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Saving the Nigerian economy

By Stephen Isayinka Anxieties over rising living expenses have been mounting for some time among Nigerians, and many have voiced their dissatisfaction with the economic…

By Stephen Isayinka

Anxieties over rising living expenses have been mounting for some time among Nigerians, and many have voiced their dissatisfaction with the economic policy trajectory.  Economic growth in Nigeria appears to be hindered by a number of structural challenges, including poor infrastructure, tariffs on imports, hurdles to investment, and a lack of confidence in currency valuation. Aside from low capacity utilisation of crude oil, the rising interest rates are impacting production and mounting debt burdens, worsening currency devaluation and giving wild inflation to Nigeria’s sovereign credit rating.

As a result of the persistent inflationary trend, Nigerians have been driven to the brink by rising energy costs, the devaluation of the local currency, and the effects of a controversial fuel subsidy policy that has been in place for years. Naira has continued to collapse on the parallel market, even as the currency strengthened to N665 to the dollar and then touched a low of N718.  In addition, Nigeria’s economy is weighed down by a massive foreign debt, which must be serviced with tens of millions of dollars each year. Over 70% of Nigerians are living below the poverty line (less than $1 a day), according to data from the World Bank, which shows that the country’s level of poverty has increased astronomically since independence, mostly due to poor agriculture.

In light of the increasing economic uncertainties, one of the concerns that begs for an answer is how long the federal government can continue to patch the economy in light of the costly transition programme that lies ahead. The Nigerian government must enact precise strategic measures to achieve economic growth and equitable income and wealth distribution among its citizens in order to save the country’s ailing economy. The government can begin by working to diversify the economy. This will contribute to the economic growth of the nation, even when oil prices are low. To entice more businesses, the government should also improve its security. The security concern posed by Boko Haram and bandits has dissuaded a number of potential private investors from investing in Nigeria. Thirdly, the government can adopt the appropriate monetary policies to guarantee that small and medium-sized businesses have easy access to credit facilities.

Also required is a dramatic change in the conduct of the many international countries with an interest in Nigeria. The United States, China, and, to a lesser extent, Russia, which is interested in Nigeria’s nuclear energy, are the major foreign powers interested in and concerned with Nigeria’s economic affairs. It is crucial that they avoid sending aid to countries without stipulating certain conditions. They should also limit their active involvement in the country’s economic issues. It is essential for leaders to have good intentions and endeavour to alleviate poverty among Nigeria’s poor. When these countries adopt these new behaviours, their economic growth and citizens’ standard of living will improve.

The Nigerian government must also diversify its economy, enhance its security and infrastructure, and adopt viable monetary policies. This will contribute to the economic growth and eradication of poverty in the country. Economic history gives substantial evidence that agricultural revolution is necessary for economic growth and development, particularly in developing nations like Nigeria. The Nigerian economy’s fundamental problem stems from the government’s failure to prioritise the agricultural sector in favor of an oil-based monoculture.

Agriculture was the foundation of the Nigerian economy prior to the discovery, exploitation, and exportation of oil, which gave rise to an over reliance on oil revenues for economic expenditures. Between 1955 and 1969, agricultural exports accounted for around 72 per cent of the nation’s gross domestic product (GDP) before falling to 35 per cent due to the oil shocks of the early 1970s (CBN, 2002). Between 1940 and 1950, Nigeria was one of the world’s leading exporters and producers of several important agricultural products. In 1960, records indicate that the export of agricultural products in Nigeria accounted for more than 75 per cent of the country’s overall exports. This has altered in recent years, since Nigeria’s economic growth and development are now exclusively dependent on oil export earnings, which account for over 95 per cent yet contribute less than 25 per cent to the real gross domestic product (RDGP). This excessive reliance on oil has impacted the market dynamics and economic growth and development of the nation.

It is regrettable to note that the contribution of the Nigerian agricultural industry to the country’s economic growth and development is not as significant as it once was. Agriculture in Nigeria is still conducted according to pre-independence practices. Despite the availability of two large rivers (river Niger and river Benue), the agricultural industry is still mostly dependent on rainfall. The agricultural sector’s productivity has fallen significantly over the years, resulting in a high rate of poverty. The majority of farmers live in rural areas, cultivate small plots of land with primitive implements, and obtain minimal yields. The problem is that there is a limited knowledge of the significance of agriculture in Nigeria’s recent economic growth and development.

As crude oil is a finite resource, it is not prudent for Nigeria to rely on it for long-term economic growth and development. In order to attain a profitable economic growth and development in Nigeria, it is necessary to enter competitive markets in advanced nations with our agricultural commodities. In light of the size and significance of the Nigerian agricultural sector, positive reform and adjustment policies are required to boost the country’s economic growth and development as a whole.

In conclusion, it is essential to note that the agriculture sector’s substantial resource base contributes greatly to Nigeria’s economic growth and development. Nonetheless, these endowments must be utilized prudently so as to diversify the economy and lessen its reliance on the oil industry and imports. The Nigerian economy is inconsistent as a result of volatile oil prices and a continuing rise in the cost of imported commodities. All of these problems have a negative impact on the nation’s balance of payments, employment, and other sectors’ productivity, as well as the purchasing power of the populace.

 

Isayinka is a Chartered Mediator and Associate of the United States Institute of Peace. He wrote his piece from Abuja, Nigeria.