( 6 minutes read)
· Many have predicted and vociferously said that Nigeria’s neglect of agriculture, which was the mainstay of the economy a couple of decades ago, would cost the country dearly
· The oil economy is somewhat flawed in the West African country because of its lack of facilities for oil refining so much so the precious crude mined out from its fields are exported to other countries f or refining and re-exported for its domestic use
· Nigeria has to think out of box to come out of its problems and challenges
Nigeria, the most populous country in the African continent, is facing multiple problems. Some of them are extraneous and some a backlash of some policy glitches, which could have been avoided. The oil price crash that had happened in 2014 and still continuing in varying degrees can be easily categorized as an extraneous factor; so also the outbreak of the pandemic Covid-19. To assume the impact of these unforeseen and unfortunate happenings confined to Nigeria alone is something that goes against sheer logic. Oil price crash had affected all oil producing countries including those in Africa. That had left indelible impact on those economies including the Middle East countries. The global disruption due to pandemic Covid-19 had affected all countries including major economies, perhaps at a lesser intensity on the African countries.
Many have predicted and vociferously said that Nigeria’s neglect of agriculture, which was the mainstay of the economy a couple of decades ago, would cost the country dearly. Yet, there was no conscious policy on the part of successive governments to assign importance to the agriculture sector. Apart from creating food security, this could have generated thousands of gainful employment to absorb the millions who were drafted into the cities in search of jobs during the book period of oil. The net result is that from a food exporting country, Nigeria started importing everything that its citizens needed increasing the import bill.
The oil economy is somewhat flawed in the West African country because of its lack of facilities for oil refining so much so the precious crude mined out from its fields are exported to other countries for refining and re-exported for its domestic use. In the round tripping of the oil, the country is losing billions of dollars as the difference between exported crude and imported refined petrol and petroleum products is considerable. The end result is building up of huge external n and internal debts for the country since the government was forced to borrow to meet its vaulting expenses and of course to meet the increasing development expenditure .
To compound the problems, the country has been beset recently with the #EndSARS agitations, which was initially triggered by police brutalities in some parts of the country and soon spread to other parts hugely aided by the social media. There are different takes on the outbreak of the agitation. The Board of the African Department of International Monetary Fund (IMF) at its Sub-Saharan Africa (SSA) Regional Economic Outlook briefing last week treated the civil unrest as a backlash of the low growth prospect of the economy and low standards of living. It should not be wished away as an isolated occurrence and should be addressed in a proactive way since such violent agitations can trigger even for trivial reasons when people are discontented and unmet aspirations are high.
Importantly, the Lagos Chamber of Commerce and Industry (LCCI) put the losses due to agitation at N700 billion within the first 12 days. The economic activities have been crippled in most parts of the country and disturbances have been particularly profound in the urban areas. During those 12 days and later, protesters at Lekki tollgate in Lagos destroyed a number of public and private properties including the Nigerian Ports Authority headquarters in Marina, the offices of both Television Continental (TVC) and the Nation Newspapers . A number of companies were torched, while shops and warehouses were looted.
The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) termed the violence as unfortunate happening, which would act as a drag on the progress the economy has been making. Its President, Hajiya Saratu Aliyu noted that its efforts as a national chamber to help project the country as a favorable and investment friendly destination to business partners abroad, and other foreign investors over the years, suffered a serious setback.
Undeniably, the government is getting some kudos for taking proactive steps for containing the deleterious impact of the Covid-19, though that was not the case with the recent # EndSARS movement, which many analysts feel the government could have easily avoided the flare up . The combination of monetary and fiscal policies taken reverse the impact of Covid-19 was hailed by the business community, which ensured the availability of more funds to the real sector, arrested the free fall of the national currency by the intervention of the Central Bank of Nigeria (CBN) and restructuring loans to stop them from going bad. That way Nigeria has taken some steps that can insulate the economy, perhaps more than that is expected of similar economies. While presenting the 2021 Budget to the National Assembly, President Buhari also echoed those views by saying the economy performed relatively better than that of many other developed and emerging economies.
What is the way out? Nigeria has to think out of box to come out of its problems and challenges. It should not be left to the government alone. In the endeavor, the private sector also will have to chip in. That way, Nigeria has an advantage. It has more billionaires and millionaires than any other country in the continent. Some isolated actions are being taken. For instance, the largest cement manufacturer in Africa – Aliko Dangote Group – is scouting for increasing its export of cement to bring in more foreign exchange to the country. Access Bank has floated a N50 billion interest-free facility for Small and Medium-size Enterprises (SMEs) to mitigate the effects of the #EndSARS crisis on businesses.
The government from its own side has to keep the house in order. Fiscal profligacy is affecting the economy. The private sector should be given more freedom to operate by reviewing some of the archaic rules that could affect their normal functioning. There should be inducement for them to go global. That, of course, can bring cheer to the economy though positive spin offs happen with a lag effect. Hopefully, oil prices, which are expected to firm up once the pandemic is bottomed out, can lend the much needed support to the country to come out of the woods.
