Business
Experts chart pathways for economic development
The Nigerian economy is in dire straits. And there is a growing consensus that things may even get worse sooner or later. Though the incumbent government of President Tinubu is not completely responsible for the deplorable condition of the economy, which has evoked fear in Nigerians, there is however no gainsaying that his knee-jerk economic responses since assuming office have compounded things. In fact, the macroeconomic environment appears to validate this position as the country’s ranking, according to the International Monetary Fund (IMF), has dropped from number one to four in Africa.
Statistics show that inflation, exchange rate, and unemployment are steeply southward. The National Bureau of Statistics (NBS)latest figures show inflation is still high at 32.15 percent, a little lower than the 34.19 percent it had attained in June 2024.
The exchange rate has hit the rooftop at over 1650/$ and this is being accompanied by an unprecedented unemployment rate, which political statistics mischievously put at 6 percent. Not to talk of the staggering underemployment figures which is presently estimated to encompass over half of the potential workforce. Even as the Gross Domestic Product (GDP) stood at a still less than satisfactory 3.19 percent in the second quarter of 2024.
Even some of the seemingly fairly positive numbers, experts reckon, contradict the stark field realities given the very excruciating pain that has greeted the populace, particularly since the removal of subsidy on Premium Motor Spirit and the devaluation of the Naira by about 300 percent.
On the growth turf, hopelessness has gripped Nigerians as the Monetary Policy Rate has just once again been increased by the monetary authorities; this time to 27.25 percent, and the Cash Reserve Ratio (CRR) has also been raised to 50 percent for Deposit Money Banks and 16 percent for Merchant Banks.
This has made it more troubling for businesses that access debt financing. It is also worrisome that Nigeria’s total sovereign debt stock has also jumped to a whooping N121.67 trillion in Q1, 2024, while Nigeria’s debt service to revenue stands at 74 percent.
That the economy is drifting and directionless, causing hardship and increasing poverty, is clear to Dick, Tom, and Harry. What matters to poverty-stricken Nigerians primarily today is how people can put some food on the table. In this light, experts approached by BH think that President Bola Ahmed Tinubu and his economic team can reverse the sliding course of the economy by deploying far-reaching positive policies as well as doing some other things better.
STRATEGIES FOR ARRESTING AND REDIRECTING THE PLUNGING ECONOMY
Economic experts have always believed that economic growth demands the creative accumulation of human and physical capital, increased productivity, and the creation of new goods arising from technological innovation. While many factors contribute to achieving economic growth for the populace’s benefit, many knowledgeable persons agree that the intentional pursuit of productive activity and efficient allocation of resources is important.
Listing a pathway to repositioning the Nigerian economy, the Chairman of Momentum & Peace Limited, a Consortium of researchers and trainers, Mr. Emma Nwosu, told Business Hallmark that the government must apply genuine Austerity Measures to curb the cost of government operations. In his view, serious Re-engineering of internal security, achieving domestic production and ensuring circumspection towards Western countries and financial institutions are necessary for the stability of the economy.
He further detailed the fact that the Presidency should encourage Cultural Change in addition to looking for creative ways to avert revolution.
‘’It is not the time for the largest executive council in the history of Nigeria. That cabinet should be recalibrated. It is the wrong time for jamborees and globe-trots with bloated contingents and expensive protocols. It is not the time to renovate the Vice President’s residence for the outrageous sum of N21 Billion, buy expensive bullet-proof vehicles, or add a yacht or another aircraft to the Presidential fleet. Such mindless expenditure should be refunded to the state. It is not the time for the outrageous remuneration of legislators and other political officeholders,’’ said Nwosu
According to him,‘’ It is also not the time for opaque, big-ticket contracts, such as the Lagos – Calabar Coastal Highway and the Badagry – Sokoto Highway when many interstate highways – more critical to commerce and internal security – remain un-motorable all over the country. Those contracts should be canceled,’’ Nwosu, who was also the former Managing Director of one big bank, admonished
The Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, had also expressed fear that Nigeria, which is burdened with the problems of debt, poverty, and bad management, needed not only reforms but also institutional reforms with clear goals.
Rewane had advised the government to ensure transparent and proper use of debt for better infrastructure and enhanced public services such as healthcare and education.
He explained that “continued efforts in economic diversification, export enhancement, and fiscal discipline are essential to maintain and improve Nigeria’s debt sustainability”.
Commenting on the deteriorating macroeconomic indicators, Chief Executive Officer HighCap Securities Limited, Mr. David Adonri, observes that whereas the government is pushing market reforms, it is yet to display a reasonable level of economic management competence and a good understanding of the basic principles of economics as exemplified by the continuing disharmony between fiscal and monetary policies.
Adonri explained, “Nigeria’s economic woes actually come from an undersupply of goods and an oversupply of people or consumers, thus leaving a huge supply gap. By now, the government ought to have identified the key factors fueling the supply gap and dealt with them through the speedy mobilization of all domestic factors of production under a nationwide supply-side programme’’.
According to him, “Another point of dislocation even in the demand management programme this administration is running is that government is not subordinating itself to the programme. Only private consumers are bearing the brunt of the exercise. If the programme is to achieve its desired goal of substantially deflating demand in the economy to rein in inflation and facilitate allocative efficiency, the government ought to drastically cut down on its recurrent expenditure by undertaking austerity measures.”
Also speaking at the Annual Conference of the Finance Correspondents Association of Nigeria (FICAN) on Saturday, September 28, 2024, themed ‘Nigeria’s Journey Towards $1trillion Economy: Impact of Banks’ Recapitalisation, Opportunities For Fintechs, Real Sector’’, the Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, urged policy makers to create an enabling environment that supports the survival of business efforts.
‘’For sustainable and inclusive growth, policymakers must create an enabling environment that supports innovation, financial inclusion, and growth while simultaneously protecting the markets, consumers, and investors,’’ he said
Mr.Oliver Alawuba, Group Managing Director/ Chief Executive Officer, United Bank For Africa (UBA), represented by the Executive Director, Finance and Risk Management at United Bank For Africa, Ugo Nwaghodoh, at the same event reckoned that boldness and determination were important ingredients to achieving far-reaching and deep economic successes.
Alawuba noted that that achieving the $1trillion economy target was going to be hinged strongly on genuinely making the real sector the ‘’true engine of growth’’.
‘’Let us take this opportunity to collectively shape the future, ensuring that the Nigeria of tomorrow is one where prosperity is shared, opportunities abound, and our economy stands as a beacon of growth on the global stage,’’ he said.
Indeed, the consensus out there is that the government should diversify the economy through investment in agriculture; and provide an enabling environment for micro, small, and medium-scale enterprises to thrive. More importantly, the government must formulate sound policies and ensure strict implementation to enhance local production otherwise the $1trillion economic target will remain a mirage.
