The World Bank, in 2020, announced that the Nigerian economic may see a dip into recession, the worst the African country had seen in 40 years. This was largely due to the effects of the fall in the global price of oil, a commodity the nation's economy is heavily reliant on, and the outbreak of the COVID-19 pandemic, that nearly crippled not just Nigeria’s, but the global economy.
But these challenges were not the only catalysts for Nigeria’s imminent recession, issues around insecurity, infrastructural deficit, trade barriers, power supply challenges, all form a crude mix that has managed to drive the country down this very path.
Since the election of the Buhari’s administration in 2015, a lot more focus has been placed on driving local content and boosting local production, particularly in the agriculture sector. This was also in line to make the Nigerian economy more self-sufficient and boost food security, focusing on staple foods like corn, rice, tomatoes, and cassava.
To this effect, the government also introduced a few executive orders, including the Executive Order 5, in 2018, which focused on propping up indigenous professionals and technical experts as the primary beneficiaries of public procurement by government agencies. All parts of efforts to create a system that looked inwards for its needs.
In further support of this, the Nigerian power sector underwent critical reforms, particularly in the areas of alternative power supply, billing of customers and sector governance policies, which saw the introduction of the Eligible Customer Policy, the commissioning of several mini-grid projects by the Nigerian government and the push for more distribution of pre-paid meters to ensure customers pay for what they consume.
The National Assembly went forward to create more opportunities for the private sector to participate in the drafting of Bills that would ensure even more progress in the ease of doing business areas and other issues around trade facilitation. These measures, in alignment with the Presidential Enabling Business Environment Council (PEBEC), made remarkable gains in moving Nigeria to the 131st position out of 190 nations on the World Bank Ease of Doing Business Index.
These well-coordinated measures produced certain desired results, to wit- the contribution of the non-oil sector to the GDP saw a steady rise QoQ, contributing up to 92% to the Q4 2019 GDP figures, with the Telecommunications sector, manufacturing sector and services sectors leading with remarkable growth.
However, there are persistent issues which played a catalytic role in effectively driving the country down its current trajectory despite the above-stated actions.
The security challenges scattered around the country, from the Boko Haram Terrorists in the North East to the kidnappers and bandits across the southern regions, have made it increasingly difficult to drive direct investment into strategic areas of the Nigerian economy. Whilst recognizing that the Nigerian government has made reasonable effort to strengthen its national security apparatus’, there has not been a visible translation of these efforts into real gains.
- INFRASTRUCTURE and TRADE FACILITATION
While the current administration has done a lot in terms of providing adequate infrastructure to support growth, there are strategic interventions that require immediate attention due to the heavy reliance domestic trade has placed on them.
The Nigerian roads, federal and state, pose a challenge to distribution networks, making many sectors of the country inaccessible, increasing logistics costs. The major ports in the country also require more direct intervention to remove all the bottlenecks, allowing faster processing of imported goods, as well as good awaiting export; as there have been reports of goods losing value and quality before inspection and clearing is processed.
It is noteworthy that there have been policy reforms and initiatives to improve the trade facilitation, however, these have yielded disputable results. While the ease of doing business ranking indices offer some facts, the on-ground situation differs as the direct trade challenges still exist and thrive. Direct partnership and collaboration with the private sector are key to eliminating these hindrances and creating a more enabling business environment.
The issue of healthcare has not been on to be brought up in trade conversations; until the COVID-19 pandemic hit global economies, and the world realized how deeply entrenched healthcare is in business and trade. This position holds for Nigeria, where its primary healthcare systems have steadily degraded over time.
The current pandemic is a stark reminder of the strategic importance of health security to the sustainable growth of any economy. This resonates with the words of Bill Gates, the Co-Founder of the Bill and Melinda Gates Foundation, as part of his address, at the expanded National Economic Council meeting in March 2018, in which he stated that ‘Nigeria would become an engine of growth if the government got health and education right’.
It is advised that the Nigerian government drives even greater investment into the healthcare sector, particularly the area of primary healthcare, as this is the tier closest to the rural and suburban dwellers. Health sector policy reforms and strengthened enforcement of existing regulations would also go a long way in providing the necessary cushion the health sector needs.
The COVID-19 Pandemic did not bring on this economic downturn, it only exposed the gaps within the structural systems that needed attention and sustainable resolutions. It is hoped that in planning an economic revival, the government of Nigeria would do more to tackle these challenges and set the country on the path to establishing more systems that can better withstand these shocks and reclaim its position as a principal investment destination in Africa.
Ikechukwu Ibeawuchi leads government relations and regulatory advisory at Marcus Flynn, a Legal and Business Advisory Firm in Nigeria, specialized in providing legal, government relations, regulatory and compliance support, and solutions to businesses across Africa. He can be reached on email@example.com.