Nigeria urged to look inwards for economic growth

In the mist of dwindling oil price and its aftermath effect on the economy, Nigeria, the largest economy in Africa by GDP, has been urged to look inwards, leveraging on its population for economic development.

Andrew Nevin, an industry expert and chief economist, PricewaterhouseCoopers (PWC) Nigeria, observed that the idea of relying on other economies to drive economic development was misplaced for Nigeria, particularly because the nation had a large internal market that could grow her economy.

Nigerians don’t need much help from the government, Nevin said, stressing that with an improved security system, infrastructure, power and blocking of leakages, growth in the economy will happen.

“Security, power and infrastructure, I think are some of the intangible things that should be worked out. Nigeria is too large to have one economic strategy; I think there should be several industries that should emerge in different regions of the country.

“Three things government need are to lower leakages, corruption, security and power. Once this is done, everything will take shape. For example, the textile market today with a lot of illegal import activities going on.

“If there was power in Nigeria, it will drive out those illegal smuggling of textile materials quickly. I don’t see any reason why if there is constant power in Nigeria for five years, she cannot revive it textile and other manufacturing sectors,” he said.

Nevin, in a visit to BusinessDay headquarters in Lagos, said PWC Nigeria was in the process of building the best private economics department in Nigeria, where regular white papers on big topics that were meaningful would be treated.

According to him, “We will try to get private and public stakeholders to deal with issues of diversification and how states can develop their various economies. We will also look at issues around Internally Generated Revenues (IGR), economic cost of leakages, corruption. These are some of the topics that we are going to be dealing with in the next year or so.”

He further said state governors need to realise that oil couldn’t be the foundation of their development, adding the tax system was truncated because the oil and gas revenue was so high and governors didn’t just take interest in other sectors.

“One area where I think technical assistance is valuable is for the states to get their own IGR system going; but it is going to put pressure on them to deliver services, make them more accountable and transparent. Overall, I think it is going to be a big transition for the country.

“The non-oil and gas tax collection in the country wa lower than 2 percent in 2013. The total tax intake in Nigeria is about 10 percent of GDP. The average tax taken in sub-Saharan Africa is actually 15 to 17 percent. So, between the 10 percent and the 17 percent, there is already a big gap, but between the two and the half percent and 15 percent, there is huge gap,” he said.

Nigeria has a little debt burdens, the chief economist observed, but “the country is not in a bad position. In aggregate, the debt log of Nigeria is very low compare to it potential 70 to 80 percent of Nigeria debt is in naira.

“The Federal Government has the capacity to borrow and manage through this transition; as with all borrowing, it works fine as long as what you do with this fund is productive.”

The issue of forex is fair to certain group of people at the expense of others, he noted, but “I think for redistribution of income, this CBN policy is not really fair because it is not serving the people. We need to face realities. When Sanusi was CBN governor, a lot of people talked about the stability of the naira at N158.

“In those years, the country ran on massive surplus. So, if a country is running on mass surplus, controlling the exchange rate is easy because it will control price from going up.”

He called for a strategic development of the various geo-political zones, adding that this would in turn drive the growth prospects in the country.

“Government should be doing less work. The ICT sector, automobile sector would be taken care of because the internal market is big enough to drive it. People will figure out how to serve that market when there is some local content,” he said.