Date Published: 06/19/09

Meltdown: Dafinone warns Yar’Adua, Sanusi

Against the backdrop of the global economic crisis, Second Republic Senator, Chief David Dafinone Thursday called on the Federal Government to set aside a minimum of 10 percent from the sale of crude oil to execute projects in the key infrastructure sectors.

He also urged the Central Bank of Nigeria to encourage the granting of credit by both micro finance and the major banks in a structured way to enhance employment and productivity.

In a presentation at the National Policy Symposium organized by the African Institute for Applied Economics in Abuja, the renowned accountant said for the country to address the catastrophic economic results of the global meltdown, a target rate should be set above which the funds from the sale of crude oil should not be distributed to other tiers of government, but set aside for periods when the oil price falls below a designated floor.

He also canvassed for a reduction on personal taxation and other tax rates to encourage investment and consumption by corporate bodies as well as a resolute eradication of corruption.

On the prevailing belief in the continent that Africa will not be affected when compared to other parts of the world, Dafinone said recent economic history has by three events shown this to be a fallacy.

“ The significant decline in the price of oil followed by the increasing volatility in its pricing, the significant loss of value in the equities Nigerian Stock Exchange and the loss of the manufacturing base within the country”.

He identified loss of taxes and royalties to the Federation Account, inability to meet the funding requirements of the various tiers of government, inability to pay pension liabilities for current and past service and increasing social tension as fewer funds are available for distribution as major effects of the meltdown.

Other consequences, he said are the inability to sell adequate foreign exchange to the public sector, inflation due to exchange rate depreciation, loss of foreign investment as lenders look to countries with better social and physical infrastructure, loss in the value of equities, increased credit exposure to bad debts within the financial institutions, reduction in the willingness of companies to raise equity capital on the stock exchange thus hindering investment expansion and development as well as increased unemployment in the manufacturing sector.