Economy: Convoke national parley on way forward

Nigeria’s economic challenges have become so complex and diverse that a piecemeal approach to their solution will have a little chance of success. There is an urgent need for a national dialogue to fashion the type of economy we desire, and how to actualise it. Nigeria is currently noted for its highly combustible political climate, […]

Nigeria’s economic challenges have become so complex and diverse that a piecemeal approach to their solution will have a little chance of success. There is an urgent need for a national dialogue to fashion the type of economy we desire, and how to actualise it.

Nigeria is currently noted for its highly combustible political climate, tough macroeconomic environment marked by hunger, inflationary pressure, depressed outlook, and insecurity overhang. These factors and more make it difficult for Nigeria to build a stable economy.

Such a gathering should aim to formulate one equation into which these and more variables can be incorporated and answers found. It should be at the instance of the National Economic Council, with of course the Ministry of Finance, the Central Bank of Nigeria, and the National Economic Summit Group being key sponsors of such a gathering. Such an event will be purely for purposes of ideation, with its output going beyond blaring front-page headlines. It should be an event that ends with hands-on decisions with action bullet points and a clear framework of who does what, when, and how.

This proposal is not about one of the fruitless jamborees often organised by governments and their agencies that in most cases end up as mere talk shows with little or nothing in practical results to show. What we need now is a gathering of eggheads; thinkers who will gather and dissect the Nigerian economy of today and determine how to get it on its feet once more. Anyone who believes this is an easy task must have a rethink. While it is not impossible, it is certainly a daunting job.

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It is good for Mr President, the Minister of Finance, and the CBN governor to attend events organised by groups or bodies, such as the NESG, and make policy pronouncements. Such pronouncements are usually about things the government is planning to do or has even done. And they make the front-page headlines, as we had yesterday, Tuesday. These stories came from an example of such an event, the 29th annual summit of the NESG, that began in Abuja on Monday.

Such pronouncements have their ‘announcement effects.’ The media give them the importance they deserve, given the personalities involved. And depending on what was said or announced, they ‘move the markets’ one way or the other, as investors react immediately or later. But beyond these announcements, Nigeria must at this point in time articulate a national economic policy that encompasses the entire spectrum of ideas on managing an economy in this distress. What behaviours led us as a people to this mess where we are now?  Yes, that is the word for this ugly situation where the rest of the world has left us behind and we are simply groping in the dark. So, we must meet and reason together. There is an urgent need to pool ideas together to understand what lies ahead of the economy and how best to confront that challenge.

President Bola Tinubu speaking at the NESG event on Monday informed the nation about a $10-billion inflow expected “in the nearest term,” that will be used to refloat the economy. “I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it,” the president announced.

Ordinarily, that should cheer us, given the state of our economy. But that was not the case, really, for while the word was still in his mouth, analysts began to question the significance of this amount versus the needs of the economy right now. Some people have even said that $10b as the amount needed to refloat the economy had been mentioned at an event some months ago. Now, given how fast things have degenerated over the past few months, including the steep loss of value by the naira, is this amount still relevant today, or should we quote another?

Various figures are being quoted with regard to what we need to be invested for certain outcomes to be achieved by the economy within a certain time frame. But the question that people have raised is: who generated such figures? How were they measured? In what sectors do we need such amounts to be invested and who are likely to be interested in making such investments in Nigeria at a time such as this?

So, the question still reverberates: what is the minimum quantum of investments or foreign currency inflow that we really need in the economy right now? And if we ascertain that amount, then we move to the next question: how best can we attract it? Capital today chooses where to go; not necessarily for the highest returns,  but it goes for the best returns that guarantee safety of investment. This raises the broader question of the state of the economy right now.

That is because the billions of dollars we expect to flow into Nigeria will not yield many results if there are no rules, regulations, and infrastructure, both social and physical, that will drive their deployment and ensure positive outcomes.  

Dr Yemi Cardoso, CBN governor, made reference to this issue in his speech at the NESG event. According to him, it is possible for Nigeria to build a multi-trillion-dollar economy within a decade of serious reforms, consistent economic action, and deliberate institutional reforms. He talked about a macroeconomic stabilisation programme to be supported by “an aggressively scaled national security effort to halt all forms of syndicated and organised crime around crude oil and solid minerals and also a made-in-Nigeria agenda to made-in Nigeria, two strategic drivers require urgent investment and a national job creation plan that drives the creation of huge volume of high-quality jobs, among others”.

As part of that “economic action,” I believe the time has come, for instance, for Nigeria to have a clear-cut policy on its foreign exchange rate. What is our policy on the naira? How strong do we want this currency to be? Are we prepared to pay the price for a strong currency? What factors should determine that? The truth is that there are so many factors currently impacting the value of the naira.  

The state of war in which the country currently runs, the incendiary nature of social structure, and the insecurity that ordinary people face on a daily basis, all feed into the making of a weak naira. That explains why there may be more investors standing at the exit doors of our nation, waiting to repatriate their funds, than those waiting to bring in their dollars.

This explains the fact that the naira currently exchanges for 1,200/dollar on the parallel market, which by far is more realistic to the Nigerian business person than the rate on CBN’s I&E window. The thought that we would get to this level would have been considered an impossibility by many a few months ago. But here we are. It’s real.

If we got into all these by mistake or through wrong policies and actions, it is clear we cannot get out of it by mistake. It is only consistent economic actions taken in the right direction and at the right time, that will get us out of it.