Sustaining Nigeria’s Economic Growth
The incoming administration must ensure that its economic policies are geared towards elevating the living condition of Nigerians as well sustaining the country’s economic growth, writes Obinna Chima
Despite the hurdles and obstacles that continue to hinder the Nigerian economy from realising its potential, the country, has been on the right path of growth since 1999 when its current democratic journey started. Nigeria, clearly, is a different place now from what it was when it began the journey towards democratic governance 16 years ago. The country has grown to be the largest economy in Africa, with key reforms in various sectors of the economy opening doors for the influx of foreign direct investments in critical sectors of the economy.
Of course, Nigeria’s democratic credentials were further consolidated with the recent peaceful outcome of the presidential election that saw the emergence of Major General Muhammed Buhari as the president-elect. He defeated the incumbent, president Goodluck Jonathan.
Buhari satisfied the constitutional requirement of polling the majority votes of 15.4 million, compared to president Jonathan’s 12.9 million total votes, while also winning at least 25 per cent of the votes cast in 28 states. Prior to the electoral contest, they were the two contending words -- Change versus Transformation.
As a result of the uncertainties in the air prior to the elections, the Nigerian economy suffered certain setbacks against the backdrop of weakening macroeconomic variables (exchange rate, oil prices, inflation, GDP) and massive outflow of foreign portfolio investments. These rubbed off on the financial market as investors became overtly cautious to jettison fundamentals for fear of the unknown. Investments were on a halt while investible funds stayed on the sideline. Therefore, with the successful completion of the election, experts have stressed the need for the incoming administration to focus on policies that would engender sustainable development of the country.
Awaiting the ‘Change’
Analysts at Afrinvest West Africa Limited stated that the victory and emergence of Buhari points to the dawn of a new era in Africa’s largest economy.
“When the President-elect assumes office on the May 29, 2015, the Nigerian masses look up to him for “Change” in the country that has seen 16 years of unbroken reign of the ruling Peoples Democractic Party. Hence, the question in the mind of many is, how soon will this ‘Change’ come?” they queried.
While advising the president-elect on how to improve national security, Afrinvest stressed the need to urgently address the poor security situation in the country via a well-trained, adequately equipped and goals driven serious crime squad to combat terrorism, kidnapping, armed robbery, militants, ethno-religious and communal clashes nationwide.
On job ceation, they advised the incoming administration to “make our economy one of the fastest growing emerging economies in the world with a real GDP growth averaging 10 per cent annually; to be driven by ICT, manufacturing, agriculture and entertainment. This is to thrive under a sound macro-economic policy environment, run by an efficient government which preserves the independence of the central bank, and modernise agricultural sector hinged on a change from self-subsistence farming to medium/commercial scale farming.”
They also called for the formulation of a private sector- led lndustrial base for the economy, entrepreneurship promotion, economic diversification and heavy investment in research and development to boost industrial development, even as they called for a speedy passage of the much-delayed Petroleum Industry Bill (PIB) and ensure that local content issues are fully addressed to grow the oil and gas sector.
In terms of infrastructure, they added: “There is need to generate, transmit and distribute power from current 5,000 -- 6,000 MW to at least 20,000 MW of electricity within four years and increasing to 50,000 MW with a view to achieving 24/7 uninterrupted power supply within ten years, whilst simultaneously ensuring development of sustainable/renewable energy; Construction of 3,000km of Superhighway including service trunks and building of up to 4,800km of modern railway lines -- one third to be completed by 2019 via a Public Private Partnership (PPP) arrangement.”
On its part, the Institute of Credit Administration (ICA) advised the president-elect to ensure that his government drastically cut the cost of doing business in Nigeria when he assumes office. The institute pointed out that the Buhari’s administration would gain local and global acceptance if the aforementioned is achieved. The ICA insisted that “it is really possible to fix electricity by all means within six months,” even as it urged Buhari to prioritise nationwide road construction
The ICA further advised him not to: “fail Nigeria and Nigerians; do not also fail the friends of Nigeria in the uttermost parts of the world. Endeavor to deliver in accordance with your campaign promises to which you must expect that Nigerians and international community will hold your government.”
“The ICA is confident that you, General Mohammed Buhari, has the requisite discipline to lead our great country into the next regime of strong economic prosperity, social justice and freedom.
“First among your priorities should be to address the nation’s urgent economic, social and security situation, and to build a strong economy for the future. Your approach no doubt should be to focus very quickly on structural reforms, fiscal responsibility and investment.
“Set up as a matter of urgency a national agency that guarantees access to loans by SMEs, and not to disburse loan to them. Such agency can be called – Nigerian Credit Guarantee Corporation (NCGC). Surprisingly, up till today, Nigerian government is still not dreaming of creating this national platform that would support the development of SMEs.
“If a National Credit Guarantee Corporation is set up by the federal government with strong capital base and very robust operating fund, you can be sure that that corporation would serve as collateral and security which people who want to borrow money do not have, that is, those within the class of SMEs. This is the practice in other countries.
“The policy thrust of your government should be economic growth revival and massive infrastructural build ups to help boost economic growth,” it added.
Also, the Chief Executive Officer, RTC Advisory Services Limited, Mr. Opeyemi Agbaje, recently stressed the need for the government to create policies and incentives that could promote non-oil exports by Nigerian firms.
He pointed out that although the current structure of Nigeria’s GDP shows that the country has achieved significant diversification in terms of local production and consumption, there is need for Nigeria to be competitive in the area of non-oil exports of goods and services by the private sector.
Agbaje cited the case of South Africa, whose export revenue is driven largely by private sector firms such as MTN, DSTV and South African Breweries, among others.
“The challenge for the Nigerian economy is for government to create policies and incentives that will allow our private sector to become exporters.
“If our export revenue was earned by thousands of Nigerian companies exporting their services, we would not collapse anytime the price of oil falls.
“We also need to start refining our oil domestically and exporting it. We should be one of the biggest exporters of refined petroleum products in the world.
“There are significant opportunities in Nigeria. If you look at the structure of Nigeria’s GDP, you will see that huge opportunities abound in Nigeria.
“In terms of the structure of domestic production, we have done a good job of diversification, but the problem is that in terms of the structure of export and government revenue, we have not done enough,” he said.
Similarly, the President of Chartered Institute of Taxation of Nigeria, Mr. M. A. Chidolue Dike, called for improved tax revenues.
“So, no matter what you do, tax is very critical. Tax is the price we pay to improve our society.
It can’t be the other way round that the government has to provide road before we pay tax, no, we have to pay.
“Having paid, we would have the moral justification to demand for performance, accountability and stewardship. It has been found that countries that rely almost completely on taxation are more responsible, more accountable and more responsive,” Dike added.
From the foregoing therefore, while a lot is expected from the incoming administration in ensuring that the economy remain on the path of growth, the real challenge however remains the need to ensure that as a developiandante middle-income country, there is still a lot more to be done to further reduce poverty, expand infrastructure and provide more social services for our people. These challenges are formidable, but they are not insurmountable.