Rather than celebrating, Nigerian companies are currently at a crossroads about what the country’s future holds for them, having had their fair share of the struggling economy over the past few decades.
Industries ranging from energy to oil and gas, shipping, insurance, banking and finance, manufacturing, aviation, health and education, among others, are unabashedly celebrating what they have dubbed “movement without movement”.
Muda Yusuf, chief executive officer of the Center for the Promotion of Private Enterprise (CPPE), said the country’s economy has experienced “sluggish growth” with minimal development over the past 62 years.
He said: “The Nigerian economy has had average growth performance over the past few decades, with a few instances of sluggish growth. However, the challenge of creating an inclusive growth path remains a major concern. While the economy had experienced some positive growth trend over the past six decades, particularly in the oil boom era, the impact on poverty, inequality and job creation has been very small. It’s a case of growth with minimal development.”
Yusuf said the current state of the economy is worrying, saying, “The country’s macroeconomic management framework continues to pose serious challenges for investors in the economy. This situation has been further aggravated by the shocks and disruptions caused by the Russian invasion of Ukraine and the ongoing impact of the COVID-19 pandemic.
“Fragile macroeconomic conditions remain a concern. The worrying macroeconomic situation has manifested itself in recent years in the following ways: a weak and depreciating currency, high inflationary pressures, a high and rising debt profile, exchange rate volatility, a liquidity crisis in the foreign exchange market, a widening budget deficit, growing debt servicing burden, and the acceleration of monetary growth after the rising CBN deficit financing.
“There are major concerns about the investment climate. High infrastructure deficit, cargo handling challenges that have continued to worsen, high transaction costs in ports, weak real sector productivity mainly due to infrastructure conditions, regulatory challenges and policy inconsistency.
“The continued import of petroleum products has continued to put pressure on foreign exchange reserves and weakened the CBN’s capacity to support the foreign exchange market. Oil refineries have remained underperforming over the years.
“The federal and state budgetary position is very weak, characterized by a large budget deficit, a high and increasing debt profile and the associated debt servicing burden.
“The state of uncertainty continues to take its toll on the economy, particularly agricultural production and food inflation. It also affects investor confidence. The wave of oil theft and the associated loss of government revenue are of great concern. Billions of dollars have been lost to this apparent failure in safety effectiveness in the oil fields,” he said.
Suggesting ways out of the crisis, he said: “Urgent steps are needed to ensure a better macroeconomic management framework to stabilize the exchange rate, eliminate the problem of illiquidity in the foreign exchange market and curb the current Naira depreciation.” Urgent reforms in the FX market with a greater focus on supply-side strategy are imperative. The current disproportionate emphasis on demand management in the FX market needs to be reviewed. Most sectors are experiencing serious disruption and dislocation due to the current monetary policy regime.
“Policies need to be strengthened to attract private sector capital to complement government funding for infrastructure. There is a need to reduce levels of leverage, particularly reliance on trade debt to fund government operations. Public debt, currently at N42.8 trillion, is already at an unsustainable level.
“Steps should be taken to attract foreign exchange through a strategy to secure new investment opportunities to stimulate foreign capital inflows into the economy. We should aim for more equity than debt.
“The country’s trade policy needs to be reviewed to support investment growth and investment sustainability. Tax policy must support investment and not become an obstacle to investment.
“The further deteriorating security situation needs to be addressed urgently to mitigate the impact on investor confidence. In the fight against terrorism, more emphasis should be placed on quality intelligence services.
“Oil and gas sector reform, now being enshrined in the Petroleum Industry Act (PIA), should be accelerated to ensure the tremendous value of the oil and gas sector, particularly the gas sector, is unlocked.
“There should be an immediate end to the impunity that has characterized the theft of crude oil and attacks on oil facilities.
“Institutional reforms are needed to ensure regulators are better placed to support investment growth and less focused on revenue generation,” he said.
National Council of Managing Directors of Licensed Customs Agents (NCMDLCA) President Lucky Amiwero told The Guardian the economy is still in tatters.
He accused public office holders of being dishonest in their quest to formulate and implement policy and urged them to look back at the ruins and find a way forward for a better Nigeria.
He said: “Just look at the port industry, it’s plagued by a lack of coordination, everyone just does what they want. Nigeria operates most of the most expensive ports in the world, uncoordinated, unfocused and inefficient.
“Our exchange rate is skyrocketing. Our interest rate skyrockets; the economy is badly hit. We know there are problems everywhere in the world, but how do we deal with our own? What are the indices; the oil we depend on is being smuggled away. The amount of oil pouring out of the country is quite alarming. The Academic Personal Union of Universities (ASUU) has been on strike for several months. Most of our leaders all have their children abroad, so you will find that many of these people in government are not interested in our economy. They just want to make some money and fly away.
“If you’re talking about 62 years of independence, what have we achieved, we don’t have a ship, we haven’t implemented some of the policies and we’re not doing it right,” he said.
Amiwero urged officials at all levels to be patriotic and plan a way forward for the country with sincerity as we celebrate the anniversary of independence.
The Manufacturers’ Association of Nigeria (MAN) is also concerned that the sector, which should drive job creation, productivity and economic growth, is facing a number of challenges.
The association listed its challenges related to power supply, which remains a major headache for businesses; Uncertainty, decaying infrastructure, FX shortages and Naira devaluation, among others.
MAN President Ahmed Mansur pointed out that the economy cannot grow sustainably without a strong and competitive manufacturing sector, as manufacturing is the engine of economic diversification and growth.
He stressed that a resilient manufacturing sector should be based on coherent and coordinated efforts that result from close collaboration between government and manufacturers.
He bemoaned challenges such as a shortage of foreign exchange, inconsistent foreign exchange policies, inefficient transportation infrastructure, high production costs, weak consumer demand and the new competitive pressures imposed by the AfCFTA, and advised that efforts should be directed towards solving these problems.
“There is a need to develop a strong infrastructure base as comprehensive, cost-effective and affordable infrastructure is critical to the success of our economy,” he said.
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