2016 will live long in the mind and hearts of majority of the Nigerian population as one of the country’s worst years, not only due to the Super Eagles, their national football team, being demoted to 51st on the FIFA world rankings table, but also due to the recessionary state the country was thrown into due its currency’s devaluation by over one hundred percentile points.
Ever since the international drop in the price of oil by OPEC (The Organization of Petroleum Exporting Countries) by 50% to $50/bbl, the oil-rich nation, being one of the major exporters of oil and relying on it for about 70% of the nation’s income, has suffered heavy losses in that regard. The economy has since seen outrageous increases in the prices of fuel, transport, food, electricity, as well as a major devaluation of its currency the naira. Making an already difficult existence almost impossible for the many living on and well below the minimum wage pay of 18,000 naira/month. All these events taking place within the span of a few months. But for once the burden of the country has not fallen on the poor man alone. Even Nigeria’s most illustrious billionaire, Aliko Dangote, lost an estimated $4.3 billion in net worth. His current net worth of $11.1 billion making him richer in naira due to the currency’s devaluation, but poorer overall.
In response, the government has started encouraging and investing in the idea of entrepreneurship and homeland innovation. Promoting its own airlines, car models, farming, entertainment, as well as any other available means of increasing exports and raising funds. Yes, the strategy can be verified as the right and most effective response to the crisis, but the question here is why is this philosophy just getting the governments backing now in this critical state? Why were they satisfied with the money they pulled in from oil alone all these years? The country may have had the largest Economy in Africa but more than 70% of the population still lived in absent poverty. So why the turn to other industries now?
A government whose actions are in the best interest of the people they serve will always have the backing of the masses especially in trying times. But when these elected officials choose to act in unpredictable and suspicious manners, the nation is torn by riots and strikes which will only intensify the blow the nation’s workforce has been dealt. The existence of anonymous government actions makes future economic predictions difficult, which in turn makes investors nervy, which in turn leads to more money leaving the country. So as of this period, we cannot confidently back up any one prediction as the assured route the nation will take in this New Year. We can, however, speculate on the various options available to the Federal Government to effectively battle a recession and reduce inflation.
Levying higher taxes on imported goods is a way to go, but taxing basic amenities like internet tariffs or tax certificates for the application of a Nigerian passport will do more harm to Nigerian consumers than good to the NCC (National Communications Commission). Taxing items that are more of luxuries than necessities hold greater promise in this regard. China recently added a 10% tax on all luxury cars being imported. This strategy will not only demoralize import but will also promote localization and domestic investment.
Nigerian Airlines currently face barriers to accessing spare parts and maintenance servicing due to difficulties in getting foreign exchange. The Airline sector of the economy is too critical to be restricted by foreign exchange and should be excluded from its restrictions in order to grow more swiftly. You cannot promote these sectors while limiting their access to necessary factors for their growth.
One thing Nigeria is globally known for is its corruption. Unqualified officials running for and gaining positions of power from which they loot the country of the tax-payers money. Recently the Federal Government reduced its allocations to all states in an effort to both demoralize greedy self-interested officials from running for office, as well as promote self-reliance by the states in utilizing the resources available to them. This theme is an important factor in ridding the nation its greed-motivated officials and I would push for an even greater drop in Federal Government allocations.
These points, as well as many others, have been touched on by Senator Ben Murray-Bruce who has headed the campaign for the promotion of entrepreneurship in the nation. It is a good time to be an educated individual with a dream or an idea in Nigeria. Out of the smoke and debris of the rubble, a recession tends to create a nation, usually, comes giant industry leaders who go on to dominate their market and hold high regards with the FG. New promising industries will create thousands of jobs, invite both foreign and domestic investment, promote exports and reduce imports, and pave the way for much more up and coming competitors.
This will be the path taken by the nation as long as the President Buhari decides to acknowledge Senator Murray-Bruce’s ideology as the most promising and effective strategy for not just short-term results, but also long-term security if ever a national crisis like this were to repeat itself.
Nigeria’s future remains promising, now more than ever in fact. We just have to put our faith in our elected officials to take the right path towards that promise and abandon their ancient corrupt-minded approach to handling situations.