The Nigerian economy will regain its bounce if the government will fast-track the equality between the oil and non-oil sectors of the economy. Biodun Adedipe, foremost economist and Chief Consultant Adedipe Associates Limited made this known at the maiden edition of Corporate Members’ Forum organized by the Nigerian Institute of Management.
The forum which was themed “The Unfolding Economic Environment in 2016: Challenges and Responses” brought together different corporate organisations from the various sectors of the economy and members of the institute to provide deeper understanding of the elements at play in the current economic downturn and how they impact business operations.
In his welcome address, Munzali Jibril, President and Chairman of the Council, Nigerian Institute of Management, noted that the objectives of the forum was to “address immediate and medium term strategies for mitigating or overcoming the effects of the downturn on business operations and how to reposition for economic recovery.”
The platform, he noted would also “afford the members the rare opportunity of interacting with one another, comparing notes and networking while rubbing minds on this all-important contemporary issue hampering their businesses in a convivial and relaxed environment.”
The growth the economy has recorded over the years has been non-inclusive and “extenuated inequality, same as the global pattern and resulted in dismal development indices,” said Biodun Adedipe the keynote speaker.
“The oil economy is disconnected from the non-oil economy. If we are able to equalize oil revenue with non-oil revenue we will free the economy from its dependency,” said Adedipe.
The economy is highly oil-dependent in foreign earnings and government revenue. Evidence of the dependence is in the fact that petroleum oil accounted for 97.28 percent of the value of exports from 2000 to 2013 and 77.8 percent of foreign earnings from 2001 to 2010, and 74.4 percent of government revenue from 2000 to June 2014.
“The real problem of Nigeria is not so much as the falling prices, but massive fiscal indiscipline,” Adedipe said.
There was need to quickly address the high rate of unemployment in order to balance the growing population of the country. Nigeria has the highest fertility rate of 6.01 among the top ten countries in the world. The combined unemployment and underemployment rates stand at 29.1 percent at the moment with the youth accounting for 50 percent.
He however commended the steps the government has taken by given major attention to non-oil revenue sources in the 2016 budget and investments in infrastructure.
“This is a major shift in a revenue profile, as oil takes the back seat in line with the price trend expectations. Expenditure allocations are also a significant shift from the recent past, more related to the key requirements for stimulating the economy,” said Adedipe.
The budget deficit he pointed out was well within the maximum of 3 percent maximum benchmark set in Maastricht Treaty. China on the other hand aims at about 4 percent in its budget, while South Africa was at 3.9 percent at 2015 and looking at doing 3.2 percent in 2016.
The present climate requires that companies in Nigeria re-evaluate their vision and mission and determine whether they are in sync with the environment. Companies also need to rethink strategy and business model and decide what needs to be changed in what they do and how they do it.
FRANK ELEANYA
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