Nigeria’s Dwindling Economy, A Crime With No Perpetrator
My friend Baba Adam lives in the United States, in one of his emails to me, and those in authority or rather to our leaders, he stated categorically “We have serious crisis at home in Nigeria that needs urgent attention.”
Reuters/Akintunde Akinleye describes it this way–Data from the Nigeria's National Bureau of Statistics report on Capital Importation in 2015 confirms a long suspected fact: the country's struggles to cope with the fall in global oil prices and its currency slide have resulted in a loss of investor confidence.
The Capital Importation report tracks the total inflow of capital into the country under three main investment types: Foreign direct investment (FDI), portfolio investment and other investments, including currency deposits and loans. In 2015, total capital imported into Nigeria stood at $9.6 billion, the lowest recorded total since 2011. It represents a 53% drop from the $20.7 billion recorded in 2014.
Nigeria's main challenges are tied to the 40% drop in oil prices since last January. Oil is Nigeria's main source of foreign revenue, and the drop has been tackled with a number of controversial monetary policies including a refusal to devalue the currency. The uncertainty has left investors frayed, describing Nigeria as a 'heightened risk situation'. In particular, the seeming inability of the Nigerian government and its central bank, to manage the deteriorating situation has resulted in declining investor confidence over the last 18 months during which capital importation has dropped by 77%.
In the same vein, Lagos Chambers of Commerce and Industry, LCCI, has lamented what it described as the “total collapse” of the country’s economy. According to the Director-General of the Chambers, Mr. Muda Yusuf, “If there is no confidence in your economy and your currency, then there will be capital flight.
“If there is no liquidity of the forex market, the volume of forex inflow will be low. If portfolio investors and foreign direct investors do not have confidence that they can seamlessly repatriate the forex they brought in without losing value, then they will hold back their investments.”
Commenting further on the current economic crisis facing the country especially the forex crunch, Yusuf said the crisis would certainly take its toll on all products in the market whether made locally or imported.
In another intervention, Sansui Muhammad II, the emir of Kano and immediate past governor of the central bank of Nigeria (CBN), says the naira has already been devalued. He added that President Muhammadu Buhari and the CBN were only subsidizing the private sector by selling dollars to the sector at N200 as against the real market price. “This argument (on devaluation) I think has first of all been framed wrong, it's not an argument about do we devalue or do we not devalue. The naira has already been devalued,” he told the BBC Africa Business Report. “What is the value of the naira? It's what you can get for it, what you can get for the dollar in a free market between a willing buyer and a willing seller – and it is not 197.
“All that is happening is that the government has chosen to sell its own dollars at a subsidized rate to the private sector. That's what is happening. So, if you're lucky, you'd get something worth N300 for N200 and you save N100,” Sanusi said. He posited that the CBN was losing N100 on every dollar sold to the private sector, giving room for huge arbitrage. “For every $1 billion that the central bank sells, it has transloaded N100 billion to the private sector – that's what is happening. So you got a huge arbitrage opportunity, which either way undermines the government's anti-corruption stance.
“You also take so much money away from states and local governments, because this is money that from oil proceeds, from PPT, royalties, that should go to education and healthcare for the poor. “While the president is looking at the pain inflicted on the poor, by high prices of import, he also needs to look at the pain inflicted on them by taking away revenue that could go into education and healthcare.”
Finally Nobel Laureate Prof. Wole Soyinka in similar take believes that the Nigerian economy was in such dire straits that President Mohammadu Buhari should convene an emergency economic conference to chart the way forward.
Answering questions from reporters when he visited the Minister of Information and Culture, Alhaji Lai Mohammed in Abuja, Soyinka described the state of the economy as 'parlous', the result of prolonged and unchecked process of attrition from past years.
In a related development, the Yoruba Unity Forum (YUF) warned that many people would lose their jobs in the year if the Federal Government does not take immediate steps to check the drastic fall of the naira and rising inflation in the country.
The forum insisted that this year would be a challenging year to Nigerians if the managers of the economy fail to initiate quality policies to arrest the “worsening economic situation.”
For a nation where the culture of economic impunity is deeply rooted in the political DNA of her leaders to say that Nigeria is yet again on the verge of another tough economic cycle is an understatement. And while the nation is on the verge economically her citizens continue to bite each other on the fringes of ethnic and political and religious fringes.
Who is to blame, the past dispensation and leadership, or those that promised change, and are exercising their rights to excuses. Fact is that we are in trouble economically, we don't seem to agree who is at fault, and we do not agree either on how to solve it, but the words of Soyinka are befitting reflection for us “I belong to a people who are very impatient for results…. When will we see results—Only time will tell.
Written by Prince Charles Dickson.