It’s expedient to focus on the nation’s economy

Politicking has started in full swing in the world’s seventh most populous country. The political landscape is fully charged as is the case every four years. One could see drama, and on a few instances, struggle among politicians within political parties across the country for positions in various levels of government. Politicians, young and old are neck deep into a frenzy of indirect and direct primaries that ended about a week ago in controversies.

Politicking has divided the attention of elected and appointed political office holders. Since the first quarter of 2018, much attention has not been paid to the country’s economy. With a population of almost 200 million, changes in Gross Domestic Products, income and wages, unemployment rate, inflation, interest rates, consumer purchasing index, currency strength and balance of trade, among others should be the focus of any responsible government. But political uncertainties as a result of politicking have created negative effects on the economy of the largest market in Africa. This necessitated the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, to hint those in the government about the state of the economy.

The Governor of the CBN says that “the exit from recession may be under threat as the economy has grown by 1.5 percent in the second quarter, slower than the 1.9 percent growth recorded in the first quarter of 2018”. This, to the understanding of this writer, is that productivity generally within the economy is slowing down. Emefiele however, adduced several reasons such as the slowdown in the oil and gas sector, late implementation of the 2018 Budget, negative impact of flooding on agriculture, weak demand and low consumer spending caused by low wages, security challenges in the country, and America’s increased interest rates, among others.

The stock market is not spared from the frenzy of political activities. The country’s stock market has lost billions of Naira worth of shares as a result of political tension. Nigerian stock market is now ranked the worst performing in Africa in 2018 contrary to its performance in 2017. A pity, you may say. We know that the price of oil is an important factor that affects Nigeria’s economic condition. Nigeria’s economy as an oil exporting nation reacts to changes in oil prices in the international market. Despite reports that the price of crude oil is steadily rising globally in addition to the relative peace in the Niger Delta, all have not resulted in higher revenue for the country. At the time of writing, crude oil production in Nigeria has dropped to about 1.9 million barrels/day. Despite the drop in crude oil production, the country is having difficulties getting buyers for this commodity in the international market. So, with Nigeria’s inability to control international market realities in the sale of crude oil, her economy faces significant risks in the days ahead. The reason is that Nigeria has not effectively diversified her economy. Nigeria’s economy is still largely tied to the sale of crude oil in the international market.

The proceeds from the sale of crude oil is closely tied to Nigeria’s foreign reserve. There is drop in the country’s foreign reserve as a result of portfolio investors exiting the market. The foreign reserve has declined from US$ 47.8 billion in July 2018 to about US$ 43.61 billion in September 2018. So, to arrest the drop in the foreign reserves, the CBN suggested a further restriction on consumer goods at its last Monetary Policy Committee meeting. Yet, productivity level in the country’s consumer goods sector is low as goods already produced are in warehouses. Locally produced goods are not competitive because of high production cost. The implication of all these is that the country will continue to experience an inflow of cheap smuggled goods through neighboring countries into her economy.

The influx of substandard, expired and fake goods into the country undercuts the prices of made-in-Nigeria goods. Consequently, local products cannot penetrate the market. The undesirable outcomes are collapse of local industries accompanied by loss of jobs, and high rate of unemployment. Higher cost of production in Nigeria has made locally made goods to be more expensive. So, smuggled goods sells cheaper in the economy unless steps are taken by the government to assist the organized private sector to improve the nation’s productive capacity. Importantly, high interest rates charged by banks must be reviewed downward to enhance productive capacity of the manufacturing sector.

An addition to this web of economic challenges is the rise in the nation’s debt profile. There are reports that the government is spending an average of eighty kobo out of every one Naira earned to service debts accumulated over time. So, what is left to execute capital projects and accommodate recurrent expenditure is very small. That is why those in authority had to yield to borrowing funds to run the government. How Nigeria will pay back a debt of about N22 trillion is yet to be understood when her revenue is shrinking. Bearing in mind these challenges, this writer is of the view that it’s politically expedient for the government to keep its eyes on the nation’s economy. It would not be in the interest of the country to have the economy slip further down.

The question Nigerians should be asking the multitude of presidential, governorship, and legislative candidates is how they intend to reverse the sluggish growth of the country’s economy. This is an important issue that has not been seriously debated. Most politicians have glossed over the country’s economic challenges without stating what they intend to do, and how they will do it with milestones to improve the economy. Those aspirants must not only talk about developing infrastructure alone. The focus must be on human capital development. Nigeria’s position of 152 out of 157 countries in the current World Bank Human Capital Index ranking is embarrassing. Infrastructure will not operate itself. Educated and healthy people in large number will design, operate and maintain infrastructure. Thank you.

MA Johnson