• Friday, July 19, 2024
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BusinessDay

Unending lamentation as Nigeria battles effects of bad governance

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Nigerians have lamented for 64 years since after the independence in 1960, and there is no indication that the lamentation will end soon.

Nigeria, a nation rich in resources and potential, has grappled with the consequences of bad governance for decades. The effects are far-reaching, affecting various aspects of the country’s socio-economic fabric.

Investment is dwindling, manufacturing is suffering, human capital development is stagnant, and the general state of the country is concerning.

Citizens are in a state of ceaseless lamentation as the adverse effects of poor governance manifest in various facets of life.

Bad governance has created an unfavorable investment climate in Nigeria, discouraging both domestic and foreign investors.

Nigeria’s corporate landscape has seen a significant exodus of multinational companies in 2023 and 2024. Over 15 major companies have departed the country, including established names like Unilever, Procter & Gamble, and GlaxoSmithKline.

This trend continued into 2024, with the departure of Microsoft, TotalEnergies, PZ Cussons, Kimberly-Clark, and Diageo in the first half alone.

Factors influencing MNC exits include high operating costs, difficulty accessing foreign exchange, and a challenging regulatory environment.

The exodus of multinationals from the Nigerian economy has cost the country a N94tn loss of output in five years, Vincent Nwani, an economist and former Director of Research and Advocacy at the Lagos Chamber of Commerce and Industry in Nigeria, said in a recent interview.

About 767 manufacturing companies shut down operations while 335 experienced distress in 2023, according to a statement recently released by the Manufacturing Association of Nigeria (MAN).

The manufacturing sector, as reported by MAN, has seen a decline in capacity utilisation to 56percent, compounded by rising interest rates and a scarcity of foreign exchange needed for importing essential raw materials and machinery.

The sector also faces an inventory of unsold finished products valued at N350 billion, alongside a real growth drop to 2.4percent.

One of the major effects of this is the massive unemployment rate in the country. Many young graduates are roaming the streets in search of employment opportunities.

Nigeria’s unemployment rate surged to 5.0 percent in the third quarter of 2023 from 4.2 percent in the previous quarter, data published by the National Bureau of Statistics (NBS) said.

Low investment in agriculture over the years coupled with insecurity have worsened the food crisis in the country.

Successive administrations have failed to prioritise the agriculture sector. Most of the policies on agriculture end on paper.

The failure of the Buhari administration to check the excess of gun-wielding herdsmen tormenting farmers also contributed to the low growth of the agric sector.

Available data shows that agriculture has grown at the weakest rate under successive administrations since 1999.

The sector contributed an average of 27.5 percent of the GDP under Obasanjo, 25.6 percent under Yar’Adua, 21.75 per cent under Jonathan and 24.4 percent under Buhari. Nothing has changed so far under Bola Tinubu’s administration.

The National Bureau of Statistics (NBS) said food inflation rose to 40.66 percent in May, compared to the 24.82 percent reported in the same month last year — indicating an increase of 15.84 percent points.

The bureau said semovita, oatflake, yam flour pre-package, garri, bean, etc (which are under bread and cereals class), Irish potatoes, yam, water yam, etc (under potatoes, yam and other tubers class), contributed to the year-on-year increase in the food inflation rate.

Other contributors are palm oil, vegetable oil, etc (under oil and fat), stockfish, mudfish, crayfish, etc (under fish class), beef head, chicken-live, pork head, and bush meat (under meat class).

According to the 2023 State of Food Security and Nutrition World report, the number of Nigerians who are food insecure has increased by 133 percent in three years. It jumped from 63.8 million people between 2014 and 2016 to 148.7 million people between 2020 and 2022.

Many citizens continue to grapple with poverty, as highlighted by the World Bank’s report indicating that 14.2 million Nigerians fell below the poverty line in 2023. The report attributed this increase to sluggish economic growth and rising inflation, emphasising the challenges faced by Africa’s largest economy.

Sluggish growth and rising inflation have increased poverty from 40 percent in 2018 to 46 percent in 2023, pushing an additional 24 million people below the national poverty line, according to the World Bank’s Nigeria Development Update report, released in December.

Nigeria’s vast potential remains unrealised due to the challenges of poor governance. The country urgently needs leadership that prioritises investment, fosters a healthy business environment, and supports critical sectors like manufacturing and agriculture. Only then can Nigeria begin to address its unemployment crisis, food insecurity, and widespread poverty.