Very quickly, sir. Well, that's what I will call the textbook response to inflationary pressures, because central banks all around the world, the first response is the rate of intrusion at the monetary policy rate, the CBN did, moving it from 14 to 15.5, then the second thing is to look at the reserve requirements. So those are the primary traditional tools, central banks use. So what they have done, we say in terms of managing the monetary system is in the right direction, that is managing liquidity, take money out of the banking system by freezing it, that is the essence of the cash reserve requirement, so that you can reduce the pressure of liquidity that is driving inflation, of course. So that is the textbook response to inflationary pressures. All right. Gentlemen, we have to call it a day at this point. We have so many questions to ask you, but we are out of time. Professor NWC and Wakuma, Professor of Economics, Director, Center for Economic Policy Analysis and Research, SEPA, and Dr. Biodore Dedic-Pair, who also is a founder and chief consultant of BAA Consult, General Administrator, Thrio having you. Lent a lot from your analysis. Thank you so much. It's a pleasure. Thanks for having me. Thanks for having me. Thank you. All right, Mesa, we shouldn't be adding diplomas in the comics today. Well, that's good. I mean, we should have more time to discuss it, but we should be adding diplomas in the comics today. All right, we have more discussions ahead. We'll take a breakdown and when we return, we'll be heading straight to our next conversation.