- Nigeria’s economic situation is worse than stagflation,
For the Nigerian economy to be globally competitive, it is imperative for public procurement processes to dedicate specific portion to made-in-Nigeria goods and services.
The Chairman, Nigeria Economic Summit Group (NESG) Board Committee, Adedoyin Salami, said this on Monday in Abuja at the opening of the 22nd edition of the Nigeria Economic Summit (NES 22).
“If made-in-Nigeria must succeed, it should not be the challenge of the federal government alone. All the 36 states of the federation and the Federal Capital territory (FCT) must have a role to play,” Mr. Salami said at the summit, which has “Made-In-Nigeria” as its theme.
The NES Board Chair, who lamented that the country’s current economic indices were far from ideal, said it was the worst case scenario of stagflation, where there was stagnant growth, coupled with rising costs.
“The country’s economic situation is worse than stagflation. What we have is an economy that is shrinking in size. So far, this year it has shrunk by about 1.5 per cent, with combination of stagnant growth and rising costs,” he noted.
Mr. Salami said the growth rate began slowing down since 2013 before contracting into the recent recession. He said the country should see the situation as an opportunity to revitalize and re-engineer the economy to grow again.
Identifying international events outside the country’s control and Nigerian factors that impact the country’s economy, Mr. Salami stressed the need to embrace the imperatives of local competitiveness and productiveness, as well as ability to create and add value to the economy.
On the international scene, he said only diaspora transfers to Nigeria was in favour of the economy, with about $23 billion sent into the country every year.
He said the other indices like global economic policy, global trade, and capital flows have worsened and are likely to remain unfavourable to Nigeria throughout the life time of the President Muhammadu Buhari administration.
For instance, he said while Nigeria realized in excess of $90 billion from oil revenue and $6.7 billion from non-oil export revenues in 2013, he was not optimistic the country would realise up to $40 billion this year, as a result of dwindling global oil prices.
“The dynamics of oil has changed, with the production of shale oil. The cost of producing shale oil imposes a cap on oil prices, with 72 countries in the world potentially capable of producing shale oil, with Nigeria’s key customers, United States and China already producing shale oil or looking for alternatives to our oil,” he said.
He advised Nigeria to begin to move away from oil dependence, saying the country could overcome the domestic economic challenge if solutions were found to the absence of a policy framework to articulate national development attainment goals.
The strategic implementation plan by the Budget and National Planning Ministry, he noted, fell short of a national development plan, as it hardly helped investors and guide the economy towards what the country’s national preferences were and what the development path should be.
He warned that failure to make the private sector the engine of growth and development would not make the country attractive to investors, saying government must encourage and support the private sector to contribute to the economy.
“Presently, we have uncertain policy attitudes towards private capital and markets. Government should not allow that to continue by intervening when necessary.
Despite the existence of a National Competitiveness Council, he said Nigeria has remained uncompetitive, with productivity low, with Nigeria ranking about 126 out of 144 countries in global competitiveness.
Mr. Salami said it was dangerous to continue to depend on oil revenues, underscoring the need for diversification, pointing out that in the absence agriculture, oil and gas, ICT, real estate and trade, the country cannot say it has an economy, despite having over 46 economic sectors that could be tapped.
Commending government for resolving the energy crisis, helping the states handle their insolvent statuses, floating exchange rate policy and ensuring fiscal discipline, Mr. Salami reminded government that it would be remembered more by what they have left undone.
“For our leaders, your success is not going to be measured by what you have done. You will always be judged by what remains to be done. While Nigerians will praise you for those things you have done, it is those things you have left undone, or remains to be done, impinging on us as a nation, and it is against those gaps that your service will be measured,” he said.
He highlighted areas of poor performance by the government to include its inability to communicate well with the people on what it has done, saying although there were several road maps in various sectors of the economy, there was need to bring them together into a development plan understood by the private sector.
“That is an imperative that must be achieved before the end of this year. This speaks to the need to review the policy direction on local content for Nigeria. We cannot continue to depend on imports. If we continue to export so much of our values through imports, we are leaving so little for ourselves”.
On rising unemployment, particularly among the 15 to 25 age group, he said this would not only destroy hope, it would create a fundamental systemic challenge for social coherence to economic progress and inclusiveness.
To create a globally competitive economy, he said Nigeria must not only produce her goods and services, but must have a strong, consistent and stable currency that gives Nigerian producers advantage against global competition.
The Minister of Budget and National Planning, Udoma Udoma, said government has acknowledged the private sector as the anchor of the country’s economic growth, assuring that government would continue to encourage and support them grow in a competitive environment.
President Buhari who declared the summit open urged participants to ensure they come up with resolutions to support government’s effort to diversify the economy in the face of challenges posed by dwindling global oil prices.
“Made in Nigeria lies at the heart of so many efforts we are making to lead us through this trouble times and lay a firm foundation for the future,” the president said.
“We need to diversify the economy so that we will never again have to rely on one commodity to survive as a country; so that we can produce the food we eat, make our own textiles, produce most of the things we use and create the right environment for our young to be able to benefit and create jobs through technology.”