Happy new year!
Now, close your eyes for a minute.
Today is the 1st of January 2030, and the latest inflation data has just come in from the Nigerian Bureau of Statistics. The headline Consumer Price Inflation (CPI) figure for the previous quarter is an impressive 3.5%, continuing a strong, continuous trend of CPI declining over the previous 20 quarters reported.
That’s not the only good news. The rate at which Naira is exchanged for foreign currency has also stayed remarkably stable over those preceding five years, buoyed by the ongoing strength of Foreign Direct Investment (FDI) into the country’s fast-growing economy.
More than US$50bn per annum on average has been the net inflow reported, driven largely by investments from Nigerians in the diaspora, development finance partners, impact investors, international corporations, as well as institutional financial investors. Foreign Portfolio Investment (FPI) inflows have also been strong, attracted by five consecutive years of positive, single-digit real interest rates in local currency terms. The stock market is booming, with hundreds of new issues printed last year, led by fast-growing local businesses in the technology, media, and financial services space.
Unemployment continues to recede at a very fast clip, down to less than 20% of the active workforce, driven by large new investments in industrial production and manufacturing capacity across the country over the last five years. Several new and large projects are ongoing simultaneously, driven by private investments in electricity (gas, hydro, wind and solar), roads, ports, airports, special economic zones, commercial agriculture and commodity processing, natural gas processing, petroleum refining and petrochemicals.
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Apart from natural gas, processed commodities and refined petroleum, Nigeria is also becoming a globally competitive export origin for those specialty chemicals derived from petroleum that are critical building blocks for the newly emerging global renewable energy economy: ethylene for layers of copolymers in solar panels, as well as propylene and xylene for the production of wind turbine engine houses and rotor blades.
All of these new ongoing investments are possible because insecurity of lives and property is a problem also receding into distant memory. This has been driven not only by large scale improvements in economic prospects for millions of people, but also by a fit-for-purpose security architecture and justice administration system, designed with appropriate incentives for good performance and consequences for failure.
Now, open your eyes again.
There are about eight weeks remaining until the critical state and national elections that will empower a new group of individuals with the executive and legislative authority to either make the pleasant outcomes above possible, or to deliver an entirely different reality for the country. I am one of those who remains optimistic that Nigeria can become a globally competitive destination for major investments in important projects with major international relevance, and in the process creating wealth and transforming the lives of millions of people positively.
For these positive results to emerge however, Nigeria will require (at the highest decision-making levels), a combination of the right philosophical approach, a strong and resilient political will, and quite disciplined implementation. This is because none of these highly desirable economic development outcomes can emerge without difficult policy decisions, carefully considered, and faithfully implemented – very often with truly painful near-term consequences.
Most Nigerians are already aware of the areas in which these difficult decisions need to be made, and indeed the substance of the policy decisions that need to be made are themselves also relatively well-known, whether it be in relation to monetary and fiscal credibility, subsidies, gas and electricity tariff regimes, deregulation, cost of governance, security architecture, justice administration, industrial policy, exchange rate management, and constitutional reforms, among others.
More than enough has been written and said on all of these and more, including by the candidates for office themselves. What remains is for a new political leadership elite to be selected that will assume responsibility for delivering the much-needed outcomes. I am confident that the human talent, financial capital, global support, and local resources to accomplish the outcomes above exist in abundant supply for Nigeria.
Political leadership and national will are the additional remaining ingredients that are essential.
My hope and prayer for Nigeria in 2023 is that all of the required elements will come together to begin the difficult journey of development ahead.
Again, Happy New Year, and I wish everyone a truly prosperous and successful 2023.
