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Stimulating economic activities for job creation

By Collins Olayinka, Abuja
19 April 2022   |   4:10 am
The steady exit of manufacturing companies from Nigeria is the forerunner of the current massive unemployment crisis Nigeria is facing.

Emefiele. Photo/TWITTER/CENBANK

The steady exit of manufacturing companies from Nigeria is the forerunner of the current massive unemployment crisis Nigeria is facing.
  
Although various economic downturns and challenges are major factors, the decaying infrastructure and unfriendly operational environment have exacerbated the situation.
  
While experts have continually cited the lack of stable electricity for the exodus of manufacturers out of the country, it is important to note that electricity was not the only challenge of the manufacturing.  
 
Opinions are diverse over factors that are responsible for the exit of the companies, what is glaring, however, is the need to bring back both the manufacturing and agriculture sectors that were the bedrock of the economic prosperity that Nigeria before crude was found.
  


Thus, when the current governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, assumed office, it was clear to him that the tasks of the apex bank must transcend its traditional mandate of price regulation, monetary stability and banking supervision.
  
Though many of the initiatives under Emefiele are targeted at employment generation, the ‘Race to $200 billion in Forex Repatriation, popularly called ‘RT200 programme’ is aimed at providing incentives for local manufacturers to engage in value addition rather than exporting raw produce.
   
At the launch of the initiative, Emefiele said: “We will fund initiatives to open factories with a five per cent interest rate for 10 years and another two years’ moratorium. Our people will no longer have to go to banks to get loans to conduct manufacturing and production endeavours at a 20 or 30 per cent rate. This will also reduce the cost of production.” 
  
The governor was quick to allay the fear of possible starving the local market of goods in preference for the export market, saying, “as long as we remained focused, this initiative will create market opportunities for us. How do we support that opportunity? We support that opportunity by offering sectoral loans for businesses to assess. It will expand the economy and create economic activities that will grow our Gross Domestic Product (GDP). So, this is an overall approach to broaden and diversify the Nigerian economy.”
  
While the CBN would want to encourage export through rebates, he was quick to caution that the apex bank is aware of the inflation that could engender.
  
“We want to discourage rebates for raw produce because we know that it has the capacity of creating inflation. The loans are for the expansion of existing initiatives or fresh ones that will boost export. That is what we want to do,” he said. 
  
On his part, an Economist, Tope Fasua, lauded the path Emefiele chose when he assumed office. 
   
“When Emefiele came, he told us that one of his main goals will be to reduce unemployment and get the manufacturing sector working. It is a valuable strategy for any government to target employment generation. This means that a government must ask itself: are my people working?
 

“Sometimes, it is not the type of work they do; it is are they working at all? If you have 33 per cent of the population roaming the streets, there is trouble. Nigeria should be targeting double-digit growth and in targeting double-digit growth, there will be high inflation. We should be a high inflation growth economy. Why not? Because in this economy, there is so much space for growth in Nigeria.”
   
On the prospect of the emergence of a strong Naira, Fasua warned that Nigeria may not have a strong currency until it breaks the jinx of extractive economy and begins to produce complex products and moves into the “economic complexity of goods and services”.
   
Fasua stated that the inability of Nigeria to add value to primary products plays a major role in the devaluation of the Naira.
     
He added: “Just imagine if we can develop our technology and refine our petroleum product. More than 33 per cent of our import is technology followed by refined petroleum products. These two products combined take more than 60 per cent of our annual imports year-on-year.” 
  
Fasua stressed the need for Nigerians to innovate irrespective of the sector they operate, saying: “There is nobody that cannot or should not innovate. As an Economist, I need to innovate. So, everyone must innovate to get maximum output from what we do.”
  
He also submitted that the era of relying on comparative advantage to drive economic prosperity is long gone. 
   
His argument: “The theory of comparative advantage where each country prioritises what they can do best is gone. That has been debunked. If a country like South Korea had listened to that, they will not be at the level they are today in terms of technological breakthroughs. To be a productive country, we must adopt a ‘mass attack, mass defence’ approach where we try to excel in things that the world wants and needs.”
   

Fasua said he sees no wrongdoing in the CBN extending its roles beyond monetary policies, adding: “It is well known that when an economy is in trouble, the Central Bank delves into the fiscal policy arena. So, it is wrong for anyone to say that the Central Bank should just focus on control of inflation and monetary policies. What is there to focus on when the economy is in perpetual depression? The Nigerian economy has been depressed for as long as I can remember.”
   
According to Fasua, floating and leaving the value of the Naira to market forces without any intervention by the CBN will be an invitation to anarchy. 
  
His words: “When Margaret Thatcher was speaking to a group of businessmen in 1981 where she echoed Joseph Stalin by saying that to destroy a country, the first thing to do is to debauch its currency. That tells you how important a currency is. In my study of the evolution of currencies, I discovered that no country set out to create a weak currency. Every country in the world starts with a strong currency. If your currency is rubbish, you are finished as a country.
  
“Government must manage the Naira so that it is not debauched and manage it around a managed floating system that is managed around a certain value so that the currency does not get debauched because a lot of things get tied into the currency of a country – the price of the people, the respect of their economy, the respect they get from the comity of nations – are all tied into the currency. A lot of things we see on the streets in terms of armed conflicts and social misdemeanours are tied to the fact that our currency is weak and is getting debauched.”