Though subtle, Nigeria’s dwindling economic can be likened to American recession of early 21st century which lasted from 1929 until 1933. It was caused by the 1929 crash of the stock market and other factors. At official meetings, social functions and even family meetings discussion about the state of Nigerian economic crunch due to tremendous fall of crude oil price in the international market and resulted in the devaluation of naira. The situation was reported to have made job creation difficult and even the existing ones are fast disappearing.
An executive of a client service company in Lagos confirmed that there are many companies in Nigeria now calling on the leadership of unions in the oil and gas sector to discuss redundancy in the industry due to sliding oil prices in the international market. The multinational oil companies that have sacked people in their employ earlier due to divestment of their oil assets in Nigeria are now using the sliding oil price to sack more workers and find their way out of Nigeria.
Before the downturn in June 2014, experts drawn from various field agreed that despite how richly blessed Nigeria is as a country, it was only a few that had actually benefited from the abundant resources. A recharge card distributor Daniel Otuke, told Economic Confidential that the perception of the larger society on the recent economic challenges in the country is not unconnected with the forthcoming elections.
According to him, there is certainly a reasonable drop in sales but his clients remain optimistic that market will pick in a good dimension after the general elections. He however, disagreed with postulations of his clients because to him, what is happening is beyond the effect of the build up to general elections but an outright effect of dwindling economy caused by falling prices of crude oil.
However, a subtle but effective move was made by the handlers of Nigerian economy. One such move was the adoption of austerity measures, which has to do with a slash in expenditure and raising tax to minimize budget deficit. This, they believe will help to maintain economic stability, boost oil revenues, reduce waste and plug loopholes.
While Nigerians continue to cry amidst dwindling economy, analyst believe that, the situation ought not to have started telling on the general public by now because what the country is having in its external reserve should be able to take it beyond this level. The questions that keep criss-crossing the minds of well meaning Nigerians are what happen to the nation’s external reserve? Could it be that the government of the day used the resources in the external reserve for self a centred purpose?
Despite the drop of the price of crude oil in the international market, stakeholders still believe that corruption is the major cause of current economic woes of Nigerians today. For them, supposing the country had managed its resources in a good order over the years, things wouldn’t have been this bad so quickly. This perception is born out of the fact that Nigeria, aside from oil has other mineral resources which if properly harnessed will make it stand out among its global counterparts.
Speaking about corruption as the reason behind Nigeria’s economic crunch, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala has claimed that lack of institutions, systems and processes to block and prevent corruption, alongside the problem of impunity in Nigeria, is basically the reason that corruption has been so hydra-headed in the country and needs to be cracked and tackled.
Okonjo-Iweala said that corruption in Nigeria needed to be tackled from the root causes while technology must be deployed to block leakages in the economy.
She spoke at a forum organized by the Catholic Caritas Foundation of Nigeria under the Catholic Bishops Conference of Nigeria (CBCN), with the theme, “Blocking Leakages in the Economy Amidst Dwindling Oil Revenue,”
“That is what this administration is doing, tackling the root cause of corruption,” she explained. “The problem is that we have been looking at the symptoms and not the causes of the disease. The cause of the disease is that we don’t have the institutions, systems and processes to block and prevent corruption in the first place, that is the only difference between us and people abroad.
“So if we arrest people for being wrong, which we must, I believe that impunity in the country has to be tackled, but behind that impunity, if you don’t do something to stop the sources, the next set of people will also come. Today, about 14 people are standing trial over the pension scam.
“We have a system that is cash-based, but we have introduced Government Integrated Financial Management System. 14 agencies in December tried to pay more than what was programmed but the system locked them out and this led to the delay of their staff salaries until the agencies were restored manually. We have been able to weed out 62, 892 ghost workers and saving about N209 billion.”
The minister explained further: “The first time I was in government, Nigeria was second to the bottom on the Transparency International Corruption Index, it was 1.4, 132 out of 133 countries; we said we must do something to improve and by 2006, when we left government, it was 2.2 out of 10 and 2011, it was 2.4 while the score now is 2.7.
“I am not saying that 2.7 is a good score, Nigeria needs to move to 6 or 7. Even if we don’t have perfection, we must not sell to our children a score of 2.7, we must fight to move that number.”
Okonjo-Iweala explained that a growing economy that does not touch people’s lives is not the type desired. However, she noted that if the economy does not grow, poverty cannot be addressed. Therefore, “we must focus on centres that create jobs, that is the way to tackle poverty.
“Agriculture promises to be a sector that could be used to address poverty but it has to be made attractive. Housing has a social impact – it puts a roof over your head and gives you a stake. We need to create an institution that would pump in liquidity into the housing sector.
“We want to create about 200,000 mortgages annually, we need evidence-based discussions in the country, we need to promote entrepreneurship; 5,400 entrepreneurs have been created by the present administration. We are also supporting the manufacturing sector to create decent jobs.”
More so, “the Nigerian economy as at today is diversified, what is not diversified is the source of income as oil contributes 70 per cent of the nation’s revenue. We need to broaden our tax base, audit and look at those abusing exemptions. We gave ourselves a target of recovering N70 billion but recovered over N100 billion. That is an example of how we are blocking leakages.”
Rev Fr Ralph Madu, CBCN secretary general had earlier observed that the negative reports about the nation’s economy call for concern, and that Nigeria will not turn into a failed state, stressing that the government needed to collaborate with the church in areas of comparative advantage.
Also Rev Fr Everistus Bassey of Caritas Nigeria argued that economic progress should not be measured solely by the Gross Domestic Product (GDP). Rather, the well-being of a nation should be measured by a series of indicators linked to social protection systems.
Such includes access to quality services, decent work, adequate, safe and nutritious food, adequate housing, personal safety and basic income security, as well as a safe, clean, healthy and sustainable environment.”
A recent report from an online medium shows that about five thousand staff of banks were said to have been relieved of their jobs in Nigeria. The reason for this action is simple; the banks were reported not have the financial muscle to keep paying the staff salaries due to dwindling economy. It is even on record that most banks in Nigeria today hire more contract staff than permanent staff.
Another angle that is link to this economic crisis is the near paralysis of activities at the nation’s sea ports. The seaport, which is known to be the gateway to Nigeria economy, has hitherto been a place full of activities at every hour of the day. But the case is no longer the same simply because importers can longer do business as usual due to ballooning exchange rate.
Speaking to Economic Confidential against this background, a clearing and forwarding agent, Mr. John Osah said that, his company used to clear containers in a large volume before the now but since the nation was confronted with this circumstances, things have changed from bad to worse, because raising money to pay for immediate bill is has become an uphill task.
He however called on the government to delve into action quickly before issues get out of hand. Noting that government’s effort towards curtailing this menace by adopting austerity measure is quite commendable, he is still of the view that the government can do better.
While suggesting measures on how the government can navigate the country away from the current quagmire even though economic meltdown is not peculiar to the country as all petroleum dependent nations are facing cash crunch, he maintained that, “ a coordinated import substitution policy may produce the quick answers, which the country’s economy so desperately needs.
“Sometimes it is difficult to know whether Nigerians and their leaders are aware that the nation’s economy is nearing collapse. In a political system where voracious spending is a habit, it should elicit passionate responses when a significant decline in national revenue inflow is announced. Unfortunately, the issues that appear to dominate public discourse are the juvenile politics and power play, as well as the move by the national assembly to legalise paedophilia. This appears to be an open display of ignorance and shame.
“The National Bureau of Statistics (NBS), the nation’s custodians and interpreters of socio-economic data and trends, released a recent report that should set a literate, rational Nigerian mind thinking deeply, but it turned out to be like a pin dropped in the ocean. Many never even heard the report by NBS that the country is going broke”, he lamented.