Continued from yesterday
BY DAKUKU PETERSIDE
A significant part of the problem lies in Nigeria’s over-reliance on oil exports, which account for over 90 per cent of foreign exchange earnings. Diversification is not just a buzzword; it is a necessity. Nigeria’s agriculture sector, for instance, employs about 36 per cent of the workforce but contributes less than 5 per cent to exports, compared to Kenya’s 18 per cent. By investing in agro-processing industries and modernising supply chains, Nigeria can increase export revenues, reduce dependency on oil, and stabilise the currency. Furthermore, if implemented well, the current policy to mop up the USD outside the banking sector and bring it into the system will help improve USD liquidity.
Policy inconsistency further compounds these challenges. The government’s perceived poor handling of fuel subsidies typifies the unpredictability of Nigeria’s policy environment. Such shifts create uncertainty that stifles long-term investment and undermines public confidence in governance. Investors and citizens alike are left to navigate a chaotic economic landscape where policies often appear reactive rather than strategic. This underscores the critical need for transparency in economic policies to restore and maintain public trust in governance.
Infrastructure deficits remain one of the most significant obstacles to Nigeria’s economic advancement. Despite being Africa’s largest economy, Nigeria generates and distributes less electricity for a population of over 200 million, forcing businesses and households to rely on expensive and polluting alternatives like diesel generators. This shortfall inflates production costs and renders Nigerian goods less competitive locally and internationally. The World Bank estimates Nigeria loses approximately $29 billion annually due to unreliable electricity supply. Addressing this requires innovative solutions such as decentralised renewable energy systems.
Transportation infrastructure is equally critical, especially rail. Poor transport networks exacerbate these challenges, increasing the cost of moving goods and services and hindering economic diversification. Expanding rail networks like the Lagos-Ibadan railway, which recorded over one million passengers in its first year of operation, could reduce logistical costs and promote regional trade. Furthermore, investing in smart city projects and integrating high-speed internet with efficient transportation systems could position Nigeria as a hub for innovation and commerce, much like Singapore.
Perhaps the most damning indictment of Nigeria’s economic progress is the persistent and widening income inequality. While GDP growth benefits the wealthiest segments of society, most Nigerians see no improvement in their quality of life. Policies such as the Value Added Tax (VAT), which disproportionately impacts low-income households, further entrench this inequity. VAT on all essential goods and services should be reconsidered and recalibrated.
However, economic growth that disproportionately benefits the elite exacerbates income inequality, fuelling social unrest and stifling overall development. The top 1 per cent controls about 25.2 per cent of the national income, while the bottom 50 per cent contributes only 15 per cent. Addressing this disparity requires policies that prioritise inclusive growth. A Universal Basic Income (UBI) pilot programme targeting Nigeria’s most vulnerable populations could provide a safety net, stimulating local economies and reducing poverty. In Kenya, a similar program run by Give Directly significantly improved recipients’ financial stability and productivity, demonstrating its potential effectiveness in Nigeria.
Nigeria’s youth population represents a demographic dividend that, if harnessed, could drive economic transformation. With a median age of 18, the nation has a significant opportunity to capitalise on its youthful workforce. However, youth unemployment remains alarmingly high, requiring immediate action. Initiatives like the Andela Fellowship, which trains young Nigerians in software development, have demonstrated the potential for skill development programmes to create pathways to global opportunities. Expanding such initiatives to include vocational training in renewable energy, agribusiness, and manufacturing could equip Nigeria’s youth with the skills to drive growth in high-potential industries.
Entrepreneurship must also be a cornerstone of Nigeria’s economic strategy. The tech ecosystem, already home to globally recognised startups like Flutterwave and Paystack, illustrates the nation’s potential. However, many aspiring entrepreneurs face insurmountable barriers, such as limited access to capital and cumbersome regulatory processes. Simplifying business registration, providing tax incentives for startups, and establishing incubators to nurture innovation could unlock the entrepreneurial potential of Nigeria’s youth.
Savings and investment culture is another area requiring attention. Currency instability discourages Nigerians from saving, undermining domestic investment and economic resilience. The economic hardship most experience means they only struggle for survival and have little or no savings. High inflation has eroded the purchasing power of the naira, so nothing is left for savings for even most middle-class families. Working class and most rural dwellers cannot save even with the best financial literacy simply because they do not have enough.
Nigeria’s economic challenges are deeply interconnected, requiring a comprehensive and innovative approach. Restoring citizens’ trust in both economic policy and management of the economy is essential for sustainable growth. Policymakers must prioritise transparency, inclusivity, and resilience while embracing bold pro-people economic reforms and leveraging technology. These measures, combined with active engagement from citizens and stakeholders, can transform Nigeria’s economy, ensuring that growth is measurable and meaningful. Through such concerted efforts, Nigeria can move from the “Amber Zone” to the “Green Zone,” realising its potential as an economic powerhouse and a beacon of prosperity for its people.
Concluded
