By Emmanuel Mbah
The National Bureau of Statistics recently disclosed that Nigeria’s trade deficit this year rose by 32.45 per cent from N1.8tn as of the end of second quarter to N2.3tn in the third quarter of the year. According to the reports, the value of imports in the third quarter of this year represented the highest level for any quarter since 2017, while the value of exports equally represented the lowest of any quarter since 2017.It is interesting that Nigeria still sunk into the current recession even when the International Monetary Fund (IMF) had in April this year approved $3.4 billion in emergency funding to Nigeria, the single biggest disbursement for any country yet with the coronavirus pandemic.
In a statement, IMF Deputy Managing Director, Mitsuhiro Furusawa, said that the pandemic and the plunge in oil prices are severely impacting Nigeria, and that the funds will provide much – needed liquidity to respond to urgent balance of payments needs. He also called for the country to expedite the unification of its multiple exchange rates.The IMF equally approved more than $7 billion in emergency financing to help other African nations battle the Covid-19 pandemic which had in the first half of the year almost halted global trade and triggered massive capital outflows.
Nigeria was told that the lender’s financial assistance would support the country’s health care sector, protect jobs and businesses. To achieve those goals Nigeria’s Finance Minister, Zainab Ahmed, affirmed that the country will continue with its engagements with the World Bank, the African Development Bank (AFDB) , the Islamic Development Bank (ISDB) and the IMF ‘’ to access concessional funding to support the implementation of the 2020 budget.’’
It is clear that the deep economic crisis arising from the Covid-19 pandemic has shown that the colonial past of Nigeria and most African countries still affect them in a negative way. They are usually told by the Metropolis which way to go . Neglecting African interest is a narrative that has not changed even after gaining independence. Most of them are using their dominant position (politically and economically) to earn huge profits while striking economic and trade deals, and making political agreements.
The current economic partnership of Nigeria with the United States and the European Union (EU) countries have so far failed to produce tangible results in the lives of common people. This situation has become even more obvious under this Covid-19 pandemic.
Major international donors as well as the IMF provide Africa loans and credits under a large number of conditions and requirements which conflict with interest of African nations. If to have a narrow look at it, one can see that such conditions represent a direct interference in internal affairs of African states, forcing them to increase taxes, decrease social support, open up internal markets for transnational corporations which devour local companies and generate excess profit at the expense of African people.
For example the IMF advised Nigerian government to unify its exchange rates to achieve desired economic growth when the move would clearly hurt the poor in the country.Currently, the country has official Naira rate pegged at about N350, I&E window, Bureau De Change, and black market rates in a desperate effort to defend the Naira at the forex market. The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, said the multiple forex policy is backed by the CBN Act and favours the poor in Nigeria’s import dependent economy.
But the IMF has remained consistent with its opposition to the usage of multiple exchange rates as it believes that it creates much distortion in prices, hurts businesses, and encourages corruption as it is subject to manipulation. The CBN, in the interest of Nigeria, said it operates multiple windows, rather than multiple exchange rates.
In an ever-changing geopolitical environment, Russia has shown a strong commitment to developing cooperation with Africa, in various spheres. During the maiden edition of Russia – Africa Summit, diverse mutually beneficial agreements were signed. However the political will and proactive approach towards their implementation are required. Russia is expected to follow the path of the old Soviet Union in bringing Russians and Africans closer including through regular Russia-Africa dialogue.
Nigeria officials should seize the opportunities offered by Moscow and show determination and consistency in implementation of the agreements signed at Sochi in 2019 by President Buhari during the first Russia – African Economic Forum. Further development of bilateral and multilateral cooperation could be promoted through creating the enabling environment on different regional and international platforms.
This is important to help the country implement and achieve the Sustainable Development Goals (SDGs) now the Nigerian government is focused on creation of jobs, investment and growth. It is on these grounds that the Buhari government is working to resuscitate the Ajaokuta Steel Company Limited and National Iron Ore Mining Company Limited at the same time. In October 2019 in Sochi, Russia, President Buhari signed a Memorandum of Understanding with the Russian President, Vladimir Putin, to resuscitate and complete the Steel Company.
When resuscitated Nigeria’s exports of iron and steel could permanently take Nigeria out of trade deficit with any country given the country’s huge populationand huge potential for growth in steel demand. At a time the Federal Government is exploring alternative ways to diversify foreign exchange earnings away from oil, the Ajaokuta project is also a veritable source of job creation and foreign exchange earnings. Self-sufficiency in steel production would also mean conserving the much needed foreign exchange expended on steel importation to substantially industrialize the country in a post Covid-19 era and keep the country away from debt – trap that go with much borrowing from the IMF.
Mbah writes from Umuahia