With an economic growth that is too slow to create sufficient opportunities for a rapidly rising population, Nigeria, Africa’s largest economy has been a tough country for millions of its citizens who, in the last five years grew progressively poorer.
Nigeria’s economy which has been gasping for breath since 2015 means more of its citizens are falling into extreme poverty as more than 82 million of them live on less than $2 (N750) a day.
Economic growth in Africa’s most populous nation averaged 1.2 percent between 2015 and 2019. Problem with that is the population grew two times faster at an average of 2.6 percent per year.
Exacerbated by the impact of COVID-19 lockdown which was enforced to contain the spread of the novel coronavirus, Nigeria’s economy contracted for the first time in three years at -6.1 percent in the second quarter of 2020. This means the economy is a quarter away from its second recession in four years.
But, long before the pandemic started spreading across the globe late last year; Nigeria’s economy had been crippled by underlying challenges.
An evaluation of Nigeria’s macro-economic indicators before the pandemic exposes how the pandemic only made what was already a bad situation worse.
Nigeria retains a long list of economic reforms that can unlock economic growth and reduce poverty but have been stuck. According to a private sector-led think-tank and policy advocacy group, the Nigerian Economic Summit Group (NESG) Nigeria needs to pay urgent attention to the following five issues.
Agriculture sector reform
The NESG notes in a recent document titled: ‘Matters of Urgent Attention’ that since the inception of the President Muhammadu Bihari’s led administration, Agriculture and the need to ensure Zero Hunger for Nigerians has received considerable attention.
“However, despite the budgetary allocations and huge sums of money disbursed by the Central Bank of Nigeria (CBN) through the Anchor Borrowers’ Programme, a huge gap remains in meeting the food requirements, which has resulted in increasing hunger among the Nigerian populace,” it said.
The Group, therefore, explained that the issues are beyond money and thus, require a complete overhaul of the management of, and support for the Agriculture sector and all related sectors –“with a view to getting more value for our investments.”
Tackle insecurity
The NESG expresses its concern about the high level of insecurity across the country and its impact on the business environment and investment flows, which has contributed massively to the current food crisis, unemployment, poverty, increasing community clashes, rising bloodshed and the absence of peace and tranquillity in the country.
“Therefore, we again join the call by all well-meaning Nigerians, for Government to critically re-evaluate our security architecture and take all necessary actions to assure and safeguard the safety of all Nigerian citizens and residents,” NESG said.
Reduce exposure to oil
The Lagos-based non-government organization notes Nigeria’s huge exposure to the vagaries of oil price fluctuations and emphasized the need for a better structured and effective diversification of the economy.
The NESG also explained that while it is not oblivious to the continuing crucial role of the Oil and Gas sector in Nigeria’s economy, it applauds the work now being done by the Presidency to see to the quick passage of the Petroleum Industry Bill (PIB).
NESG urged that there should be “further stakeholder consultations so that the resultant law will create the required enabling environment for investment flows, reserves enhancement, technology transfer and utilization efficiency.”
Policy clarity from the CBN
The NESG explained in the recent document seen by BusinessDay that there has been evolving developmental roles of central banks around the world especially as it concerns resource allocations.
“However, such allocative roles must be undertaken in a very open, transparent and fair manner,” the Group said, adding that it expresses serious concerns about how the Central Bank of Nigeria (CBN) has carried on the business of foreign exchange transactions, loan disbursements (intervention funds) and price fixings without appropriate policy clarity.
“This can be subject to abuses, manipulations and significant market disruptions, reflective of a policy akin to crony capitalism. We therefore respectfully request the appropriate authorities to properly review this policy to restore credibility into our financial sector.”
Interest rate management
The document from the NESG said the Group has observed with concern some distortions in the liquidity and interest rate management of Nigeria’s financial system which has resulted in rate distortions causing grave disadvantage to domestic investors and pensioners.
“This will occasion major disincentives to savings and investments and thereby, be a disadvantage to Nigerian pensioners and long term savers,” NESG said, explaining that the low-interest rate policy is inimical to the current administration’s concern for the elderly, the weak, the infirmed and those who had served Nigeria meritoriously in their prime.
“It must be stressed that our country needs to mobilise domestic savings and investments even as we seek to attract foreign investment and we should be careful not to initiate policies that appear to discriminate against or discourage domestic savings and investors. Policies making average Nigerians poorer by the day should not be encouraged.”
