The confluence of COVID-19 and an oil market collapse means that our oil boom is well and truly over. We have no public sector savings, approximately $85 billion (20 percent of GDP) that we have difficulty servicing, unemployment closer to 40 percent than the official 6 percent when adjusted for COVID-19, under-employment and under-reporting. Nigeria is also hobbled by a seemingly endless war in the north-East, climate change and decades of gas flaring devastating the Southeast and Niger Delta, industrial output below 40 percent, daily public electricity averaging less than 5,000 megawatts, augmented by an alternative power market that delivers over 30,000MW at an estimated daily fuel cost of over N1.5 billion. We are indeed up the proverbial creek without a paddle. And the boat is leaking.
We can no longer await a post-COVID-19 economic recovery. Nigeria’s leaders must either deliver sterling leadership in a time of crisis or lead us to drown swiftly in the slough of despond. Apprehensive though we are about the coming socio-economic upheaval, BusinessDay believes that this may be the long-awaited tonic that compels a comprehensive change in the political economic management of the country. Absent public sector funding, the private sector becomes the engine of regeneration and subsequent growth, as ought to have been the case for long.
Economic recovery must benefit the middle class and establish a sustainable platform for moving more Nigerians upwards into the middle class. Policy and law in the coming months, therefore, must encourage private sector investment into ICT, infrastructure, agriculture, manufacturing and, COVID-19 permitting, the services sector. The bedrock of all this is urgent investment in physical (roads, land, sea and air transport, energy transmission) and social (healthcare and education) infrastructure.
BusinessDay recognises that Nigeria’s infrastructure growth is challenged by the stifling grip held by the Federal Government over every infrastructure asset or opportunity, and not by access to project finance. Ports, pipelines, railways and electricity transmission lines are owned by and cannot be built or operated without negotiating exemptions from some Federal MDA or the other. Existing assets, almost all poorly maintained and inadequate, cannot be devolved to the private sector except via a procurement process, run by the ICRC, so tortuous and prolonged that it defeats the purpose of starting the transaction in the first place.
The Federal and State public sectors must come up with a mechanism for developing viable projects around these brownfield infrastructures and finance them with domestic capital. Only then will foreign investment materialise. This is the most effective and fastest route to Nigeria’s economic revival. Fortuitously, the National Economic Council, comprising State Governors, the Minister of Finance, the Governor of the CBN and chaired by Vice-President Yemi Osinbajo, has spent the last 6 months working on two major initiatives that could, if properly and firmly implemented, take Nigeria out of the woods and into a new era of sustained socio-economic development.
Furthermore, the imminent massive cut in the flow of free money from the monthly FAAC ritual in Abuja compels the 36 governments to earn revenues from productive taxable activity, again by the private sector. With very few States having invested consistently in education and healthcare or acted to encourage large scale private sector activity in manufacturing, mining and agriculture – three areas in which all the States can do very well – this will be a difficult journey. At this point, they and the Federal Government must work together to handover assets to capable private sector players as quickly as possible and work to safeguard the investments that will follow.