Last week, we argued that although Nigeria is Sub-Saharan Africa’s largest economy, she has been struggling with slow growth and persistent economic imbalances for almost two decades now. We also argued that, though the Nigerian economy recorded positive growth, it is still vulnerable to even small and routine economic shocks. This fragility, no doubt has had, and is still having negative impact on the country’s productivity, competitiveness as well as sustainable economic growth.
As such, Nigerians really want to know what the future hold for the country’s already fragile economy? They also want to know how their dear country can navigate out of the economic crisis she has found herself and how the country’s policymakers responding to these challenges or crises among several other pertinent questions.
To address these questions, we identified some policy issues our policymakers must prioritize given the limited resources and competence available to the country.
Hence, this week, we shall continue with key policy issue or decisions that we think the Government of Nigeria must pay urgent attention to in order to reinvent and reposition the country’s economy so as to hedge against the vulnerabilities that poses tremendous risks to her.
The Nigerian government must ensure that the country’s central bank isn’t just strong, but also independent. This is necessary for noninflationary growth. The central bank needs to provide adequate liquidity for growth but must not provide excessive liquidity, or prices will (continue to) rise. For the fact that inflation is disastrous, she must ensure that it is properly managed. Failure to do so will further drive-up interest rates and weaken the Naira.
Similarly, the Federal Government of Nigerian must promote/provide basic property rights. These are very essential. If Nigeria cannot guarantee private property, its protection and the right to exchange it, development of a working market economy will at best be slow and invariably affect her competitiveness. The absence of a secured property rights, a constitutional legal system, and enforceable contracts will make the country uncompetitive and development impossible. Markets work, and contribute to growth, only within a secure legal framework, which the government must provide.
The Federal Government must also address the shortage and quality of production resources. Although the fundamental structures in the economy have been changing, production resources have been a decisive determinant of the national competitiveness. Production resources in Nigeria remain short and low quality. In other words, the supply of inputs for the economy is insufficient in both quantity and quality such as lack of skilled labour, poor infrastructure (transport and electricity supply), and barrier of capital resources. Therefore, some measures are needed to fulfil production resources shortages in Nigeria in coming years.
Another very important policy decision that the government must address is the provision of quality higher and vocational education. This is because, the quality and cost of human resources are the defining characteristic of national development. Human resources must not only be efficient, but also innovative and dynamic to proactively meet the continuous changes required by an ever more competitive market place. The basic skills possessed by human resources need to be further channeled into more specialized areas so as to fulfil specific tasks which require technical skills. The competitive supply of certain products and services require properly trained human resources, and efforts at maintaining a top-class vocational and higher educational system are important components of the country’s competitiveness.
Creation of a favorable business environment is another key policy issues that deserves adequate attention. This can be achieved by simplifying regulations to eliminate bottlenecks, outdated laws and regulations as well as redundancies. Likewise, the underlying objectives of policies should be outlined before development through collaboration and stakeholder engagement – engage subject matter experts where necessary. The government should regularly undertake deliberate and focused fora to evaluate policy performance objectives and milestones achievement o Improve competitive rankings/assessments for Foreign Direct Investment (FDI) attraction and human capital.
Nigeria also needs to develop economic diversification strategy. This strategy should be short – to – long term plans with clear objectives where different levels of ownership and accountability are well defined, and the country’s comparative advantage and exploit opportunities identified. Likewise, the required resources (human & capital) must be identified. Also important is to ascertain competitors, cost of production, customers for export trade. The country should also put in place a well-defined performance monitoring and measurement framework and milestones as well as process checks and controls in the public sector. All uncertainties around policies must be address so that the economy is made more-attractive for foreign investment.
The said national economic strategy, must answer the following questions the following questions:
- What is the unique competitive position of the Nigeria, given her location, legacy, endowments and potential strengths?
- What is the country’s value proposition?
- What role can the country play in African Continent and the world at large?
- What are the key strengths that the country can build on?
- What weaknesses must be addressed to achieve parity with peer countries?
Providing sincere and adequate answers to the foregoing questions is an essential requirement for the development of a National Economic Strategy that will pave the way for Nigeria to achieve tremendous and optimum level of growth and socioeconomic prosperity. As it is today, Nigeria needs an overall strategic framework, and not just lists of aspirations and weaknesses if she must systematically navigate her way out of her macroeconomic crisis.
In conclusion, Nigeria must create and foster all the crucial institutions that facilitate sustainable economic growth and prosperity. Trade policy, saving incentives, a financial environment conducive to investment, good governance, equitable income distribution, and the absence of crime and corruption are just a few of the institutional conditions that those in government must create and sustain. Taken together, these policies will amount to a national strategy, and the institutions will invariably create the necessary organizational structure required to translate the strategy into results.