The All Progressives Congress (APC)-controlled administration of President Muhammadu Buhari is celebrating its second anniversary. What options are open to the Acting-President, Prof Yemi Osinbajo, to inject live into the country’s economy that has since gone on recession?
Please permit me to excuse myself from whatever rhetorics and drama that may be trending for political reasons. Rather, we should ask ourselves: What should any family that depends on one source of income like Nigeria do to reduce or cushion the impact resulting from jolts and bumps arising from the crash in the price of crude oil in the international market? The reason the economic recession was particularly severe on the country is that Nigeria is a mono-product that never treated with seriousness years of advice and persuasion by economic experts that the country should diversify and broaden its economic base. You cannot rely on a single product for survival and expect not to sneeze and cough whenever that product responds to stimuli from the international market over which you have no control. That is exactly what happened to Nigeria.
It is bad enough that we refused to heed words of caution to diversify and broaden the country’s economic base. Our refusal to heed expert advice transformed into disaster when the price of a commodity which we do not control suddenly came crashing when you least expected it. That is what happened to Nigeria suddenly. We are a mono-product economy, do not forget. And whenever there are ripples, shocks or the international market for crude oil sneezes, the country’s economy catches, cold which is exactly what happened.
At this point, we should not be bemoaning a reality that has already occurred but asking ourselves what should be done to mitigate the disaster. As a country, we should not be concerned with wasting emotions on how we forgot or neglected to heed the advice of experts to diversify and position the country’s economy to absorb any shock. At this stage, we should be concerned with options available to the country to adopt to cushion or mitigate the effects of the recession, which cannot be wished away overnight.
What are the options open to Nigeria?
What happened to the country is not different from what can or would happen to any family that depends on one commodity or source of income for its livelihood. Despite years of advice by experts that we should diversify the economy to make it less dependent on crude oil, adequate steps were not taken to translate this into reality. Oil still accounts disproportionately for the country’s Gross Domestic Product (GDP). So when the unexpected suddenly occurred, the impact was almost paralysing. Projections by government suddenly became distorted because money available for development suddenly became grossly inadequate. It is not too late to do the needful. As a matter of fact, diversification of the economy still remains the most viable option open to the government to beat the effects of the economic recession on Nigerians.
In concrete terms, how does the country go about this?
We can start by drastically curbing or reducing our unhealthy appetite for importation. Nigeria must reduce its dependence on importation, especially for items that we can source for locally. We must reduce our huge appetite for importation, which is what is putting undue pressure on foreign exchange, and invariably on the naira. If pressure is reduced on foreign exchange, it will automatically strengthen the national currency.
Other components of this interplay include a serious determination by the government to cut wastages and plug loopholes in its expenditures. There are many areas of wastage in government expenditure that should be plugged. This is a veritable challenge for those responsible for conducting due diligence on government expenditure. There is so much more they can do in this regard because much money is going down the drain.
How will diversification unlock or release the many potentials that abound in the country’s economy?
That is a good question. To make diversification meaningful, not just political rhetoric, government will have to be ready for the responsibilities that this economic option imposes. But to make diversification possible and attractive, government will have to open up infrastructure. For instance, small and medium scale enterprises provide the engine of growth for any economy worth its name. In most developed economies, small and medium enterprises constitute the engine of growth. They usually provide a critical segment of the GDP. If Nigeria’s enduring power challenge is eventually resolved, its impact on the economy would be tremendous.
The resolution of the recurring power challenge will boost the economy significantly because SMEs constitute the engine of growth in most developed economies of the world. Some people allege that there is considerable economic sabotage as far as the power challenge in the country remains unresolved because there is huge profit to reap from the welter in the power sector. When the power question is eventually put right in the country, the multiplier effect on the economy would be awesome. Tradesmen, artisans and other small investors will be encouraged to invest. These small investments will add up to a significant boost to the economy and whether the price of oil falls or not, the impact will not be felt because other contributors to the GDP are driving the economy comfortably.
How can government make agriculture attractive for investors in the sector?
Similar investment in infrastructure will equally make agriculture attractive to investors. There is so much the sector can contribute to the GDP of the country. Do not forget that there was a period the country depended on agriculture for survival, the same role crude oil plays today. The mistake we made, as a country, was not to provide incentives to make agriculture attractive to investors simultaneously as crude oil. For example, stable power will ensure that investors in agriculture will not incur wastages because no matter how bumper the harvest, there is guarantee that nothing will waste because any excess could be adequately stored.
And provision of good roads will enhance accessibility of produce to markets. And just as it is a cardinal requirement for investment in any sector, government must demonstrate capacity and willingness to provide and enforce security for investors in agriculture. Very few investors are prepared to invest in a sector without security. For agriculture to be made attractive to potential investors, there must be guarantee of adequate security for investors.