DESPITE President Muhammadu Buhari’s recent assurance that his administration is “working very hard” to overcome the nation’s economic challenges, business confidence in the country is at a 12-month low. This is the seventh consecutive month that a global index which measures investors’ confidence in different countries is putting business confidence in Nigeria at a year-long low.
According to data released by the reputable London-based business research think tank, World Economics, the shaky business confidence in Nigeria could put its economy on a cliff-hanger, pushing all key economic parameters to the doldrums.
Of particular concern, according to the survey, is that inflationary pressures intensified in March, while the Consumer Price Index, unemployment and exchange rate woes are on the rise. The survey added that the situation is worsened by the crash in the price of crude oil, which is Nigeria’s main revenue earner, in the international market. Also, the Market Growth Index measured in the survey, indicates a disturbing decline for the fifth consecutive month. This is the lowest recorded in the country since March, 2015.
The verdict on business confidence in Nigeria captured in the World Economics report is not altogether surprising. It corroborates other recent reports which had already put the business environment in the country in negative territory. The indicators highlighted in this survey are, however, profound and consequential. It is disturbing that the warning signs in the report are comparable to what could be expected in an economy in recession.
Although the government has not publicly admitted it, the indices in the World Economics report affirm much of what is already well known in Nigeria: that the fundamentals of the economy are not strong, and that we need to improve the Ease of Doing Business in the country. Even the World Bank, in a recent report, described Nigeria as one of the “worst countries in the world to do business.”
Besides, there are many indicators of an economy in recession in the country. Inflation has reached a double digit figure of 11.4 percent, the first time in three years. This is beyond the Central Bank of Nigeria (CBN) ceiling of nine percent. This development informed the bank’s recent decision to resume its monetary tightening cycle after a period of accommodative monetary policy. The increase in inflationary pressures was cited as a major reason for this action.
In addition to the low business confidence in the country is the foreign exchange problem. In the last one week alone, oil prices have fluctuated between $38 and $40 per barrel, while exchange rate in the parallel market has been between N320 and N330 to the US dollar. Statistics also show that a total of 18 million Nigerians between the ages of 15 and 65 are either unemployed or underemployed. The current unemployment rate of 24 percent of the population is the highest in six years, according to the National Bureau for Statistics (NBS).
This troubling scenario calls for urgent measures to avert the many Doomsday predictions on the economy, and their socio-economic repercussions. It is necessary to remind the Federal Government of its promise to create more jobs for Nigerians. This is the time to walk the talk. The soaring exchange rate has pushed up inflation. The rising cost of essential consumer items is making life more difficult for the people.
Government should see Nigeria’s rating on this Business Confidence Index as a wake-up call to address this troubling situation. The authorities should also improve the Ease of Doing Business in the country to get more Nigerians back to work. For two consecutive years, the World Bank has ranked Nigeria low on this index. Its latest assessment said that there are only 20 countries in the world where it is harder to do business than Nigeria. This is an indictment of the ‘largest economy in Africa’. It is not acceptable for a country that aims to be among the top 20 economies in the world by 2020.
The power sector, which is a major driver of any economy, is in its worst state ever. A near total system collapse was experienced across the country last week. Nigeria currently generates less than 3,000 megawatts, a far cry from the government’s target output of 10,000mw per annum. The economy cannot grow without a vibrant power sector.
Nigeria’s economy will remain in negative territory if all the levels of government do not do what is required to create a conducive environment for the attraction and sustenance of local and foreign investments. The relevant authorities should address all the factors threatening business confidence in the country. Let them attend to challenges such as poor power supply, bad road network, access to credit, insecurity and tax problems. They need to quickly revamp the economy by fixing the problems that have made Nigeria’s business environment unfriendly.
We, therefore, urge the President to give the economy the much needed direction to stimulate growth through the promotion of business confidence.