Forex crunch, bad choices and Nigeria’s future
However, despite the diversity of opinions, the common thread is that, as a country, we have made very bad choices over dating back to political independence in 1960. Successive leaders and their ministers only talked about the necessity of diversifying the nation’s economy so that oil would no longer be the major source of our national revenue. Yet, they did little or nothing to concretely ensure that this lofty agenda was achieved during the tenure of their administrations or set on an irreversible course for their successors to complete. And even when policies were put in place, the aftermath was usually policy summersaults years later when another government comes to power!
We saw nothing wrong wasting billions of dollars importing fuel when the sensible thing we should have done was ensuring that our refineries were all working at optimal capacity and satisfying our internal consumption needs while exporting the excess. That way, the 40 percent of official foreign exchange demand being used for importation of refined petroleum products would simply have been unnecessary. Our insatiable appetite for foreign goods was also another of our bad choices. We loved importing all kinds of things, some of which could be produced here in Nigeria, that the average import bill of the country skyrocketed from N148.3 billion in 2005 to N917.6 billion in 2015, a whopping increase of over 500 per cent, within just 10 years according to the CBN.
Yet, if we had developed our manufacturing sector as well as focused on further expanding agriculture, we would have leapfrogged our economy to higher heights beyond even our own imagination.
These actions further worsened the poverty level among Nigerians while our elites send their children to study overseas instead of making our own educational institutions first-class. They equally fly abroad for treatment instead of fixing our own hospitals here. Many of them sadly died over there. The final nail that sealed the coffin was the pervasive corruption in the system and the scandalous salaries and entitlements politicians gave themselves.
Since independence in 1960, Nigeria has received no less than $400 billion in aid, six times what the United States pumped into reconstructing the whole of Western Europe after World War II, yet we really have nothing super-impressive or outstanding to show for it when we compare ourselves to Asian countries like Malaysia and Singapore which got independence around the same period as we did.
The decline in foreign earnings we are experiencing now wouldn’t have been as high as almost 70 per cent if our past leaders had used Nigeria’s oil wealth to diversify and deepen the structure of the country’s economy. That is why Nigeria is the third country in the world with the highest percentage of the world’s poor, trailing India with 33 per cent, and China, 13 per cent. Seventy per cent of Nigerians, most of them residing in the rural areas, live below the poverty line of $1.25 a day according to the World Bank.
The cumulative effect of poor leadership decisions and choices including unpatriotic lifestyles adopted by some of us over the years is what we are now experiencing.
The country would need to manage the outflow of forex from the economy until oil prices rebound and the inflow of forex improves. The scope of options or solutions are seriously limited since scaling-up its supply into the country is clearly not within our control as a country or that of even the CBN. The good news is that something can be done concerning what the country’s diminishing stock of dollars in our foreign reserves can be used for because this is in our control. This explains why the CBN decided to put some restrictions in place by limiting the list of goods that officially-sourced forex can be used to import aside the bank’s other intervention activities.
Beyond these, looted funds being recovered by the government through the EFCC must be devoted to reducing the shameful level of poverty in the country through employment creation, boosting the industrial sector, improving agriculture and rural development, enhancing the provision of healthcare, scaling up the quality of education and physical infrastructure, as well as developing tourism and various basic social amenities as befits a country that prides itself as the largest economy in Africa and the 26th largest economy in the world.
From bad choices, we can start making good choices. With our over 170 million population, if we truly get our acts together, poverty can be seriously curbed. There are lessons our country’s economic managers like CBN Governor Emefiele and the Finance minister, Kemi Adeosun, can learn from the Senior Vice President and Chief Economist at the World Bank, Kaushik Basu, who famously explained at the IMF/World Bank Spring Meetings in Washington in 2014 that to mitigate poverty and strive for a more equitable society requires determination but also ideas and innovation because ‘the ways of the economy can be strange.’
If the APC government of President Buhari works on fixing power and infrastructure and providing the enabling environment for manufacturing companies and small businesses to thrive, internal growth will be stimulated, even foreign investments will be attracted. But the government must equally show itself as respecting the rule of law by eliminating impunity and illegality in public office even as corrupt politicians being indicted are brought to justice. Even then, all Nigerians must also be ready to pay their tax much more than ever before. Frankly, if we fail as citizens to pay our tax and refuse to hold government officials accountable on delivering electoral promises made, we will only be ruining our collective future.
I will admit that doing all these won’t solve our problems in a day or a year but they would go a long way in helping us achieve our desire for a better country for ourselves, and a more prosperous future for our children.
• Adebayo, an economist, writes from Lagos Island.