On Nigeria’s declining economic activities and falling export market

Following the collapse of oil prices in the international market, there have been calls and speeches about government’s determination and resolve to diversify the economy from oil and set Nigeria on a part of sustainable growth and development. However, despite these platitudes, which Nigerians have been fed by virtually every government since the oil boom, the government does not appear to be doing much to translate its plenty talk into reality. Instead, it has been preoccupied with building walls around the economy and protecting its ability to import goods and services while the economy continues to stagnate and indeed, deteriorate. The economy has been on a tailspin since the second quarter of 2015 and all economic indices have continued to worsen since then.

According to data compiled recently by Cobalt International Services, a company that provides export inspections services to the federal government of Nigeria, Nigeria’s non-oil export revenue from ECOWAS fell from $350.86 million in 2014 to $154.47 million in 2015. Interestingly, ECOWAS is Nigeria’s biggest export market and Nigeria’s premium export commodities and products such as tobacco, footwear, plastics, salt, beverages, lime and cement have been losing their grip to Asian imports throughout the year under review. Exporters say the result of this quarter could be worse, given the harsher operating environment facing exporters, farmers and manufacturers, as well as government’s silence on the Export Expansion Grant (EEG) and exporters’ negative attitude to the CBN’s policy of foreign exchange repatriation. Pray, how could the country’s exports be declining at a time the government has proclaimed its resolve to diversify its revenue base by encouraging exports of non-oil commodities and products?

As if that was not enough, the Central Bank of Nigeria just released the Purchasing Managers Index for April and the report clearly indicated further decline in economic activities across the country during the month. According to the report, production levels, new orders, employment and raw materials inventory declined in the manufacturing sector, while business activities, new orders and employment declined in the non manufacturing sector. Expectedly, inflation has steadily risen to double figure over the past months and growth rate declined sharply to just over 2 percent for 2015. Consumer prices also increased 12.8 percent year-on-year in March of 2016, following a 11.4 percent jump in the previous month. To put it in perspective, it was the highest figure since July 2012.

Sadly, despite the worsening economic indices, the government has continued to feed the people exaggerated hopes of ‘change’ and better days ahead even when it has done nothing to improve the economy and has thus far demonstrated little understanding of, and capacity to robustly manage the ailing economy. Indeed, it has contributed in so many ways to further depressing the economy by its dithering and failure to act decisively earlier on after the peaceful elections and transition brought renewed confidence and expectations from investors and the business community. Further, the government’s needless political interferences with the powers of the Central Bank of Nigeria and the Monetary Policy Committee to determine the country’s monetary policy, its decision to place import bans and restrictions on some items and its inefficient rationing of scarce foreign exchange have further contributed to bringing the economy to its knees and chasing away investors that would have brought in much needed foreign exchange.

As it is, the way the government has been proceeding appears to confirm the suspicion that its only programme and strategy for jump-starting the economy is the fight against corruption. It appears the government believes that once corruption is tackled, the economy – and indeed, every other thing – will pick up. This cannot be further from the truth.

It is time the government prioritises the economy and get to work to deliver on its change agenda that is increasingly looking hollow by the day. Perhaps soon, the government will realise that Nigerians are impatient for the change they voted far and have far less appetite for further pains!