The dwindling state of the Nigerian economy

THERE was a time that the Nigerian economy was the toast of the world. On every front and on every basic fundamental Nigeria was among the very top globally, particularly in commodities. The country was feeding the developed world with essential raw materials; and the balance of trade was such that kept the country’s currency in favorable competition with the strongest in the world. 

Then, Nigeria found crude oil in commercial quantity, and spent less energy in making huge earnings. Crude oil gradually replaced agricultural products and solid minerals as the major foreign revenue earner. Complacency slipped in and fiscal indiscipline followed. The country started spending like a reckless lottery winner and those in positions of authority turned the treasury into personal coffers where they dipped their hands at will.

The public service started swelling and the cost of running the structure and maintaining the profligate lifestyle of top government officials became a serious burden on the economy. Coupled with the systemic corruption, the economy began a downward journey. 

Gradually but steadily it started witnessing stress, but the mindless spending and looting continued without a care. The structures that held and promoted the financial system started deteriorating and some started crumbling. The economy started collapsing under the weight of ineptitude and lack of proper direction, because there was no framework to keep it in place.

The country’s reliance on crude oil revenue became its Achilles’ heel. Crude oil revenue could no longer carry the weight of the profligacy. Revenue streams started drying up. 

Rattled by the looming insolvency and the absence of any visible and sound country strategy to buoy the economy and return it to stable ways, subsequent governments resorted to overtaxing citizens. When it became obvious that the taxes and levies were not adding up, they jumped to borrowing, both internally and externally. This has now become another area of critical concern as the little revenue that accrues is being used to service debts, leaving very little to run the system. 

Unfortunately, insecurity crept in under the tardy watch of the authorities and stalled the little effort at reviving agriculture aimed at food sufficiency and providing raw materials for the manufacturing and food processing sectors.

Although the world generally is experiencing serious economic downturn owing to a number of factors, the Nigerian situation was predictable. It started long ago, and it was obvious that it was going to travel this road; but successive governments gambled with policies that were either not strategic, given our peculiar circumstances, or were neglected outright for purely primordial reasons. 

Just like the other economic policies before it, the Economic Recovery and Growth Plan (ERGP) 2017 – 2020, which was well thought out and positioned to restart the economy, and which was applauded by global economic institutions (including the World Bank and International Monetary Fund), lacked a follow-up implementation strategy; and so was dumped for a successor Medium Term Development Plan 2021 – 2025 which is neither here nor there. 

With all these policy gerrymandering, it is no wonder that the economy of the country is on a tailspin. The economy is going down in every positive fundamental and going up in every negative fundamental. Between 2016 and 2020 the economy slipped into recession twice; even though it struggled out within a reasonably short space of time in each case. 

Ordinarily everything looks good for the country, but there is an apparent lack of leadership to mobilize and drive the potentials available in good quantity in all sectors. There is apparent lack of positive will by operators of government machinery to push towards results. The processes and procedures which they have held fast to, as the Apostles’ Creed, is only helping to service their greed and profligacy, even if the economy is bleeding to death. This attitude needs to be curbed and government must summon the courage to immediately abort its profligate indulgence, and seriously cut down on the perks of political office holders to free funds for more productive engagements.

Government must be serious in its anti-corruption drive and ensure that theft and pilfering are seen as mortal sin within the system, with deterrent sanctions. Over-bloated contracts, unproductive training and traveling expenses should be abolished. Frivolous expenditure on entertainment and purchase of luxury vehicles for government business should be discontinued. These are low hanging fruits that can free more funds for basic services.

We must come up with a sound country strategy to revive the economy and put it on the path of inclusive growth and development. The strategy must be supported with a structure that drives foreign direct investment and an environment conducive for healthy business rivalry. 

Furthermore, we must develop a productive capacity that harnesses the country’s factor conditions, both natural and created (capital, skills and technology) and leverage the country’s robust demand conditions, which is largely satisfied by imports currently. The ultimate goal should be to not only replace imports but to be a net exporter of goods and services. 

Also, we must create enabling support and allied systems including reliable infrastructure (such as power and good road networks), services and an effective justice system founded on the rule of law.

We must take a look at the national economy on a sectoral basis. This should also include the mobilization of the subregional economies which form the aggregate of the national economy. The Federal Government must show leadership. When leadership is provided, every other thing will follow. There must be a platform for leadership and empowerment if we are to get out of the woods before dusk.

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