Although challenges still abound in various sectors of the nation’s economy, pundits say the President Goodluck Jonathan administration is trying pretty much to ensure a robust business environment. However, there have been complaints over alleged multiple taxation, unfavourable government policies and the lingering challenge in the power sector. One of the greatest challenges of the present administration has been that of security.
In the last two years, some businesses have been forced to flee the country as a result of upsurge in criminality in some parts of the country, particularly in the North East. The Amnesty Programme in the Niger Delta has helped a great deal in dousing the tempo of violence in the region. It would be recalled that some oil prospecting companies that fled the country owing to the bombings and kidnappings that were prevalent in the creeks of the Niger Delta have started to return.
Unlike the disruption of oil production by the militants lowering the daily production to an abysmal level, what appears to be currently holding back the country from meeting its production target is the delay in the passage of the controversial Petroleum Industry Bill (PIB).
New investments in the oil and gas sector are not coming because operators are sceptical about the current PIB. Reports have it that some International Oil Companies (IOCs) have started to sell their investments to move to some other places where they think the grass is greener. But in other sectors, there appears to be improvement in businesses.
Sorting out security challenges
With the onslaught against members of the Boko Haram sect through the deployment of troops to states (Borno, Yobe and Adamawa) considered as the hotbed of insurgency, it is expected that there will be a measure of calm in the affected states and in the region thereafter. The terrorist activities of the group have drastically affected the economy of the North.
A lot of businesses have been affected as some people, out of fear, have abandoned their businesses and relocated to more peaceful places. Many businessmen and women who used to ply their businesses in the trouble-states have withdrawn for fear of being killed. The courage mustered by President Jonathan to take war to the insurgents has continued to receive commendation.
House probes yield hope
In the last two years, the House of Representatives have conducted investigations on many sectors. Although its intervention in the fuel subsidy crisis nearly smeared the lower chamber of the federal legislature, it however, revealed and brought to the public domain the rot in the oil and gas sector of the nation’s economy.
By the same token, although the House probe of the Security and Exchange Commission (SEC), nearly turned into a boomerang, it nevertheless achieved some results.
Its investigation of SEC was to unravel what led to the collapse of the capital market with the aim of plugging the holes. Although there still exist grounds of disagreements between the leadership of the National Assembly and the SEC, the probe has really restored vigour to the market.
Moreover, the House of Representatives’ probe of the oil industry revealed the decadence in the sector. These probes helped a great deal to instill some elements of fear in the major actors in all the sectors involved. It also restored some confidence and reassured members of the public that it may not be business as usual for those who are used to cutting corners.
Surge in middle class consumption pattern
There appears to be an improvement in the consumption pattern of the middle class in the country. Places considered off-limit to some categories of people, have begun to host such persons. There is an improvement in people’s purchasing power. Unlike in the past when visits to shopping malls, for instance, was the exclusive of the super rich in society, the pattern is fast changing so much that people go to such places, either for window shopping or to pick a few items.
So, that status symbol appears to be dying gradually. The springing up of Shoprite, leading retailer across Africa which first landed in Lagos in 2005 and which has since spread to many cities across the country, and the number of customers they see on a daily basis attest to the fact that business climate in the country is getting brighter and more robust by the day. It is not so much about people shopping, what matters is what such shopping malls represent – rendering the service that is now being needed by a larger percentage of the people.
Someone said: “People come to be seen here, so people assume you have so much money, even though that may not be the case. Things have changed a lot.”
Nigeria is probably one of the fastest growing consumer classes in the world. The middle class in Nigeria drive demand in the economy.
The bond market
The bond market has been in the upswing since the recent past. That 15 states that include Lagos, Kwara, Niger, Benue, Ebonyi, Ekiti, Kaduna, Imo, Edo, Bayelsa, Delta, Ondo, Niger, Gombe and Osun have accessed funds from the market is a clear indication of this assertion. Reports have it that Lagos, for instance, is really making good use of the money. It is not really about going to the bond market, what matters is the use to which the funds are put, to benefit the people.
Banking industry on steady move
The banking industry is another sector that has in the past few years become more robust than ever. Confidence appears to have returned to a sector that was nearly run aground by a few individuals who, unethically, converted some banks into their personal estates. Although the cleaning exercise carried out by the Sanusi Lamido Sanusi-led Central Bank of Nigeria (CBN) affected some individuals, it however, returned the sector to the pathway of honour.
At a point, confidence in the country’s banking sector hit ground zero, resulting in panic withdrawals by depositors, but with the CBN intervention, the nation’s banks can compete favourably among others, globally. Today, people can confidently do business with the banks without fear of losing their hard-earned money.
Moreover, the reformation exercise in the microfinance bank has helped to rescue a sector that was as good as dead. Unlike the situation in time past when operators went beyond the their boundaries establishing MFBs and operating as if they were commercial banks, thereby jeopardising depositors’ funds and giving bad names to the sector, now, everything is standardised.
Agric business booms
There appears to be an improvement in the Agric sector. The ministry appears to be taking the industry to a new level. Today, fertilizer distribution is no longer on the thumbs of middle men and politicians who were in the habit of diverting the products. Fertilizers now get to the right people who actually need them. This has helped to boost the productive capacity of farmers, especially in the North. President Jonathan recently alluded to the feat achieved in this area. “People should watch how we have been conducting government business. We have been bringing down the issues of corruption gradually. If you look at the fertiliser sector, you will agree with me that if government actors are interested, we would have continued the same story of buying all kinds of things, awarding all kinds of contracts in the name of fertiliser. But we are not doing that we have sanitised that sector.”
Not yet uhuru on power
Although the present administration appears determined to deliver on power generation and distribution, the sector has continued to constitute a serious hindrance to the ability of businesses to achieve bottom line owing to increasing overhead cost. Government claims the country is generating over 5,000mw of electricity and targeting over 6,000 in the nearest future.
Although the challenges are enormous owing to long years of infrastructural decay and maladministration, posing a huge burden on the current administration, the future looks bright. This bright outlook, however, is predicated on the current administration’s ability to carry through its reform agenda.