How To Revive, Stabilise Nigeria’s Economy – Experts

As the nation struggles for survival under an excruciating fiscal deficit manifested in bloating inflation rate, foreign exchange management, unemployment and hike in commodity prices orchestrated by nationwide insecurity on the domestic front, and Russia/Ukraine crisis on the external front, economic experts expect the authorities to be more ingenious to stem the tide of a collapsing economy.
The experts said to revive the economy, stabilise it, put it on sustainable growth part with the capacity to create wealth and reduce unemployment, the authorities must engage policies that are focused on medium-term fiscal consolidation, while safeguarding growth and financial stability.
The experts also called for structural reforms to enshrine in law, main governance measures, and to boost productivity to achieve high income status and inclusive growth.
The state of the economy is a fall-out of the poor management of the economy, especially by the fiscal authorities who failed to introduce and drive aggressive fiscal policies to support the monetary authorities. It explains the progressive deterioration in the quality of life of the average Nigerian citizen resulting from high and rising inflation rates.
Not a few people believe that the current fiscal deficit, collapsed security structure, exchange rate management and the collapsed infrastructure, especially road infrastructure, with its ripple consequences for the economy, inexplicable high, rising and crushing debt and debt service burden are some of the factors that have down the economy.
Professor of Economics at University of Benin, Hassan Ebhozele Oaikhenan, told this newspaper that government’s poor economic management policies have resulted in the elimination of what used to be the middle class.
Like Oaikhenan, many economic and investment experts said to revive the economy, Nigeria has to discourage the exportation of raw materials, and encourage value addition for export, to create jobs for her teaming youths.
The experts generally agreed that the nation’s economy cannot advance with the current state of poor power supply.
Nigeria’s electricity generation fell to lowest in 3 months when the national grid collapsed last month for about the fifth time this year. The power generation dropped 6.4 per cent to 3,675MW earlier this month.
Even the presidential candidate of Labour Party in the forthcoming election, Peter Obi, had adduced to the fact that Nigerian economy can only receive a boost with an improved electricity supply.
Like many other experts, Mr Obi said, “If Nigeria can generate 20,000 megawatts of power, the country’s economy will transform within a short period of time. Nigeria has borrowed $500million in the last 20 years, if Nigeria had spent five percent of the money borrowed so far on entrepreneur and power generation, the country will compete with advanced countries.”
Beyond that, the nation’s economy is now being faced with a notorious increase in core inflation.There are concerns that inflation expectations will continue to grow as long as the cost of petroleum products, electricity, exchange rate and insecurity continue to rise.
The International Monetary Fund (IMF) is among other those that have consistently urged the federal government to do away with the scandalous fuel subsidy regime to free up revenue for fiscal demands. Nigeria currently has huge fiscal deficits, resulting in over N43 trillion public debt portfolio.
The Fund believes that the implicit fuel subsidies have a significant negative impact on Nigeria’s fiscal position, which experts say could increase the nation’s overall fiscal deficit proportionately above the estimated one percent of its annual economic growth.
For those who belong to that clique say it is imperative to come up with a creative and innovative exit strategy from the subsidy regime.
However, those who are not averse to the increasing public debt say the federal should new borrowings are tied to critical projects with economic benefits.
Many also believe that to revive the economy would mean to deal with the issues responsible for the rising inflation rate.
In the light of the country’s current situation, Professor of economics and capital market, Joseph Uwaleke, said the most effective way to tackle inflation is for the government to find a lasting solution to the seemingly intractable problems of fuel imports and insecurity while the CBN deploys more of its development Finance function in a targeted fashion.
Chief executive officer, Sofunix Investment and Communications, Mr. Sola Oni, belongs to the league of those who hold that the economy could be revived with lower interest rate regime.
“Nigeria can grow the non-oil sector by operating a regime of lower interest rate in order to reduce the cost of borrowing. This singular approach shall increase consumer spending and investment. The real wages should be increased by ensuring that nominal wages are above inflation. By this model, consumers’ disposable income will increase,” Oni said.
Former director-general of WAIFEM Prof. Akpan Ekpo, said beyond focusing on the federal government, all the subnational states should build their economies and rely less on the federal government.
Ekpo said the economy must invest heavily on hard infrastructure such as power, railways, roads etc as well as soft infrastructure (education and health). Apart from that, he thinks policies, strategies and programmes must be geared towards industrialisation if the growth trajectory is to be sustained.
“For development to occur, at least 80 per cent of the population must have access to quality education, health, secured environment, good housing, running water, electricity, among others,” he added.
As it is, Nigeria needs policies that would boost activities in financial services, agriculture, industrial sector and telecommunications, especially financial technology (FinTech) to achieve sustainable economic growth and development, economic analyst Stephen Kanabe said.
Mr Kanabe said, “I whole adopt the suggestion of IMF that non-oil revenue mobilization —including through tax policy and administration improvements—remains urgent to ensure financing constraints are contained and the interest payments to revenue ratio sustainable.”
There is a general concern about the current insecurity in Nigeria, which has seriously affected farming activities across the country. The fear is that the widespread insecurity would have a spiral effect on Nigeria’s investment portfolio.
Prof Oaikhenan said many foreign investors will not have anything to do with Nigeria whose leadership has failed to deal with insecurity that has caused national apprehension. “Insecurity is inimical to economic progress. In fact, insecurity and economic progress are not only contradiction in terms, they are strange bedfellows,” he added.
Investment analyst Maxi Sam Onwadunwa, said the factors that promote investment energy availability and cost, availability of investable funds, transportation of goods and services, security of lives and prosperity, access to foreign exchange, inflation, consumer purchasing power – are generally in the negative.