Nigeria’s flagging economic recovery is facing a new threat after it emerged that Africa’s most populous nation may spend a staggering ten billion dollars this year to cover food importation at a time of an acute foreign exchange shortage.
BusinessDay learnt that by July this year, $5.4bn had already been expended on food importation, a rising indulgence for a nation which has suffered two economic contractions in five years and which hitherto kept its food import bill well within a healthier band.
“Today, Nigeria is facing a second set of vulnerability outside that of exposure to oil price volatility and that threat is emerging in our rising food import bill which could reach $10bn by year’s end,” says Doyin Salami, economist and chairman of the presidential economic advisory council.
He spoke as the lead economy speaker at the 2021 Lagos Business school alumni day on Friday at which he said Nigeria must abandon its 1970s mindset to make economic progress.
According to him, “Nigeria has to move away from the mindset of 1970 defined by pursuit of import substitution and massive government intervention underlined by our claim that money was not our problem.
Today, should know better. We do not have the money any longer and there is a more effective way to run the economy by building a globally competitive economy, by understanding the market so we can be less afraid of the markets bring.”
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The university teacher who led sessions in the economic environment of business at the Lagos Business school where he is still an adjunct lecturer said in 1990, Nigeria’s GDP per capita or the size of the economy when divided by population was two times that of China at $500. Today China’s GDP per capita is $11,000 and five times that of Nigeria which is stuck at $2,000.”
Salami said that more than $19trn was invested in negative yielding assets in 2019 and noted that as a nation, we should ask ourselves why we are unable to attract a significant portion of that capital floating around the world.
“Can you imagine what would have happened to the Nigerian economy if we had been able to attract just $100bn of that fund/” he asked his audience as he highlighted the trends of today’s world where ten countries account for 71 per cent of global manufacturing.
The economist said Nigeria’s human capital capacity must improve tremendously if Nigerians are to be able see economic opportunities and take advantage of same to reverse rising poverty and inequality in a nation where poverty rate in Lagos is a mere 4% compared with near 80% in Zamfara.
He said there is a lot wrong with Nigeria where 76% of the people do not think it is bad and even criminal not to pay tax.
Salami said Nigeria can build on its diversified economy, the fourth most diversified industrial base in Africa by adopting market oriented principles that help to open up the economy and open the door to much needed capital for development.
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