By Dr. Ahmed Adamu
Recently, I have written and spoken on many
media about the current economic crisis in Nigeria. Some of my recent articles
can be accessed via my blog at www.ahmedadamu.blogspot.com.ng. Subsequently, I was invited to New York to speak on the above topic by the Nigerian Young
Professional Forum, even though I could not make it to New York, I decided to
write the following short piece as the extension (different perspective) of some of my recent articles
on the Nigerian economic crisis, which was presented in the event.
Nigerians expect so much from the current administration, and this was as a result of the appealing and ambitious campaign promises during the elections by the ruling party. Coming to power, realities defer significantly from fantasies and expectations, the politicians are now caught in the cross-fire. Things are not going well, but they (politicians) decided to put the blame on the past administration, the easiest exit, though valid. However, things are continuously getting out of hand, but one thing that we all have to keep doing as citizens is to continue hoping and believing in “May Be”. May be if prices of crude oil increases, we might get out of recession. May be Naira will appreciate if we develop the real sector of the economy.
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| picture sourced from http://vincentnwani.com |
According to the Sheikh Al-Maktoum
(The King of Dubai), “Leaders must always look forward, further than anyone
else, in order to anticipate the future, predict the challenges it will bring, and
prepare their people to face them”. If the past administrations will have to take
the blame for the current economic conditions for not saving to build the real
sector and provide the necessary infrastructures, the current administration
must also be ready to accept the responsibility of thinking about the future
and the challenges it might hold, to avoid been blamed too. Therefore, there is
need to develop the country’s economic roadmap for the next 20 years or more,
and the plan of actions toward achieving the set targets.
Nigerian economy is cursed for
relying heavily for so long on hydrocarbons and depending on the subsidised importation
of foreign goods and services. Now due to low oil revenue, currency
depreciation and increasing volume of importation, government cannot continue
to subsidize foreign currency demand. Subsequently, inflation rose to the
highest level of 17%, and foreign reserves declined to the decade’s lowest level
of $26 billion. Poverty is becoming endemic as many depend on government, as
access to business capital and infrastructure are lacking. This limited the
disposable income and wellbeing of the people. Agricultural outputs are not
optimised due to the outdated agricultural system. Population is on the
increase amidst inadequate infrastructure and income. Which direction are we
going? what is up in our front?, the government must give answers to many of
these questions.
The challenges are numerous, and
they must be identified and strategically chosen to address step by step. Things
are moving very fast and problems are compounding quickly. There is need for
aggression and proactiveness to address ever evolving economic challenges.
Being so protective and too cautious will not auger well in the period of emergency.
Action is the best way to solution.
Moving forward, the government must
identify the major import demands and set targets and action plan to eliminate
them. For example, government might set target of five years to stop
importation of refined petroleum. How can we achieve that? we have to allocate
substantial amount of resources and policies to encourage construction and
development of local petroleum refining capability. This must be rigorous and
inclusive, where private sector plays significant role. So, by the end of this
five years, the 15% demand for foreign currency must be eliminated. So, the
import demand will then reduce to 85%. In addition, the importation of plastics
(4%) would have been eliminated as well.
The Importation of vehicles, which
constitute 8% of the total imports, can be eliminated too by providing
efficient and adequate public transport systems, so that individuals would not
need to own private vehicles, and the need to import them will not exist. So,
there is need for rigorous development of inter and intra state public
transport systems, which include within town and inter towns trains and public
busses. This will result to reduction in the demand for transport fuels, and
enable saving for other consumption and investment purposes. If can do this, the
total imports by then will reduce to 73%.
Electronic equipment, machines,
engines and pumps contribute 22% of the Nigerian imports; to reduce or
eliminate some of these imports, public and private sector must collaborate to
set up industries that produces these specific items. Foreign companies can
also be invited to open factories or workshops within Nigeria, through any
possible incentive. It is easy to achieve this due to the recent improvement in
security and access to energy. Achieving this will reduce the import demand to
around 50%. This is a feasible target, only if we plan for it.
If we can achieve above, then
achieving local sufficiency for Pharmaceuticals, iron and steel will be easy.
And funny enough, the $814 million spent for importation of fish in 2015 can be
eliminated by encouraging and establishing fish rearing and processing firms.
Finally, if we can reduce the
import demands by 50%, the Naira will appreciate significantly, and our foreign
reserves will appreciate too. Unemployment, inflation and poverty will reduce.
But, there has to be plan and commitment. This cannot be possible without
competent economic team made up of public, private and academic sectors. There
has to be genuine reduction in unnecessary expenditure from the government.
Private individuals must stop unnecessary foreign trips for holidays, shopping,
education, and medicals. Government can enforce this where necessary. The
government must listen and be open to criticism and suggestions. It must
effectively communicate and engage with public on its activities and plans.
Regarding the recent speculation about the sale of federal assets,
I would advise the Federal government not to sell public assets, because these
assets remit revenue that will stream for years to come. You don’t kill source
of income for immediate need. You can only use the profit/earning for immediate
need. Government needs to diversify sources of income not to switch source of
income. Efficiency can be optimised even in public sector. Government should
raise money through tax enforcement, open market operation, and infrastructure
tax for high income earners. These public assets are the sources of income that
can be used to fund infrastructural development and social welfare. Instead,
government should motivate private sector to construct and operate infrastructures
for a period after recovery. Private individuals willing to buy devalued public assets should partner to establish their own capital assets and compete with that of the government.
Best regards!
Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of
Commonwealth Youth Council,
University Lecturer (Economics), Umaru Musa
Yar’adua University Katsina.
+2348034458189
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