What does the future really hold for Nigeria in 2018, seeing that the nation has wandered in the development wilderness for 57 years in search of the path to the promised land of economic vitality flowing with jobs, infrastructure, good living standard, flourishing SMEs and an environment devoid of pollution. Considering the recent economic recession that besieged the nation with hunger and sufferings since 2015, Nigerians hope that in the year 2018 political leadership and corporate businesses will demonstrate their readiness for sustainable, responsible and innovative development trajectory that would leapfrog the nation to its desired destination.
In the following analysis, we provide you with details of ‘the Nigeria we want’ in 2018:
We Want the Nigeria with Economic Diversification and Export Mix
The year 2017 witnessed an accelerated pace of the global shift from crude oil to renewable and clean energy-powered technologies, such as solar and electric cars, which has mounted concerns over the future of Nigeria’s oil-dependent economy. This implies that in 2018, Nigeria is faced with a renewed effort to build an economy that will survive the future where oil could be irrelevant and may no longer be precious.
Nigeria should begin to shift focus from crude oil to other sectors, such as agriculture, mining, manufacturing, and ICT, as well as build the capacity of other sectors to compete globally. Diversification to several sectors of the economy will not only help the nation to mobilise more revenue against the volatility of oil price, but also generate more jobs for the people. Nigeria can learn from how Dubai has successfully expanded non-oil sectors such as tourism and communications that have attracted foreign investors.
A private sector-driven economic activities is also what Nigeria needs as a ‘shock absorber’ to the volatility of oil revenue. While playing their regulatory role, government should also support the non-oil private sector to enable them to contribute towards sustainable development where decent jobs will be available for both the present and future generations. Such support could be in the form of boosting human capital development, incentivisation through a refined tax regime, and building the technological capacity of Medium and Small Scale Enterprises (MSMEs) to effectively compete in the global market and generate revenue for the country.
We Want the Nigeria with a Knowledge-based Economy
The global economy is in transition to a “knowledge-based economy”, where knowledge is fully recognised as a driver of productivity and economic growth, leading to a new focus on the role of information, technology and learning in economic performance. While in past centuries, raw materials constituted about 30% of the world’s total output and source of wealth, today it is only 4% as the wealth of nations come mainly from ideas embedded in new technologies, services and manufacturing. According to the book, ‘Why Nations Fail’: “countries thrive when they build economic institutions that unleash, empower and protect the full potential of each citizen to innovate, invest and develop”.
This suggests that instead of relying on natural resources such as crude oil, natural resources that are no longer a guarantee to economic progress, the Nigeria we want in 2018 needs to focus on growth in high-technology investment, enhancing the skills and education of the labour force, improving management and organisational techniques, upgrading the domestic technological capability and innovation that provide rapid acceleration in the technical and scientific that can positively impact on the financial wherewithal of the wider population.
We Want the Nigeria with Improved Savings Policy and Fiscal Responsibility
Despite low crude oil price and current economic recession, it is time for Nigeria to start saving for a rainy future and to mobilise ‘stabilisation funds’ to guarantee a sustainable future without oil. In anticipation of future oil price fall and volatility in the international oil market, Nigeria should maintain more funds in the Sovereign Wealth Fund to meet the foreign exchange quotation (that expresses the amount of foreign currency required to buy or sell one unit of the domestic currency of its currency). Other ways to mobilise funds in Nigeria include purchasing of foreign-denominated low risk debt certificates like Eurobonds, and attracting foreign direct investments – through enhanced policies protecting investors as well as the local economy – to increase inflow of foreign currencies.
Fiscal recklessness has contributed immensely to the decimation of the Nigerian economy of today. Going forward, responsible mobilisation and management of foreign exchange reserves and funds generated as oil proceeds should be utilised to maintain ample liquidity against any future collapse of crude oil, Nigeria’s major source of revenue. We should not ‘eat our future today’ to suffer tomorrow, rather we should avoid any ill-motivated quest to share the funds made for future savings.
We Want the Nigeria with Economic Growth that Improves the Overall Societal Wellbeing
Nigeria’s recent exit from recession due to the economic growth is yet to improve the overall societal wellbeing of citizens in the country. We want a Nigeria where the calculation of economic growth will include the overall societal wellbeing of the vast majority of Nigerians, the future generation and the ecosystem on which human life depends. Those who calculate the GDP growth will need to consider the cost of environmental pollution and depletion of resources that have transpired in the course of providing the goods and services that drive the recent economic growth.
We Want the Nigeria that Integrates and Legalises Informal Sector into the Official Economy
Much of the country’s economic potential are unrealised because the contributions of the informal sector, such as street hawking, to the national growth have often been neglected. Street hawking has allowed the poor, mostly uneducated, unskilled people, to eke out a living with meager capital and without the expense of maintaining business space or formal registration or documentation. We want the Nigeria that will formalise or integrate the economic activities of traders, artisans and other forms of people who eke out their living in less formal means to be included in the country’s geometric growth indices.
There will be no fiscal contribution of street hawking in Nigeria without the legalising of their activities; taxes cannot be generated from the hawkers without a proper inclusive structure that enables them to obtain license from the government. Some of these hawkers are distributors or employees of big formal businesses whose mission is to evade tax. Hence, their sales fail to contribute to the nation’s revenue generation. To benefit optimally from this segment of the informal sector, government should strategically integrate millions of these businesses into the formal economy.
We Want the Nigeria with Responsible Debt policy and budgeting
After the heavy scars of debt exit in 2006, Nigeria is still treading on the same calamitous path of excessive debt that may deter its credit worthiness and scare foreign investors. According to the International Monetary Fund’s (IMF) Regional Economic Outlook released on 30 October, 2017, debt servicing costs are becoming a burden in Nigeria, and was expected to absorb more than 60 percent of government revenues in 2017.
As a nation, we cannot continue to borrow as the only solution to pay off debts, but should drive a development trajectory that can run a primary surplus, where current government spending should be equal or less than the current income. To build a sustainable public debt policy in 2018, we must avoid fiscal conditions that may cause tax burdens to rise; a Nigeria that would not mortgage the future of unborn generations with debts services; and a Nigeria that would not transfer significant costs to future taxpayers.
We want a 2018 with ‘equitable’ sharing of the budget’s collection, tax burdens, expenditure benefits, and distribution of scarce resources across successive generations without shifting the cost to future generations.
We Want the Nigeria that promotes Financial Inclusion
Financial inclusion strives to address and proffer solutions to the constraints that exclude people from participating in the financial sector. The increased emphasis on financial inclusion reflects a growing realisation of its potentially transformative power to accelerate development gains, reduce poverty and boost prosperity. Unfortunately, the real world financial system in Nigeria is far from inclusivity. The Nigeria we want in 2018, is a nation where financial institutions, such as banks, will develop an approach that promotes accessible and affordable financial products and services to disadvantaged groups who are either not served or are underserved. By catering to these needs, financial inclusion will bring currently marginalised populations into the mainstream economy, improving their chances for resilient livelihoods and financial stability.
We want a Nigeria where all households and businesses regardless of income level will have access to and can effectively use the appropriate financial services they need to improve their lives. This is a critical instrument for achieving key objectives such as: reducing extreme poverty; improving individual and household welfare; reducing barriers to economic participation by women and disadvantaged groups; and spurring small enterprise activities.
Retrospect
- Why Extractive-Based Nations Fail: Between Resource and Knowledge-Based Economies
- Towards The Bleak Future of Crude Oil: What Nigeria Should Do Now
- Fiscal Sustainability: Between Nigeria’s Debt Plan and the 2018 Budget
- Mainstreaming Street Hawking in a Formal Economy: An Inclusive Approach to Development
- The Reality of Nigeria’s Recession Exit: Between GDP Growth and Sustainable Development
- Financial Inclusion: Are Nigerian Banks Getting it Right?