On Tuesday 7th of June, Nigerians received the reaction of the federal government of Nigeria on the recent trend of retrenchment of workers in the financial services sector. The position of the federal government delivered by the Minister of Labour and Employment, Senator Chris Ngige revealed a feeling of disapproval and shock that employers of labour in the financial sector especially banks were breaching its directives to stop further retrenchment of workers, with the government threatening to withdraw the operating license of any bank or telecommunication company that deliberately continues the onslaught on Nigerian workers. According to the minister, a rain of heavy sanction is soon to pour on erring companies because Government had a duty to protect jobs in this harsh economy.
Examining present realities
Behind the terrible blow of mass sackings on Nigerian families, perhaps another pressing concern is that even critical services like electricity is failing with pitch darkness setting in on Major cities and placing businesses on a standstill in a country rated as the largest economy in sub-Saharan Africa. Food prices have also climbed at an alarming rate making the purchase of essential commodities extremely unaffordable for the common man with many traders attributing the climb to oil scarcity which resulted in high cost of transportation of goods, extra charges and even shortage in food supplies.
According to the National Bureau of Statistics, Nigeria’s employment crisis worsened in the first quarter of 2016, with unemployment rate rising to 12.1 per cent, the bureau said in its latest Unemployment Watch report. Between December 2015 and March 2016, the population of unemployed Nigerians increased by 518,000 to over 1.45 million. The report explained that the failure of government to meet its target of creating a minimum of 1.5 million jobs required for the period to keep the unemployment rate constant at 10.4 per cent before the end of December 2015 created the present unemployment situation.
Identifying a way out
A growing number of seasoned analysts have expressed concerns about the prevailing economic realities well before it got this bad. A notable instance that of the Chief Executive Officer Economic Associates, Dr. Ayo Teriba, who encouraged the federal government to ensure a sustainably conducive environment for foreign businesses as off-shore investments contributes significantly to improving the economy and accelerate the process of national development.
Teriba explained that the best way to stimulate growth in the economy is to ensure that significant investments keep flowing into such sectors, adding that the growth progressively leads to improved revenue for the government. He admitted that Nigeria’s best example of success in attracting and retaining foreign investment has happened in the telecoms sector and the experience in the past 15 years ought to encourage Nigeria to solicit more in sectors even outside telecoms.
“The fastest growing economies in the world today accord a place of importance to foreign direct investments. India is an example. They started liberalising the investment since about 1991 and today, practically all their infrastructure sectors are open to foreign investments. Surprisingly they allow 100 per cent equity holdings for foreign companies because they have seen the benefits of funding strategy for growth, employment and for steady supply of services”.
CBN’s call for non-oil alternatives
Delivering a lecture titled “Managing the Quandary of Commodity Price Declines in an Oil Dependent Economy” at the 40th anniversary and 22nd convocation ceremonies of the University of Maiduguri, Borno State recently, Governor of the Central Bank Of Nigeria Godwin Emefiele represented by his deputy, Alhaji Suleiman Barau revealed that the nation’s import-related demand for foreign exchange rose to N102 billion monthly, despite the sliding fortunes of foreign exchange inflows from oil, which fell short of $1.36 billion monthly.
“It is important to note that the increased demand, which shows the country’s dependence on imported items, even the ones that can be made in the country, was in contrast to monthly average import bill of N12.4 billion in 2005; N65.6 billion in 2013; and N73.2 billion in 2014. It is against this backdrop that the CBN challenged the nation’s tertiary institutions to improve teaching and learning experiences to secure the desirable links among knowledge generation, economic growth and structural remodelling. Educational institutions must now impart to students high-level skills required to obtain and retain employment and most importantly create jobs, as well as align academic curricula with the development agenda of the times” the CBN chief said.
Saving the economy through non-oil alternatives
Many Nigerians are embracing opportunities outside the oil sector to bail out the economy, entertainment, agriculture, arts and culture, tourism and even telecommunications are all emerging as sectors that hold the potential to balance out our revenue generation deficit.
For instance, prior to the oil boom of the 1970s, agriculture was the main stay of the Nigerian economy. The boom brought about a gradual shift from agriculture to crude oil making Nigeria to depend heavily on petroleum as a main source of foreign exchange earnings. Hence, the Agricultural sector which had been the back bone of the economy was out-rightly neglected. The time has come to reprioritize and consider previously unpopular options that hold a promise of economic growth and revenue generation that will ease and support the nation out of the looming recession.
The telecoms sector is perhaps the most obvious alternative available and should be encouraged as such, regarded as the fastest growing sector of the Nigerian economy. The sector is indeed turning out to be the fastest growing contributor to the Gross Domestic Product (GDP) of Nigeria. The telecoms industry has seen an enviable growth with over $32 billion investment, more than 152 million subscribers and close to 100 million Internet subscriptions according to available statistics from the Nigerian Communications Commission (NCC), the industry regulator. Data released by the Nigerian Bureau of Statistics (NBS) also revealed that the telecommunications sector contributed 8.88 percent to the GDP in the final quarter of 2015.
Noteworthy is the fact that at the end of 2014, Nigeria alone had about 136 million registered lines from the four major operators (Etisalat, MTN, Glo and Airtel) and Nigeria telecom operators accounted for 35 per cent of the total Foreign Direct Investment, FDI, into Nigeria in 2014 alone.
This development has enhanced uptakes in financial transactions technology and payments systems, E-commerce facilitation, improvement and proliferation of transport services and virtually all services offerings that can be improved by digitalization.
As posited by many experts the globalization driven by ICT makes it imperative for Nigeria as an emerging market to seriously consider the application and promotion of ICT to facilitate its rapid growth and development.
MTN Nigeria probably the biggest foreign investor in Nigeria over the last decade has led the telecoms industry to achieve its huge contribution to the Nigerian economy. The company has invested an excess of 15 billion dollars in Nigeria, provided thousands of employment opportunities and has solely accounted for 4.5 per cent contribution to the country’s Gross Domestic Product (GDP). Aside the fact that the company had invested more than N3.2 trillion over the past 15 years; it is also proudly impacting hundreds of communities positively across the country for the better.
Following this development many experts have called for an optimum utilization of available alternatives to the Oil sector in an attempt to positively revive the economy.
Moving forward with a positive outlook
As Nigerians look forward to an improved condition and dividends of positive change from the present administration, it is imperative for government at all levels, private sector and relevant stakeholders to demonstrate a deliberate commitment to improving the economy.
There is indeed no better time than the present, to look -out of the box- of revenue generation from the oil sector. It is noteworthy that the National Assembly has shown its eagerness to play a leading role in the “Made in Nigeria” initiative through the application of legislative measures for Nigerians to do away with import dependency. This move should be supported by concrete actions to diversify the economy, increase productivity and provide job for the teeming number of unemployed youths.
Concerted effort should also be expended in creating an enabling environment for foreign investors and businesses which is why experts have rightly criticised the delay of Nigerian Lawmakers and long silence in finding an amicable solution to one of Nigeria’s biggest foreign investors MTN Nigeria/NCC regulatory debacle.
With timely, appropriate and sustained action taken in providing the proper growth strategy for turning around the economic woes, Nigerians look forward to measures that will encourage foreign business interests, a conscious attempt to empower non-oil alternatives and the encouragement of local production and consumption. With these and many more in place, it will certainly not be difficult to achieve the desired positive Change as the agenda the present administration have so extensively bandied.
– Adefemi, an economic commentator, writes from Lagos