From Uche Usim, Abuja
Taking giant strides to build a stunted economy is what Nigerian leaders seem to have achieved since the country gained independence on October 1, 1960.
Before the discovery of crude oil in commercial quantity in 1956 in Oloibiri, Bayelsa State, Nigeria’s economy survived and flourished on agriculture. Records indisputably show that 72 per cent of the total national output of the economy came from agriculture in 1950, as against 1.1 per cent from mining.
With the discovery of crude oil, agriculture was gradually sidelined, making Nigeria a lazy importer of goods that could easily be produced locally.
From raw and processed foods to imported petroleum products, Nigeria flung its gates open for substandard goods to flood the country and ultimately fractured local production and the economy at large. With that ugly development, Nigeria has been perennially robbed of foreign exchange that should have been earned from exporting whole and processed agricultural products.
Foreign reserves that should safeguard the naira and grow through organised export became the lifeline of atrocious imports, depleted slowly but steadily.
Analysts infer that the oil boom era (1973-1983) was responsible for the emergence of disorderliness in Nigeria. Despite the fact that there was a remarkable increase in foreign exchange earnings during the oil boom in Nigeria, profligacy, rather than frugality, became the rule such that Nigeria did not save robustly.
Between 1960 and 1973, oil output exploded from just over five million to over 600 million barrels. Government oil revenues in turn accelerated from N66 million in 1970 to over N10 billion in 1980.
The increase in oil prices from 2005 to 2008 reflected an increase in revenue but higher expenditure for the Nigerian government.
To many, crude oil in Nigeria is more of a curse than a blessing because, over the years, it has been extremely difficult to convert this natural resource wealth into broadbased improvements in economic performance and human development.
Recent international investigations have alleged that both the 2015 and 2019 general elections were funded by bribe monies from crude oil merchants.
In fact, heavy dependence on the export of crude oil has been shown to negatively affect Nigeria’s economic, social and political development because the poor are not impacted.
Despite the highly politicised economic growth, poverty has become endemic in the country to the point that Nigeria, with a population of over 200 million, has overtaken India as the poverty capital of the world. Poverty rate in Nigeria, according to findings, moved from 15 per cent at Independence in 1960 to 50 per cent in 2021.
Evaluating Nigeria’s economy after 61 years of independence, Nigeria’s first professor of the capital market, Prof. Uche Uwaleke, told Daily Sun that the macroeconomic indicators leave very little to cheer about.
“With persistent double-digit inflation, sluggish real GDP growth rate below population growth rate, high unemployment and poverty rates, high exchange rate and insecurity, the 61st independence anniversary only calls for sober reflection.
“This is more so that, after 60 years of nationhood, the productive base of the economy has yet to be diversified and Nigeria has remained a mono-product, import-dependent one; the country imports petroleum products in spite of its status as a major crude oil producer.
“The independence anniversary provides an opportunity to reflect on these challenges and to commit to implementing measures to address them.
“Fortunately, some of these measures have been articulated in various reports and economic blueprints already at the disposal of government,” he explained.
The managing director of Financial Derivatives Company (FDC) Limited and a member of President Muhammadu Buhari’s Economic Advisory Council (EAC), Mr. Bismarck Rewane, said recently that Nigeria, aside from being the poverty capital of the world, was also battling developmental issues like the falling of total capital importation to $875.62 million in Q2’21, from $1.91 billion in Q1’21, and the crashing of the parallel market rate to N570/$ on foreign exchange (FX) supply shortages.
According to him, Nigeria’s second quarter year-on-year positive GDP has yet to have a significant impact on socio-economic conditions.
The latest report from the Nigerian Employers’ Consultative Association (NECA) shows that the incidence of poverty rose by 10 per cent between 2019 and 2020. In the October 2020 report, NECA said the number of citizens in extreme poverty stood at 102 million, representing 50 per cent of Nigeria’s estimated population of 205 million.
The National Bureau of Statistics (NBS) reported a 40 per cent poverty rate in 2019. The World Bank also said in June this year that 11 million additional Nigerians would fall into extreme poverty by 2022.
Nonetheless, poverty and inequality in Nigeria are not due to lack of resources, but to the ill use, misallocation and misappropriation of such resources. From abundant human and material resources to swathes of arable land and phenomenal marine endowments, economic watchers insist Nigeria should never have a pact with poverty.
But rudderless leadership and unbridled corruption have been the blight of Nigeria for several decades. It finds expression in the rising number of extremely poor and vulnerable Nigerians.
Global auditing firm, PricewaterhouseCoopers (PwC) warned that, if corruption was not dealt with immediately, it would cost Nigeria up to 37 per cent of its GDP by 2030, amounting to nearly $2,000 per Nigerian resident by 2030, PwC said.
Elite capture of public sector policies and resources has continually undermined the productivity of vital sectors of the economy and prevented the fair distribution of the benefits of growth. This is especially notable in agriculture and in the oil sector.
With mass unemployment and overstretching of inadequate and decaying infrastructure, many Nigerians have had to seek their fortunes abroad.
Smaller nations such as Ghana, Rwanda, Ivory Coast, Qatar and the United Arab Emirates are beginning to catch up with First World nations. At the same time, big corporations from industrialised and wealthy countries in Europe and South Asia find the Nigerian business climate unhealthy, no thanks to poor infrastructure, corruption and blooming insecurity. Big European corporations have, over the years, shut down or relocated their Nigerian manufacturing plants to Ghana and Rwanda, among others.
The governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, recently quoted a Moody’s report, which concluded that Nigeria needed to spend about $3.3 trillion in capital expenditure over the next 30 years or $1.1 trillion a decade to close its infrastructure deficit.
This amounts to $100 billion (N40 trillion) per annum or 28 per cent of Nigeria’s GDP of N144 trillion.
Nigeria has spent just about $100 billion on infrastructure provision in the last 10 years.
Former Emir of Kano and CBN governor, Sanusi Lamido Sanusi, at a recent seminar in Kaduna, described Nigeria as a giant of Africa with clay feet.
He said other African countries like Ghana, Senegal and Kenya were better placed economically than Nigeria: “Only 9 per cent of new graduates in Nigeria find employment; so, we have an incremental 4.5 million people added to the unemployed annually; 41 per cent is the number for youth unemployment. Overall, we have 27 per cent unemployment among the youths, which is the most serious component of the population, and that is why you have restiveness, thuggery, crime, and that is why you have insecurity.”
Sanusi lamented that Nigeria was ranked 114 in the Global Innovation Index, adding, “We are lower than other African countries like Kenya, Rwanda and Senegal. We are ranked 14 in sub-Saharan Africa. I think we should have this reality check and know where we are as a country. If not, we continue to call ourselves giant of Africa; we are a giant with clay feet. We are 14 in innovation in sub-Saharan Africa.
“Countries like Senegal, Kenya are ahead of us, and I am not even talking about South Africa. Our expenditure on education as a country is only 7 per cent of the budget. We are spending less than Ghana on education, not on percentage, but in absolute terms. And we are surprised that companies are moving to Ghana, that industries, individuals are moving there. We are not investing in education and human capital. We have a 68 per cent mismatch between graduates’ skills and job requirements, the major areas being communication, IT and decision-making.”
He said countries that were growing were those that have developed their human capital and not resources. The former CBN governor had earlier in the year analysed that Nigeria made no economic progress in the last 40 years.
“In 1980, Nigeria’s GDP per capita on purchasing power parity basis was $2,180. In 2014, it appreciated by 50 per cent to $3,099. According to the World Bank, where were we in 2019? $2,229.
“At this rate, in the next two years, in terms of purchasing power parity, the average income of a Nigerian would have gone back to what it was in 1980 under Shehu Shagari. That means, in 40 years, no progress, we made zero progress, 40 years wasted.”
The World Bank’s Ease of Doing Business Index ranked Nigeria 131st, 169th in “getting electricity,” 183rd in “registering property” and 179th in “trading across borders globally.”
Nigeria also remains one of the most corrupt nations on the planet. Transparency International ranked the country 144 out of 180 in its 2018 corruption perception index.
President Muhammadu Buhari’s six years in the saddle has seen the nation buffeted by many economic challenges, with inflation and unemployment at worse levels than he met them. Between May 2015 and now, the Nigerian economy has fallen into recession twice.
The economy fell into recession first in 2016, when the economy contracted 2.06 per cent between April and June. The country saw two consecutive quarters of declining growth, the usual definition of recession, when its vital oil industry was hit by weaker global prices. Among other concerns, analysts blamed President Buhari’s failure to initiate an economic road map and constitute a cabinet for the economic recession.
Again, in 2020, Nigeria slipped into recession after its GDP contracted for the second consecutive quarter, according to data released by the nation’s statistics bureau. The data also showed the impact of the COVID-19 pandemic and low oil prices on economic output.
In November 2015, six months after Mr. Buhari took over as President, the naira sold against the dollar at N197. Today, it is exchanging for N441/$1 at the I&E window and N570 at the parallel market.
Nigeria is also burdened by a huge debt of N35.4 trillion.
In October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18 billion and an overall reduction of Nigeria’s debt stock by $30 billion. The deal was completed on April 21, 2006, when Nigeria made its final payment and its books were cleared of any Paris Club debt.
At the recently-concluded United Nations General Assembly, President Buhari pleaded for another debt relief.
To rescue the depressed economy from the doldrums, the CBN has rolled out a plethora of intervention programmes, beginning with Anchor Borrowers’ Programme (ABP).
Under the scheme, the apex bank has cumulatively released the sum of N798.09 billion to 3.9 million smallholder farmers cultivating 4.9 million hectares of land across the country. Out of this, for the 2021 wet season farming, the bank released N161.18 billion to 770,000 small-holder farmers cultivating seven commodities on 1.10 million hectares across the country. While harvesting for the 2020 dry season under the programme is rounding off, harvesting activities have commenced for the 2021 wet season cultivation. The Strategic Maize Reserve Programme of the CBN has been useful in moderating maize prices by directly targeting large feed mill producers. Under its Commercial Agriculture Credit Scheme (CACS), the CBN has supported 657 large-scale agricultural projects, to the tune of N708.39 billion.
To support Micro Small and Medium Enterprises (MSMEs) across the country, the bank disbursed N134.57 billion to 38,140 beneficiaries under the Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS), and for the Targeted Credit Facility (TCF), the sum of N343.21 billion has been released to 726,198 beneficiaries, comprising 602,730 households and 123,468 SMEs.
Some of the commodities captured under the ABP are cassava, cotton, fish, groundnut, maize, poultry, rice, soya beans, wheat, cattle, sorghum, ginger, castor seed, sesame, tomato, cocoa, yellow pepper, oil palm, cowpea and onion. All intervention loans attract only 5 per cent interest and some moratorium.
Under the Real Sector Facility, the bank released N1.00 trillion to 269 real sector projects, of which 140 are in light manufacturing, 71 in agro-based industry, 47 in services and 11 in mining. Under the Healthcare Sector Intervention Facility (HSIF), N103.02 billion has been disbursed for 110 healthcare projects, of which 27 are pharmaceutical, 77 hospitals and six other healthcare service projects. The bank has also disbursed a total of N145.99 billion under its Non-Oil Export Stimulation Facility (NESF). The CBN has revised the guidelines, working with Nigerian Export-Import Bank to improve access to the intervention and stimulate non-oil export growth in Nigeria.
Under the National Mass Metering Programme (NMMP), N41.06 billion has been disbursed to 10 DisCos, for the procurement and installation of 759,748 electricity meters. Under the Nigerian Electricity Market Stabilization Facility-2 (NEMSF-2), the bank has released the sum of N145.66 billion to 11 DisCos as loans to provide liquidity support and stimulate critical infrastructure investment to improve service delivery and collection efficiency.
In furtherance of its intervention in the energy sector, the CBN has disbursed N39.20 billion to six beneficiaries to improve gas-based infrastructure to support the Federal Government’s Auto-Gas Conversion Programme. The Bank has also encouraged deposit money banks (DMBs) to participate in the Solar Connection Facility to improve energy access in the rural areas.
To promote entrepreneurship development among Nigerian youth, the Bank recently approved the implementation of the Tertiary Institutions Entrepreneurship Scheme (TIES). The scheme is designed to promote entrepreneurial activities and foster job creation among Nigerian youths.