‘When the righteous are in authority, the people rejoice: but when the wicked beareth rule, the people mourn.’
To say things are tough in Nigeria will be an understatement, with fuel scarcity, naira redesign crisis, bad roads, poor power supply, joblessness among others things that make life miserable for citizens.
When COVID-19 hit the world in 2019, there was nothing like it in recent history as people were locked in their homes with little or no food, while government palliative measures in Nigeria to send food to homes failed. It was later discovered that some people hoarded food, waiting for the right time to sell and profit from the mysteries of fellow citizens.
Now fast forward to 2023. It was a bigger crisis created by the central bank in an attempt to redesign currencies and withdraw the old ones just few weeks to a national election that will produce new set of leaders that will serve for another four years.
As if the central bank got its research wrong that the volume of new currencies to replace the old ones being recalled would not adequately go round, the cash shortage crisis that resulted brought the entire economy to its knees, with small businesses closing down, hunger hitting homes while protests erupted across the country as banks closed down with no cash to disburse and the fear of being attacked.
Not a few people believe that the naira redesign crisis is worse than COVID-19 with the perennial fuel scarcity and power outages no longer seen as major contenders for the afflictions of the African most populous country.
From the International Monetary Fund’s World Economic Outlook for October 2022, Nigeria economy didn’t grow and perform as expected due to structural economic shocks and challenges brought about by the global fall in oil prices, which was a fall-out of the Russia-Ukraine war.
Nigeria’s economic potential is said to be constrained by many structural issues, including inadequate infrastructure, tariff and non-tariff barriers to trade, obstacles to investment, lack of confidence in currency valuation, and limited foreign exchange capacity.
Other similar reports had traced Nigeria’s biggest economic problems to corruption, poor human development, over-dependence on crude oil, crime and terrorism, low export earnings, high rate of unemployment, lack of infrastructure among others.
With high inflation which hit 21.91% in February 2023, taking a toll on household’s welfare and high prices said to have pushed an additional 8 million Nigerians into poverty, the country is ranked 103 out of 121 countries in the 2022 Global Hunger Index (GHI), a position that signifies a level of hunger that is serious.
World Bank in its 2022 Poverty and Prosperity Report said Nigeria contributed three million people to global extreme poverty, while the country is “home to a large share of the global extreme poor.”
This is the economy that the President-elect, Asiwaju Bola Tinubu is going to inherit with unemployment rate of 32.1%, public debt at 36.6% of GDP together with a population of over 200 million, majority of who will try everything possible to escape to other countries where they believe that things can never be this bad.
Nigeria’s national productivity growth rate has been low due to what observers linked to infrastructure deficit, unemployment and youth challenges, constant strike actions, brain drain, corruption, insecurity, poor workers’ attitude to work. Up to 80 percent of workers are said to be employed in sectors with low levels of productivity—agriculture and non-tradable services, which means that the kind of jobs needed to generate income growth and lift many Nigerians out of poverty are not available in large numbers.
A major problem facing the economy is the neglect of the manufacturing sector, with the country not producing enough, for both local consumption and export, with statistic showing that non-oil exports as a share of non-oil GDP averaged 1.3 percent while manufactured goods as a share of total exports remained low at 5.2 percent in 2021.
The Tinubu administration will be expected to develop an economic agenda with a practical strategy on how to structurally transform the economy, moving labor and economic resources from low productivity sectors to high productivity sectors.
To implement policies that will deliver an inclusive and competitive economy, first, it may have to rattle feathers in getting professionals to head all the strategic government agencies which are currently headed by mediocrities. It will definitely create bad blood among those that have seen such jobs as their birthrights, but the assurance of a greater opportunity in an expanded economy that will profit all should assuage any aggrieved interest with entitlement mindset. If the economy is productive and people are earning healthy wages in the private sector, the rush for government jobs and appointments will definitely drop. But under no disguise must any of the strategic government agencies be manned by unqualified persons again.
Data from the National Bureau of Statistics indicated that unemployment and underemployment rates increased to an all-time high of 56.1 percent in 2020, pushing 133 million Nigerians into multidimensional poverty with economic growth not inclusive as it faced key challenges of lower productivity, weak expansion of sectors with high employment elasticity.
Getting the youths to work must be an immediate task for the new government and will be driven by fixing productivity through combinations of policies that cut across some strategic sectors of the economy. With a population of over 200 million, it’s obvious that a weak manufacturing base can only yield foreign exchange shortages, limited number of jobs created to accommodate workforce entrants, and an import bill that can hardly be met by export earnings.
Starting with national registrations of all unemployed youths across the country through dedicated local government centers, the policies that will get them engaged should explore opportunities in strategic sectors such as blue economy, energy , digital economy, mining, sport, agriculture and tourism, and get them to seamlessly access the Nigeria Youth Investment Fund approved by the outgoing government to support entrepreneurship for the over 68 million Nigerian youths between ages 18 and 35. This will instantly have impact on getting the youth to start doing business. The new entrepreneurs will need trainings, mentorship to grow and this can be provided by the well established ones including the multinationals which must be mandated to deliberately accommodate them for an agreed period, even if it will be at the expense of subsidy and tax incentives from government.
Many startups that need to be encouraged by the coming government are currently springing up in Nigeria, developing technology to fix identified problems in payment systems, insurance, agribusiness, e-commerce among others. The beauty of their emergence is that their concepts are globally acceptable, making them eligible to expand to other countries while attracting foreign exchange and creating new jobs.
Very laudable is the latest $600 million Investment in Digital and Creative Enterprises (i-DICE) Programme with funding from the African Development Bank (AfDB), the Islamic Development Bank (IsDB), the Agence Française de Développement and FG through the Bank of Industry to support young Nigerians ranging from ages 15-35 who are entrepreneurs at the early stages in creative, innovative and technology-enabled ventures.
I attended a forum sometime when an expert said that if the government can provide a grant of just $100,000 each for 100 youths, they will be capable of solving the nation’s economic problems in the medium and long term.
The incoming government should explore similar initiatives to raise funds to encourage more startups that will be building solutions to solve identified problems that are still numerous in Nigeria because it’s still an underdeveloped economy.
Even though oil and gas is going out of fashion globally with migration to clean energy, Nigeria will still need all it can get in the short and medium term from oil to industrialise its economy.
The President-elect will need the right professionals to run the oil industry. Specifically, there will be a need for a total overhaul of the system. The new NNPC Limited should be made to advertise the positions of its CEO and other top directors to attract the right professionals from all over the world. If a small Nigerian independent energy firm, Seplat Energy Plc with assets which cannot be up to 1% of NNPC can be so profitable to the extent of declaring $951.8 million revenues for 2022, there is no reason why the national oil company which has always been declaring losses should not be making over $100 billion in a year.
It is also very important that the government must do everything possible to provide incentives and attract investors for the realization of the Trans Atlantic gas project that will take Nigerian gas through North Africa to market in Europe.
There will also be a need to remove fuel subsidy at the early stage of the administration as the commodity is no more available at the subsidized price, couple with the associated scarcity, but government must deliberately develop a scheme to subsidise transportation cost for the indigent people that will be mostly hit by economic hardship. A specialized e-card can be issued for them to access subsidized transportation services for a period of time.
While ensuring effective management of the oil and gas assets for the nation to receive commensurate returns, the oil industry must be made to adopt the right energy transition strategy so that the nation will not miss the opportunity to be a leader in clean energy without becoming the dumping ground for foreign technologies in the long term.
In extension, the mining sector must receive the necessary attention for it to live up to its potential. Law must be reviewed to end illegal mining which has been the bane of the sector.
It was not until the recent invasion of Ukraine by Russia that it dawned on many that the country of only 43.79 million is the leading food basket of the world. It accounts for 10% of the world wheat market, 15% of the corn market, and 13% of the barley market. With more than 50% of world trade, it is also the main player on the sunflower oil market.
Nigeria with a total of 79 million hectares of agricultural land and only 44% being cultivated should naturally be the food basket of Africa. But not only that it’s failing to fulfill this purpose, it’s contending with an annual food import of $20 billion.
There are some exportable agricultural products that keep on having growing global demands which Nigeria has the right climate to produce to quickly bridge its foreign exchange gap in few years.
A list of items with high global demand that Nigeria can exponentially raise its cultivation and export includes; ginger, cocoa butter, rubber, palm kernel oil, textiles and garments, gallstone, sesame seed, garlic, yam tubers, charcoal, cotton, cassava floor, cashew nuts, honey among other.
With over $40 billion earnings from crude oil but mere $10 billion from non-crude in 2021, it’s interesting to note that Nigeria can be positioned to capture a major slice the global sesame oil market which is anticipated to expand to $ 10.7 billion over the 2021-2031 period; cassava starch is projected to reach $66.84 billion by 2026; cashew is estimated to reach $10.5 billion by 2031; ginger is projected to reach $7.53 billion by 2028.
The Tinubu government can return to agriculture and make it the number one foreign exchange earner for the country by attracting investments and partnering the state governments based on the agricultural products they are the best at. The farm settlements that the government will promote should be mechanized, modernized with all amenities in the cities such as sporting and recreation centers with cable TV among others to attract youths and help solve unemployment problem.
*Segun Adeleye is the President/CEO, World Stage Limited.