Last week, I joined a host of Nigerian business leaders at the 26th Nigerian Economic Summit.
Under the auspices of the Federal Ministry of Finance, Budget and National Planning and the Nigerian Economic Summit Group, the summit convened national and global policymakers, business leaders, development partners and scholars towards ‘Building partnerships for resilience’, as the theme of the summit. The first time I attended the National Economic Summit was in 2017, when I was invited to the summit to speak on the ‘Access to Capital’ panel with three risk capital executives where we discussed strategic options for unlocking capital. Nigeria had just come out of the 2016 recession that year and all hands were on deck to drive growth.
Fast-forward to 2020, the COVID-19 pandemic has hit the globe and many countries are grappling with the adverse socio-economic impact as well as trying to contain the spread of the deadly virus. Nigeria was especially vulnerable not only to the effects of the pandemic but its dependence on the oil sector where prices and production fluctuated immensely. In fact, the country is now faced with the effects of the pandemic and another recession. The economic response to this recession cannot be the same as 2016, with the fragile growth rates that have been recorded since then mainly made possible by a few traditional sectors like crop production, telecommunications, information services and trade. In other words, we must not only sustain and grow these sectors further, we must rejuvenate and add new, high-growth potential sectors.
According to the National Economic Summit Group, the devastating impact of the pandemic was reflected in a decline in real GDP by 6.1 per cent in Q2’2020. A further breakdown of the growth numbers indicated 13 out of 46 sub-sectors recorded favourable growth rates, led by financial institutions and information and telecommunication at 28.4 per cent. On the flip side, the lagging sub-sectors were led by oil refining (-67.7%) followed by most activities in the transport sector including rail transport and pipeline (-63.3%), air transport (-57.4%) and road transport (-51.4%). Nigeria needs sustainable investment and focus on growth sectors like agriculture and manufacturing, which can create more and better jobs, generate well-needed revenue and increase the country’s GDP.
It is on this premise that I was invited to the Nigeria Economic Summit CEO Roundtable to discuss these new growth drivers alongside Dr. Omobola Johnson; Senior Partner at TLcom Capital and former minister of communications technology, Mr. Anthony Oputa, the Regional Managing Partner (West Africa) of Ernst & Young and Mrs. Fola Laoye, the CEO of Health Markets Africa. Our panel was moderated by Ms. Chinwe Egwim, a senior economist with FBN Quest Merchant Bank.
The panelists spoke on varying matters especially regarding how crucial the technology sector is, and how capable it is of boosting almost all the other growth drivers like agriculture, education and manufacturing. Dr. Omobola Johnson reiterated that Nigeria must deliberately equip its future workforce, by improving STEM education across all levels and ensuring a talent pool to build and sustain solutions. I have similarly argued in previous articles on this column that there is a great shift in the types of skillsets that have real, applicable value in a rapidly advancing world like ours today, especially in the wake of various technological advances in areas like communication and manufacturing. I advised that we should focus on education, training and skill development in these areas, as simple or complex as they may seem, rather than only creating entrepreneurs or sectors that are bound to fail because they lack the talent pool to succeed with.
The panel was interesting and a lot of issues were examined and solutions proffered. The one topic that stuck to my mind even after the summit and amidst all discussions around technology, health, agriculture, trade and exports was the issue of diaspora remittance. It is estimated that Nigeria receives $20 billion every year from its diaspora. That’s almost as much as we earn in oil revenue. This triggered a personal intrigue for me regarding the poverty gap between Northern and Southern Nigeria, resulting from overseas remittances alone. What most analysts don’t see is that the bulk of diaspora remittance to Nigeria is targeted at households and not businesses or investments. Therefore, households with members in the diaspora are generally better off than those who don’t have anyone in the diaspora and as such Northern Nigeria’s households receive at best, less than five per cent of these remittances.
Balancing this great economic divide cannot be achieved by shipping out even more professionals abroad, causing an even worse brain drain for a country that already suffers from the mass exodus of its professionals (in the health sector alone, 33 per cent of graduates trained in Nigeria’s state medical schools migrate to the US, Canada or the UK within 10 years of graduation). This is why I feel the attention to new growth drivers in Nigeria is especially important in the North, which has no recourse to the ever-increasing diaspora remittance. We can’t export professionals but we can import jobs if we have the skill-base. We can attract global markets by deliberate investments in high-demand goods and services. Besides, the world will certainly not wait for us to educate, train and migrate our professionals to be employed overseas and start sending money or investing back home. The truth is, the world will never be as slow as it is now. The pace of change will always move faster and the earlier we device and execute our economic and development policies with that in mind, the better for our survival and prosperity.
