Nigeria has had a checkered past over the last 62 years of independence. From a period of hope in 1960 to a bloody civil war, oil boom, unrelenting slide in the value of the local currency, coups and counter-coups, economic booms and busts, a new democratic dispensation that came with renewed hope, dashed hope in the Fourth Republic, to name a few.
Arguably, there are lessons to learn from the past if Nigeria must have a bright future.
Stakeholders have lent their views on the burning issue. A procurement professional, Mohammed Bougei Attah, noted that the Nigeria economy over the last several years has witnessed a series of changes, upwards and downwards.
This development, according to Attah, who is also the national coordinator, Procurement Observation and Advocacy Initiative, is not unexpected considering the wanton corruption that has caused infrastructure deficits in all sectors of the economy for over 20 years.
He said the country is however gradually moving in the right direction in recent times, from a consumer nation to a supplier nation, which is as a result of current efforts to rebuild the economy through the revamp of key sectors such as transportation, power and agriculture.
“The ongoing efforts to revive Ajaokuta, renewed commitment to energy and road construction are milestones in this direction,” he said.
He added that for the next administration to succeed, it should concentrate on sustaining these drives. Attah advised that the incoming administration improves on human capacity development by ensuring wages are met, while laying more emphasis on professionalism in driving the economy.
The global trend to get nations self-sufficient through industrialisation must be the primary goal of any administration if we want to compete favourably in the global space.
In his assessment, the chief executive officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said over the past six decades the Nigerian economy has transformed from a basically agrarian economy to an economy driven largely by services and oil and gas.
While the agricultural sector contributed an estimated sixty percent (60%) to the country’s GDP in the sixties, its contribution has reduced to about twenty three percent (23%) presently.
Conversely, the services sector has grown significantly since independence and now contributes over 56 per cent of the country’s GDP. These are indications of a significant structural change in the Nigerian economy since independence. “The service sector contribution to employment generation and revenue to the government has risen sharply over time,” said Yusuf.
According to him, the more than two decades of uninterrupted democracy since 1999 reflects relative political stability, which is also good for the confidence of investors. The Nigerian economy had recorded an impressive growth rate over the past decades although with a few instances of sluggish growth. The challenge of creating an inclusive growth trajectory remains a major concern. While the economy has experienced some positive growth trend over the past six decades, especially in the oil boom era, the impact of poverty, inequality and job creation has been very minimal. This is what is characterised as growth without development.
Yusuf further observed that some sectors have been significantly transformed over the past six decades. One of such success stories is the telecoms sector, he said, noting that the number of telephone lines in the country today is over two hundred million as against what obtained about two or three decades ago when the country had a mere three hundred thousand lines, with just a handful of mobile telephones. The economy has also witnessed considerable changes in the ICT sector, and this has impacted many sectors through the digitalization of their processes and systems. “We have seen increased traction in IT applications in many sectors of the economy,” he added.
Electronic payment systems have brought remarkable transformation to the financial services sector.
He said transactions on electronic payment platforms and POS, mobile transactions are far in excess of one hundred trillion naira annually. The entertainment sector has grown in leaps and bounds over the last decade. It has also grown in quality and in number. The sector has become a key sector to be reckoned with globally. Nigerian music and films have gained amazing traction worldwide. This growth has come with massive job creation in the sector, especially for the youths
Furthermore, the economy has witnessed impactful private sector footprints in many sectors, especially in the following: telecommunications and ICT, aviation, transportation, education sector, health sector, print and electronic media and many more.
Accordingly, the contribution of the Nigerian private sector to the Nigerian economy has grown in leaps and bounds over the years.
He however, pointed out that the country’s macroeconomic management framework continues to pose serious challenges to investors in the economy. This situation has been further compounded by the shocks and disruptions inflicted by the Russian invasion of Ukraine and the lingering effects of the COVID-19 pandemic.
He cautioned that the fragile macroeconomic conditions remain a major cause for concern, noting that the troubling macroeconomic situation has manifested in the following ways in recent years: weak and depreciating currency, high inflationary pressure, high and rising debt profile, exchange rate volatility, liquidity crisis in the foreign exchange market, increasing fiscal deficit, growing debt service burden, and the acceleration of money supply growth following the rising CBN financing of deficit.
There are profound concerns around investment climate issues. High infrastructure deficit, cargo clearing challenges which have continued to worsen, high transaction cost at the ports, weak productivity in the real sector largely as a result of infrastructure conditions, regulatory challenges and policy inconsistency.
Persistent importation of petroleum products had continued to put pressure on foreign reserves and weakened the capacity of the CBN to support the forex market. Petroleum refineries have remained non-performing over the years.
The state of insecurity continues to take its toll on the economy, especially on agricultural output and fueling food inflation. It is also impacting the confidence of investors. The spate oil theft and the associated leakages of government revenue is very troubling.
Billions of dollars have been lost to this apparent failure of security effectiveness in the oil producing areas.
For incoming administration, he advised on the need for urgent steps to be taken to ensure a better macroeconomic management framework to stabilise the exchange rate, eradicate the challenge of illiquidity in the foreign exchange market and to stem the current depreciation of the Naira. It is imperative to have urgent reforms in the foreign exchange market with greater focus on supply side strategy. There is a need to review the current disproportionate emphasis on demand management of the foreign exchange market.
There is also a need to strengthen strategies to attract private sector capital to compliment government financing of infrastructure.
There is the need to reduce the level of debt financing, especially the reliance on commercial debt to fund government operations. Public debt is already at an unsustainable threshold.
Steps should be taken to attract foreign exchange through a strategy of ensuring new investment opportunities to stimulate foreign capital inflows into the economy. We should be seeking more equity capital than debt capital.
He also said the government needs to review the country’s trade policy to support investment growth and investment sustainability. Tax policy must support investment not become a disincentive to investment.
The security situation, which has continued to deteriorate, needs to be urgently addressed in order to mitigate the effects on investors’ confidence. There should be greater emphasis on quality intelligence in the war against terrorism.
The oil and gas sector reform, which is now being anchored on the Petroleum Industry Act [PIA] should be accelerated in order to ensure the unlocking of value in the oil and gas sector, particularly the gas sector.
There should be an immediate cessation of the impunity that has characterised the stealing of crude oil and the attacks on oil installations.
Institutional reforms are necessary to ensure that the regulatory institutions have better disposition to support the growth of investment and focus less on the generation of revenue.
The international trade process needs to be reformed to prioritise trade facilitation. The current obsession for revenue generation is hurting the international trade processes and impacting adversely on domestic and foreign investment. Therefore, the orientation of the Nigeria Custom Service, Nigerian Ports Authority, the shipping companies and the terminal operators and the security agencies at the ports need to change in favour of an investment friendly international trade processes.
The banking industry, which brings together people who have money, but have no investment outlet for it, and those who need money for investment, is the lubricant of any modern economy. As to how the industry can bring Nigeria a happy future, the following stakeholders lent their voices.
Mr. Chris Nwani, the Convener of the `New Nigeria is Possible’ Group said while the banking system had improved technologically, it had not encouraged the issuance of loans to youths.
Nwani, also a former banker with one of the old generation banks, said the economy would be more buoyant if youths were provided the resources to translate their talents into realities. He lamented that the development had triggered the proliferation of criminal activities among the youths.
“The essence of banking to improve the buoyancy of the economy of every nation depends on the ordinary people. Where the present Nigerian banking system has not been giving out loans to younger people who have talents to improve on what they have, it shows that we have not really moved forward.
“I wish the CBN could come up and assist where the banks cannot help to ensure that the younger generation, people who have innovative ideas can be supported.
“The CBN is trying but whatever effort that is being dissipated on anything will actually be considered based on the impact. We are yet to see some of these impacts,’’ he said.
Prof. Uche Uwaleke, a Capital Market expert said that the monetary authorities, represented by the CBN, had fared relatively well in ensuring the stability of the financial system in Nigeria.
Uwaleke said that monetary policies over the years had failed to achieve inflation, interest and exchange rates targets.
The financial expert said the failure was due to the huge infrastructure deficit and the country’s inability to diversify its export base away from crude oil.
“We have witnessed a raft of banking sector reforms that saw the end of the era of state-owned banks that were inefficiently managed, as well as the era of fragmented banking institutions following the banking consolidation exercise.
“Today, decades after independence, the banking sector is stronger. Prudential guidelines are in place while the CBN Act and the Banks and Other Financial Institutions Act (BOFIA) have gone through a number of amendments aimed at strengthening the financial sector.
“Having said that, it is important to point out that monetary policies over the years have failed, on average, to achieve low inflation targets, interest and exchange rate targets due to factors located in the structural bottlenecks in the economy.
“The way forward is for the government to clear these bottlenecks to enable effective transmission of monetary policy,” he said.
Former president, Chartered Institute of Bankers of Nigeria (CIBN), Mr. Okechukwu Unegbu, said the banking sector had not impacted much on the public. Unegbu said the credit system in banking, which worked perfectly in developed economies, had yet to function in the country.
“We do not have a credit system to give a percentage of your salary in a credit card just like in the developed economies. Credit system makes the economy move, thrive, and goods and services are easily replicated. Banks in this country are not customer-friendly, they are happy seeing customers suffer. You must have empathy for customers even if you are not able to do what they are asking for; you should receive them immensely, have a human face and talk to them,’’ he said.
The former president also appealed to the government to create an enabling environment to enable fiscal policies to thrive.
