Despite the country’s celebration of its 58th Independence anniversary, a fundamental problem with the country, which continues to confront successive governments, is the failure to diversify the economy, writes James Emejo
As expected, the country’s recent 58th independence celebration once more provided analysts with an opportunity to vet the efficacy of government economic policies, implementation and impact on the well-being of Nigerians.
In their assessment, experts have focused on happenings in the macro-economic space since it goes to determine to a large extent, activities in the micro-economy.
Though, the country was able to manipulate it’s way out of an economic recession few years ago, winning accolades from many quarters, the continued deterioration in macro-economic indices including inflation, foreign exchange, gross domestic product (GDP), unemployment rates, foreign reserves among others had been particular sources of concerns to economic observers who felt 58 years on, Nigeria ought to have surmounted some of its economic woes.
Notably, the inability of government to pursue and achieve true diversification-as against the usual lip-service paid to it- had ensured the nation’s external reserves are kept under constant pressure for foreign exchange to import a whole lot of agricultural and allied products which ought to be produced in the economy to create employment.
Since the inception of the current democracy after many years of military incursion into politics, all the various regimes which came on board had committed to the diversification of the economy from oil, having come to terms with the vulnerability of the commodity and it’s adverse effects during moments of volatility.
Several regimes had promised to bring the naira at par with the US dollar or at least, reduce the huge exchange rate disparity. In spite of that, the gap has continued to widen, with inflation further dampening any hope of recovery- and the resultant decrease in purchasing power of Nigerians.
Although, efforts had been made by the Central Bank of Nigeria (CBN) on the fiscal side to tame the headline index, achieving the single digit target has remained a herculean task for authorities.
Furthermore, the external reserves have also come under sustained attacks in recent times, decreasing at a frightening fashion.
Barring their minds on the state of the economy especially as the nation marks it’s 58th anniversary, an erudite Professor of Finance and Capital Market at the Nasarawa State University, Keffi, Prof. Uche Uwaleke partly attributed the country’s economic woes to the to poor implementation of government’s economic blueprints, particularly the failure to diversify the economy.
He said: “58 years after independence the country is yet to diversify her export base and still relies on crude oil with its associated volatilities. The agricultural sector has not grown beyond the subsistence level due to negligence.
“The state of infrastructure is nothing to write home about. Nigeria cannot boast of a national carrier. Except for the Abuja to Kaduna railway, the country lacks standard gauge rails.
“Electricity supply in a country of nearly 200 million people is still under 5000 megawatts compared to South Africa’s 40,000 megawatts with a population of 50 million.
“The general poor state of infrastructure hampers industrialisation efforts and has made the country import dependent. The result has been so much pressure on the forex market and the depreciation of the naira over the years.”
According to him, “The domestic currency which used to be at par with the US dollar especially in the late 70s now exchanges for as high as N360 to the dollar. The country’s shallow export base is largely to blame.
“Through a cocktail of monetary policy tools, the Central Bank of Nigeria has been fighting the inflation monster, but this has equally resulted to high interest rate environment owing largely to structural weaknesses in the economy which has contributed to stifling the growth of SMEs in Nigeria.”
However, Uwaleke noted that there had been some achievement recorded in the economy nevertheless.
He said, “Having said this, it is heartening to note that the economy has witnessed some sunny sides since independence. The rebasing exercise carried out in 2014 showed other promising sectors of the economy that were not reckoned with previously such as Telecoms, ICT and Nollywood.
“The capital market has recorded significant milestones since the establishment of the Nigerian Stock Exchange (then the Lagos stock Exchange) in 1960. Trading infrastructure has been modernised and the bonds market has been developed. Beyond the traditional products of equities and bonds, many more have been introduced to give more choices to investors.
“Currently, there are five securities exchanges compared to just one up till the turn of the century. More importantly, market regulation was greatly strengthened following the establishment of the Securities and Exchange Commission.
“Going forward, genuine effort should be made by the government to break the jinx of a single product economy. Effective strategies to achieve this have already been laid out in the Economic Recovery and Growth Plan.
“There is no gain saying the fact that previous economic blueprints since independence from the development plans to SAP, Vision 2010, NEEDS, Vision 20:2020 failed due to poor implementation. So, this time around, with respect to the ERGP, government must walk the talk.”
Also, former Managing Director, Unity Bank Plc, Dr. Mohammed Rislanudeen, harped on the failure to diversify the economy, therefore exposing it to external shocks.
He said: “Despite recent efforts by the government especially under the EGRP to diversify the base of the economy, we still remain mono product and susceptible to external shocks of oil price movements, for which we have no control.
“We still remain import dependent hence any reduction in foreign reserves as well as reduced capacity of CBN to accommodate foreign exchange import demands leads to currency crisis, round tripping and cost push, imported inflation. Recall that we sank into recession mid 2017 due in large part reduced oil price as well as reduced volume of oil exports. We got out of it largely due to oil sector recovery.”
According to the former banker,”58 years after independence, most of our state governments are still largely relying on statutory funds from the federation to meet up with their statutory obligations even though the states are blessed with abundant opportunities for enhancing their revenue potential and improve capacity to enhanced living conditions of its people.
“Reliance on monthly federal allocations as well as over bloated fiscal deficits through unhealthy borrowings, help in part towards accentuating fiscal crisis and/ or difficulties in meeting statutory obligations like salaries payment and infrastructural support by the states.
“This underscores the imperative for an effective fiscal federalism where states get obligated to develop efficient ease of doing business system that allows for thriving of agriculture, agribusiness and industries with ultimate impact of enhancing revenue generation, employment and general improvement of the misery index across the states.”
Furthermore, the Chief Executive, Global Analytics Consulting Limited, Mr. Tope Fasua expressed disappointment over the general performance of the economy several years after independence from colonialism.
He said: “Its apparent that Nigeria’s economic performance in 58 years has been dismal and mediocre. Our exchange rate has plummeted from being at par with the pounds sterling to almost N500 today and it went as low as N650 at some point.
“Our central bank has warned that we are not out of the woods yet and the nation seems to be bracing for some turbulent economic times.
“Inflation is down to 11 per cent, but food inflation is still around 13 per cent while economic growth itself is down to 1.5 per cent, meaning that many people are falling into the poverty trap.
“The analysis from the World Poverty Clock says that 8,000 Nigerians fall into poverty daily in world where most countries have devised means of taking their people out of poverty.
“It’s a shameful perspective. We can do a whole lot better than this and I urge everyone who has ideas to step forward and rescue this nation.
“Beyond the grandstanding, it is evident that the current arrangement and current crop of leaders can only take this nation to the cliff end and beyond.”