• Wednesday, February 28, 2024
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BusinessDay

Nigeria’s 2020: No respite on the horizon

Nigeria-macroeconomic indices

In an alternate reality, Nigeria has attained the goals set out in its lauded Vision 2020:20 and has become one of the 20 largest economies in the world. Furthermore, Nigeria has consolidated its leadership role in Africa and has established itself as a significant player in the global economic and political arena.

Unfortunately, that remains wishful thinking and could not be farther from actual reality. As a new decade starts, not one goal of the vaunted Vision 2020:20 has been met, and Nigeria’s potential remains largely unfulfilled.

The end of the previous decade drew the curtain on another year of economic stagnation for Nigeria, as the nation continues to grapple with basic socio-economic problems including poverty, corruption and social injustice. Furthermore, rather than focus on bettering the lot of citizens, the political class continues to engage in needless politicking, doubling down on the hare-brained policies which had led the nation to its first economic recession in 25 years.

While Nigeria’s 2019 could be assessed as a year of stagnation, there is no indication that the New Year 2020 will be any better. In fact, the outlook of nation’s macroeconomic indices for the New Year does not make a pretty picture.

Inflation, which rose to its highest in nearly a decade partially driven by the government’s on-going border closure, is likely to remain high. Since the announcement of the border closure, the nation’s inflation rate has been on an upward trajectory. Already, basic commodities including food, transportation etc. has become more expensive, with the severest effects suffered by the nation’s poor. Unfortunately, as long as the border closure persists, it is unlikely that inflation will subside, with ripple effects on poverty.

In addition, Nigeria is likely to retain its ignoble position of being home to the largest number of people living in extreme poverty globally for the foreseeable future. Even though an estimated 87 million Nigerians live in extreme poverty, poverty alleviation remains a buzzword backed up with no holistic government policy. Thus, that the nation’s poverty levels will be reduced this year is simply wishful thinking. In fact, all indicators point to the opposite – that the poverty will worsen this year due to a myriad of factors, particularly the national unemployment rate.

Since 2015, the unemployment rate in Africa’s largest economy has soared, rising from 8.2 percent to 23.1 percent in the third quarter of 2018. For young people aged 15 to 35, the figures are even worse as 55 percent of the youth population are unemployed or underemployed. With a stagnating economy and restrictive trade policies, there is no indicator that unemployment will reduce in the nearest future.

In addition to all of these, there is no doubt that Nigeria’s government is severely cash-strapped, evidenced by the government’s desire to seek fresh loans. Considering that the nation’s debt stock already stands at over ₦24 trillion, news that the nation intends to add more debt in 2020 is worrying, Furthermore, considering that debt servicing already consumes over 60 percent of the nation’s revenue, the nation’s future economic sufficiency has never been in more jeopardy.

While Nigeria’s 2019 could be assessed as a year of stagnation, there is no indication that the New Year 2020 will be any better. In fact, the outlook of nation’s macroeconomic indices for the New Year does not make a pretty picture

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Such is the state of Nigeria as the new decade starts. Despite achieving rapid economic growth in the early years of the 21st century, much of the attained progress, driven by debt relief and private sector involvement in the economy, have been undone in the immediate past decade, and this malaise is likely to extend to this new decade.

Overall, a combination of poor leadership, corruption and incompetence has resulted in a failure to develop the nation’s economy, invest in critical infrastructure and harness the nation’s most valuable resource – its people. Thus, as the nation enters a new decade, there is seemingly little or nothing to celebrate. In fact, it will border on self-deception or delusion to envisage an upturn in the nation’s economy without any significant shift in national economic and trade policies.

Therefore, if Nigeria is to have a successful 2020, and by extension, a successful decade, the political will for progress is imperative, given the deep-rooted changes that must be implemented. There must be an urgent will to address pressing issues such as the nation’s reliance on oil earnings, the bloated civil service and public corruption. In addition, the nation’s ticking time bomb of youth unemployment must be resolved through the enactment of viable job creation policies and enhancement of labour productivity. This however will not be possible without sustainable investments in education and infrastructure development.

Subsequently, Nigeria’s ballooning debt problem must be swiftly addressed. The nation is currently expending over sixty percent of its revenues on debt servicing, thereby leaving nothing for infrastructure development. Therefore, the rising national debt volume must be tackled with urgency, perhaps starting with reducing government spending on recurrent expenditure.

Overall, if Nigeria is to have a successful year and by extension a successful decade, fiscal prudence is essential. Unfortunately, there is no indication that this will happen. Rather, there is every chance that 2020 goes the way of 2019 – wasted and culminating in stagnation.

 

OLARENWAJU RUFAI