International financial organisations have often advised African countries on ways to harness their strong potentials for sustained economic growth. The global financial institution, the International Monetary Fund (IMF), was on one of such advisory engagements last week when it stressed the “critical need” for a substantial policy reset by policymakers in Africa. It further affirmed that the response of policymakers in Africa to the challenges facing the economies of the continent remains insufficient.
The advice from the IMF is contained in its Regional Economic Outlook for Sub-Saharan Africa, which was released a few days ago. The report, among other things, shows that economic growth in Sub-Saharan Africa, which includes Nigeria, fell to a record low of 3.5 percent last year. This is the lowest in 15 years. Worse still, projected growth for 2016 is expected to slow further to 3 percent. This is well below the projected 6 percent average over the last decade. This is also barely above the country’s population growth.
According to the multilateral institution, Africa faces uncertain socio-economic times ahead. For example, things are not looking up in commodity exporting countries such as Nigeria. Fiscal and foreign reserves are depleting rapidly and financing is hampered. The response to these developments needs to be prompt and robust to reduce shocks and improve the stability of the economy.
It is clear that all is not well with the Nigerian economy. Inflation rose to 13.2 percent in April 2016; power supply, which is the engine-room of socio-economic growth is in crisis; there are acute fuel shortages.
In view of this, the IMF has advised African countries to use exchange rate stability as part of a wider macro-economic policy package, to absorb the present shock. Besides, the IMF report says the reduced revenue from key sectors and the generally tighter external environment should make African policymakers find ways to contain fiscal deficits and build a sustainable tax base from the rest of the economy. These measures, the IMF said, could come at the cost of slower growth in the short term.
We have carefully considered the advice of the IMF and the options it says are open to Africa to stimulate its economic growth. We agree substantially with the concerns raised by the multilateral institution. There is no doubt that sub-Saharan Africa, of which Nigeria is a key player, faces one of its toughest times in decades.
Sadly, these challenges are made worse by the lack of a comprehensive economic blueprint that can unleash growth in critical sectors of its economy. This has resulted in the present shocks to the economies of some of its member-countries.
It is either African leaders are averse to policymaking as a tool for economic growth or they are bereft of ideas that can turn things around in their countries. This unfortunate situation has, according to IMF, made leading oil exporting countries on the continent such as Nigeria and Angola to continue to face harsh economic conditions. This is because they depend almost solely on oil as source of revenue. We are inclined to believe that the present harsh economic outlook of some Sub-Saharan African countries may not be unconnected with what former Education Minister and Vice President of the World Bank, Dr. Oby Ezekwesili, called the “command and control economic policies” of some African countries, including Nigeria. Such “ineffective and inefficient economic policies, she said, have further worsened the standard of living of the people. We agree with Ezekwesili.
But, the way forward for African countries is to have purposeful leadership, with hands-on economic policies and the freedom of their financial regulatory authorities, such as the Central Banks, to perform their critical statutory role of managing monetary policies.
In many sub-Saharan African nations, apex banks are largely controlled by the governments in power. Sometimes also, the budgets which are meant to shape social and economic policies are unduly delayed due to bickering between the executive and legislative arms of government. This is what Nigeria recently went through until President Muhammadu Buhari assented to the 2016 Budget, some days ago. Unfortunately, it is the weakest and most vulnerable people in the affected countries who suffer the brunt of such conflicts.
We, therefore, urge African countries to see the IMF advice as a wake-up call to look inwards, but think globally, on how best to harness their potentials for sustainable growth. Doing this will require a strategic vision for short, medium and long-term growth.