The Nigerian economy is currently in dire straits with major economic indicators looking grim amidst increasing vulnerabilities. With the sharp decline in the price of crude oil, the country’s major source of revenue, as well as the raging coronavirus, some policy makers and private sector operators who gathered at the ‘Going for Growth 2.0’ held in Abuja on Wednesday, spent the entire day in trying to fashion out strategies to ensure sustainable economic growth for the country. Obinna Chima and James Emejo bring some of the contributions of the participants. Excerpts:
‘ For us it was a shock and unexpected; we didn’t think the price of oil would go as low as $30 per barrel. So, it came to us as a great surprise. These are very strong headwinds and these headwinds reinforce a wake-up call for us as a country to look towards a life without oil and the time to do that is now.
But for all of us in this room, we have a responsibility to ensure that we do not spread panic and that we don’t allow speculation, which will not be in favour of our country. We need to put our hands together to weather this storm.’
‘One of the critical measures that helped to boost growth in 2019, was the impact of the Central Bank’s new minimum loan to deposit ratio, which was initially at 60 per cent, and subsequently raised to 65 per cent. We also imposed restriction on access to OMO auctions in order to encourage banks to lend to the real sector. Indeed, the banking sector has responded positively with the rise in aggregate industry credit from N15.3 trillion in May 2019 to over N17.4 trillion in January 2020. I am aware that these loans have been granted to borrowers across different sectors at considerably lower interest rates. Although a lot more still needs to be done’
‘We used to say when the financial sector collapses, everything collapses. But certainly, it is the other way around. When the oil market collapses, everything collapses. So, oil is the only commodity that the beneficiaries panic when the price goes up…the assumption for this year was $60 per barrel. Now, we are facing sub $30 per barrel and potentially we haven’t seen the bottom…Today, I can share with you there are LNG cargoes that are stranded because there is an abrupt collapse in demand associated with the coronavirus. We hope that is the only reason. Today, for Nigeria’s crude, we have about 50 cargoes that have not found landing’
‘When we were to bring in the metals, the iron for the tracks, just to move it from China to Nigeria and I was excited to support a Nigerian company that has a shipping line to bring it from China to Nigeria. And you know the response we got? That there’s a Chinese law that says only Chinese vessels can carry Chinese cargoes.
Now, we had that law but either NNPC or the Minister of Petroleum has refused to implement that law…Now if you want to encourage private sector investment in Nigeria, then that law should be implemented’
‘If we make those roads work, then we score a big dent in easing transportation by road across Nigeria. The rail is progressing because the money is there: Lagos-Ibadan, second Niger Bridge and Abuja-Kano are progressing because the money is there. So, the big elephant is how do we find the money?” What we have seen from our 2016 to 2020 budget is that we are getting just under 50 per cent budget releases. And that speaks again to the challenge that the minister had had to deal with: raising revenues in order to fund infrastructure’
‘In 2004, before consolidation, all the Nigerian banks put together, their total market capitalisation was below N12 billion and all of them put together could not lend one-tenth of what Dangote Cement required. But today, one of the top tier banks is much larger than all the banks’ shareholders’ funds put together in 2004.
So, that is a testimony that Nigerian banks are solid. We have even started to export our expertise to West and East African countries. Nigerian banks in Ghana are the ones showing the way. They didn’t know about recapitalisation, until we thought them’
‘The diversification of this economy is very important, in fact, we are late. Since 1979 that I came to Lagos, people have been talking about the diversification of the Nigerian economy. You can only diversify the economy through manufacturing and agriculture. Manufacturing actually creates a lot of jobs, creates middle class and also transforms countries. These are areas we need to really focus on. But how do you diversify an economy and go into manufacturing that makes sense and also makes it an inclusive growth, then you need to actually do what we call backward integration or import substitution. Well as you know, for the crash of the oil price, it is imperative that we diversify this economy’
There are clear challenges within our legislative environment that make it difficult for us to achieve some of our priority projects. For example, there is a law in the Philipines that states clearly that certain project would not be interrupted by any form of court injunction…that means the project is insulated from legal challenges and it is able to see the light of the day. A lot of instances, we see challenges whereby a project is started and have all manners of interjections and interruptions through legal processes’
‘Power is extremely important. Access to electricity is key for the development of every economy and we believe that if we can all work together and improve power, it will propel growth in our country seriously’
‘No matter the volume of gas available in the country, no matter the installed and available capacity, no matter the extent to which power can be evacuated, if it is not effectively distributed, it is a waste of time. So, we need to frontally resolve issue around power distribution. You hear a lot of commentators speak to the fact that we have installed capacity of 13,000MW and the transmission company say we can transmit 7,000. However, today, you see the distribution companies supplying just 3,500MW. Nigerians don’t want excuses and all they are looking for is that there should be electricity’
‘We need to start doing something differently, from what we have been doing in the past, in financing infrastructure in large scale. If the population is growing at 2.6 per cent, this economy needs to be growing at eight to ten per cent and infrastructure spending needs to be growing at 15 to 18 per cent annually. And for you to get to that scale of infrastructure investment, you need to create another intervention that has the ability to bring $3 billion to $5 billion for financing infrastructure every year’
‘The agriculture sector employs 40 per cent of our population today and continues to be the largest contributor to our GDP and is very important. So, we have to start looking at things around dams, the river basin authorities that existed in the past and how do we bring them to be as efficient as they were in the past. We need start looking at things around irrigation, silos and storage. These are all critical for the agricultural value chain’