Nigeria has been in the throes of worsening economic challenges for decades and counting. The current government, upon assumption of office, promised to bring an end to some of the teething issues, which include mounting infrastructure deficit, mounting debt profile, rising inflation, growing unemployment, especially among the youth population, rising fuel subsidy expenses, insecurity, among others.
But even in the gloaming of this administration, those issues are yet to be resolved. By implication, these challenges, which have proven to be hydra-headed over the years, will be inherited by the incoming administration come May 29, 2023.
Reflecting those teething issues, an economist, and social affairs analyst, Brian Nwosu, told NATIONAL ECONOMY that Nigeria is currently grappling with a combination of spiralling inflation, rising energy cost, scarcity of foreign exchange (FOREX), dwindling value of the naira and an almost comatose aviation sector. He added that the education system is in a stop-gap mode, coupled with rising debt, depleting foreign reserves and ever-rising fuel subsidy expenses among others, threaten to lay bare the country’s economy.
Nigeria continues to subsist on the vagaries of the complexities of global crude demand and supply, which is dangerous; and with the constant threat of oil theft and pipeline vandalism, which had choked production to less than 1 million barrels per day in July and August last year, the reality stares the government in the face that a mono-product revenue source is highly unreliable and not sustainable.
But the country’s economic underperformance can be much better with a little tweaking of policies as there seem to be some silver lining as the country progresses into 2023.
So while 2022 ended on a disappointing note, analysts believe 2023 offers a profound opportunity, especially by the incoming administration, to redirect the Nigerian economy from the labyrinth of hopelessness by enunciating policies that will meet the current challenges facing the nation’s economy.
To unlock growth and investment and restore hope for Nigeria in 2023, the federal government has been urged to facilitate reforms in the oil and gas sector, fix power and prioritise infrastructure financing.
The Centre for the Promotion of Private Enterprise (CPPE), disclosed this in its economic and business environment review for 2022 and agenda for policymakers for 2023.
In the document, the CPPE director, Dr. Muda Yusuf stated, “The country desires job creation, economic inclusion, investment growth, poverty reduction, and an accommodating tax regime for investors.
“The deregulation of the petroleum downstream sector is a major economic reform imperative. This is inevitable if we must unlock investment in the sector to put an end to the perennial fuel scarcity and the monopolistic structure of the sector,” he stated.
In the document, Yusuf also stressed the need to consolidate the power sector reforms, as an enabling environment must be created to sustain current private sector investment in the sector as well as attract new private capital to the electricity sector.
“Urgent reforms are vital with respect to electricity tariff, metering, and deepening of the energy mix. We need robust incentives, fiscal and monetary, to boost private investment in renewable energy.
“We should reform the budget and appropriation processes to prioritise infrastructure financing and human capital development. This would boost the productivity and competitiveness of the economy.
“Adoption of these reform initiatives would guarantee progression towards fiscal consolidation, reduction in fiscal deficit, diminishing need for borrowing and abating debt service burden,” he stated.
Furthermore, he said, “The maritime sector is a very crucial sector of the economy. It is a sector where reform imperatives have become very urgent.Legacy trade facilitation issues persisted and became intractable. There is a pressing need to ease the cargo-clearing processes and vessel turnaround time at our ports. These are major components of ‘ease of doing business’ to which government had severally expressed commitment.”
He itemised the factors that deserved major priority as shorter vessel turnaround time by reducing delays, curtailing bureaucracy, and curbing extortions in the clearance of vessels.
He noted that, “Vessel turnaround time should be reduced from the current four weeks to a maximum of ten days; shorter cargo dwell time at the seaports from the current 20 days to less than one week; better engagement of stakeholders in the implementation of the Vehicle Identification System by the Nigeria Customs Service; fixing the problem of frequent breakdown of customs server which causes undue delays and demurrage payments by importers; reduction in the number of agencies and approvals needed for clearance of cargo at our ports; deployment of technology at all stages of approvals and documentation.”
Yusuf, in the document added that the government would never manage economic resources better, “because government is not a very efficient user of economic resources,” stressing that the private sector was well known to achieve more value for money when it comes to investments as against government that has several avenues for financial leakages.
The CEO, Cowry Asset Management, Mr. Johnson Chukwu, said some of the current expenditure of government are discretionary and government can actually do away with such discretionary expenditures in order to save the country from huge borrowing that will be difficult to repay. Some of the expenditures of government do not add any value to the economy and such expenditure should be discarded.
According to Chukwu, “Government spends so much on capital expenditure, and my worry is that if government has to borrow for every capital expenditure, then it will be economic wise for the government to outsource capital expenditure to the private sector.
“Today Ghana is defaulting on both local and international debts and Nigeria should be careful not to toe the line of Ghana in terms of borrowing to service debts. Any country that is borrowing to service debts is in a dead trap that could consume such country and that is where Nigeria is gradually heading to,” Chukwu said.
An economist at Trust Assurance, Dr. Abdul Mohammed, told NATIONAL ECCONOMY that a sure way of getting out of the economic rot Nigeria currently finds itself in is to improve security across the country. According to Mohammed, insecurity is having its full gamut of negative effects on the economy. He said aside from the fact that Nigeria is no longer producing enough to feed herself, farmers are not able to till the land; many of them have been rendered jobless. And so much money is being invested in that sector. He noted that the 2023 budget for defense is more than twice what is being invested in infrastructure.
According to him, a dangerous blend of self-destructive tendencies, insecurity and fiscal and monetary policy inconsistencies have also conspired to make the situation worse.
A lecturer at the Nnamdi Azikiwe University, Awka, Dr. Felix Echekoba, said the government should, in the short-term widen the tax net, reduce wastage in governance, and focus on economic projects that will stimulate the Nigerian economy and guarantee an enabling environment for businesses to operate. He said businesses are dying due to lopsided tax burden across the country, as well as multiple taxation.