According to the World Bank, Nigeria’s haemorrhaging economy is predicted to grow by 1.8 percent in 2021.
While this outlook seems highly uncertain given the country’s vulnerability to external and internal shocks, more threats to Africa’s largest economy’s growth prospects may be suppressed if certain policy actions are carefully undertaken within a decent time-bound.
Addressing output optimality
Achieving sustainable growth in Nigeria will require the government to allow the private sector to operate entirely without sovereign interferences that limit its capacity to perform optimally.
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Providing structures and an enabling environment to run productive investments in the country can help arouse foreign and domestic business interests critical to capital formation and investment generation in the various sectors.
Enduring transparency and predictability of the exchange rate can help ensure that agents can access foreign exchange in a timely and orderly manner at agreed rates. By this, investors are less bothered about price-related risks that may dampen their profit potentials.
Also, a full and effective re-opening of land borders to allow for free flow of tradables between Nigeria and her trading partners will help restore confidence in investors who still care about running their business interests in the country. Replacing import bans with quotas and tariffs that align with the ECOWAS common external tariff arrangement, especially for goods deemed harmful for consumption, is also necessary to resume trading relationships that contribute to overall economic activity in the nation.
Strengthening food security by addressing food supply shortages resulting from insecurity challenges, especially in the Northern parts of Nigeria, is an important area of economic focus that affects everyone. Resolving farmer-herdsmen clashes, extremism and terrorism in the North, and some southern parts of the country, is key to ensuring that agricultural production continues unhindered.
The government should also roll out programmes that can help support farmers and rural households’ entrepreneurial efforts to increase the pace for economy-wide production.
Required efforts to drive industrial productivity by exploring areas of comparative advantage in production and trade are also necessary to cater to domestic demand and boost export revenue for the nation, on the other hand.
Addressing spending and revenue generation gaps
Appropriately calibrating the fiscal space and addressing fiscal consolidation challenges is a central point of concern if the country must enjoy lasting growth.
Increasing the tax generation capacity of the economy by plugging all loopholes in the tax collection and generation processes is essential. Also, strengthening tax laws, demanding more tax responsibility and compliance by business firms, imposing taxes on harmful products and rationalising tax expenditures are areas the government must keep a stern eye upon if growth must be experienced.
The government can also prioritise taking advantage of domestic non-oil revenue sources to diversify its funding channels. Eliminating fuel subsidies is also vital to checkmate excessive sovereign spending.
Government must spend its revenue wisely and invest the same into investments that would generate multiplier returns to the country. Also, resorting to deficit financing of the national budget should be discouraged.
Addressing economic policy management
Managing the economy right is key to ensuring that national interests are steered towards desirable directions.
Making the right, time-elastic policies and responding to feedback appropriately is an essential part of governance that shows the country’s level of value in its growth process.
It is important that the government clearly defines its policies, programmes and objectives and communicates the same to its citizens, timely. Iran’s government was successful in its last petrol subsidy programme because they carried their citizens along and partnered with the relevant stakeholders to ensure a smooth policy pass through throughout the implementation time frame. Nigeria can learn from the same experience.
The central bank of Nigeria (CBN) should focus on goal-oriented policies rather than on political matters; financial programmes should be transparently carried out, and a level playing field should be provided for local and foreign investors who wish to run their businesses in the country.
The CBN should take a better hold of the growth of money supply in the country by devising efficient and effective monitoring and reporting of CBN overdrafts and other financial gadgets. The apex bank should also improve efforts to unify the highly disproportionate exchange rates at the various windows. Ensuring full access to foreign exchange at the officially determined rates is key to combating FX scarcity and imported inflation.
Indeed, avoiding another recession should be a prime objective of the government at this time as the world still struggles to regain pre-pandemic balance. It will be better if the Nigerian government begins to rethink its growth strategies if the nation must conform to the acclaimed 2021 growth projection predicted by the World Bank.
