Economy still crawling after 22 years of unbroken democracy
• Power still the missing link
• Aviation wobbles with muted ambition
• Banking feeding fat on a bleeding economy
From manufacturing, agriculture, solid mineral, retail and oil/gas to service sectors such as aviation, telecommunication and banking, the economy has not lacked policy statements and blueprints since the return of democracy 22 years ago. Yet, the economy has been lethargic, growing at a pace slower than the rate of expansion of the population.
The country’s population was estimated at 119.3 million in 1999 when the then President Olusegun Olusegun assumed leadership. Just about two decades later, the population has almost doubled to over 20 million, having grown at an average of 2.63 per cent yearly.
Whereas the GDP has grown exponentially, from $60 billion to over $400 billion as a result of rebasing, the inconsistent growth trajectory and exclusiveness of the economy, according to experts, ended up widening the income inequality, increasing the poverty rate and fueling social tension.
Information and communication (ICT), which has centred on telecommunications, is the catalyst of the growth momentum of the past two decades.
Its contribution to GDP has been geometric in the past decades. Even since the onset of the current administration, its contribution has almost doubled, from 8.5 per cent in 2015 to 14.7 per cent.
The National Bureau of Statistics (NBS) latest GDP data shows that the ICT sector grew by 6.47 per cent in Q1 2021, making it the fastest-growing sector of the Nigerian economy.
This development has been powered significantly by the recognition of the Buhari-led administration of the importance of a digitally-driven economy. As such, on October 23, 2019, the ministry’s nomenclature changed. It became the Ministry of Communications and Digital Economy.
The name change was done to further expand its mandate to capture the goals of digitalisation of the Nigerian economy in line with the Economic Growth and Recovery Plan (EGRP), one of the key agenda of the present administration.
The Minister of Communications and Digital Economy, Dr. Isa Pantami said that the old name had become limiting and obsolete and did not reflect the trend as emphasised by the International Telecommunications Union (ITU).
Pantami said the change of nomenclature will propel the ministry to reposition its strategic objectives as laid out in the priority areas of this administration while accelerating growth and social inclusion.”
To run an efficient digital economy, the ministry also recognised the immense benefit of broadband. In March 2020, the New National Broadband Plan 2020 to 2025 was unveiled. The plan envisages that by the end of 2025, there should have been 70 per cent penetration and 90 per cent coverage of the entire landmass of the country.
Consolidating on this development, the Nigerian Coordinator, Alliance for Affordable Internet (A4AI), Olusola Teniola, said the major areas of focus within the ICT sector by the Federal Government can be summed up as a compliance drive, more than seeking deliberate ways to expand ICT infrastructure across the nooks and crannies of the geographical space.
Teniola said by now Nigeria should have built a network covering 80 per cent of the population with 3G and built extensive fiber networks in preparation for 4G and 5G.
He also said the opportunity to develop a robust Digital Financial Service has only been identified by the current Minister of Communications and Digital Economy.
According to him, this new service assumes that wide deployment of digital infrastructure is in place and for that to be sufficiently in place, the ministry has to address the issues and barriers mitigating the rollout of fiber by removing Right of Way (RoW) issues, Critical National Infrastructure (CNI) and Digital Literacy and Skills.
The A4AI boss stressed that FG also needs to ensure that the telecoms industry is robust enough to serve as a platform and tool for the country’s development in the era of AFCFTA’ emerging Digital Economy policies and regime “so that we can export knowledge in addition to our natural resources. This means FG policies towards ICT should always be enabling and positive to attract the needed Private sector capital to fund the infrastructure.
Chairman, Mobile Software Solution, Chris Uwaje, said ICT is still playing the role of a make-belief curtain-dresser informed by the insignificant and grossly limited inclusion and involvement of core and indigenous IT professionals in the system.
On infrastructure, Uwaje said the nation has done a lot in acquisition at great cost to it, “however, utilisation and maintenance remain below expectation. One would have expected the rapid implementation of eGovernment to have been prioritised for trustworthy governance and national security.”
The journey to building a telecommunication sector that provides scaffolding for broader economic growth started with the liberalisation of the sector by the Obasanjo administration. At a subscriber base of 2,271,050 and GDP contribution of 0.85 per cent in 2002, today’s growth has surpassed all projections. Yet, experts say the potential for further growth is huge.
LIKE telecommunication, the power sector has been unbundled and partially commercialised. Whereas Nigeria expected the next big bang to come from power, after telecommunication, the power situation has been that of motion without movement.
Nigeria’s installed generation capacity is merely 12,500 megawatts (MW) compared to South Africa’s 58,095 MW while the electrification rate still lags at 45 per cent, making the sector the missing link in the economic plan.
Prof. Adeola Adenikinju, an energy economist at the University of Ibadan, has called for the review of the privatisation contracts as blackout envelopes the country, close to a decade after the defunct Power Holding Company of Nigeria (PHCN) was unbundled and sold to 11 distribution companies (DisCos) generally assessed as “non-performing.”
FINANCE is the blood of the economy and king in the business world. But in Nigeria, those who render financial services seem more like blight on the troubled economy, always thriving in crisis.
Before the famous Prof. Charles Soludo-led consolidation, the country had 89 banks with many that were at best providing marginal financial services while the big players relied on offshore tracking. At post-consolidation, Nigerian banks emerged as global players as their capitalisation ballooned, enabling them to undertake big-ticket businesses.
The huge capital base also increased the risky behaviour of some chief executives, who were ready to fund quick cash businesses but without the patience to do the hard work required to grow the real sector. Hence, manufacturing, agriculture and small and medium enterprises were left unattended.
And when the bubble burst during Mallam Lamido Sanusi’s tenure, the poor who were left to their fate were taxed to bail out their banks and pay for the excesses of the chief executives. About 11 years ago, the Asset Management Corporation of Nigeria (AMCON) was set up and a N1.7 trillion bond floated to fund banks’ non-performing loans (NPL) acquisition. The bond, which is yet to be liquidated, has become part of Nigerians’ debt burden – a situation many said has constituted a moral hazard in the industry.
When the banks are flush with liquidity, they lend to only a small percentage of the rich while their poor risk management burden is borne by all.
As of total N25 trillion total banks’ exposure to the economy at the end of last year, trade, oil and gas, as well as the public sector, take a huge chunk while inclusive sectors like agriculture are given a pittance. It reflects a historic trend where sectors that contribute less to the GDP get much of the commercial credits, while the real sector is starved to death.
The Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, has argued that inadequate credits are the bane of the competitiveness of the country’s manufacturers.
Over the years, the Central Bank of Nigeria (CBN) has employed moral suasion and other strategies to increase banks’ credit to the real sector. But like other CBN-created intervention programmes, the strategies have not achieved much as agriculture and manufacturing remain high-risk areas.
THE aviation sector, like others, had an ambitious developmental policy when Capt. Hadi Sirika, assumed office as the Aviation Minister in late 2015.
The policy, code-named “Aviation Road map,” has key components that include a new national carrier, airport concession, aircraft leasing companies, Maintenance Repair and Overhaul (MRO) facility and aerotropolis.
None of the projects has been delivered to date. The national carrier, after its christening in London in 2018, ran into a storm of public criticism and had to be “temporarily” suspended by the minister. There is an indication that the new airline, Nigeria Air, may take to the sky in 2022.
About three years ago, the Federal Executive Council (FEC) also approved the concession of four major airports – Lagos, Abuja, Port Harcourt and Kano. The facilities are yet to get the requisite buy-in from the private sector.
Besides the stalled critical projects, stakeholders are most worried by the non-composition of boards of aviation agencies in six years. The Boards are statutorily mandated to oversee the agencies, see to workers’ welfare and drive the development of the sector.
President of the National Union of Air Transport Employees (NUATE), Ben Nnabue, said aviation had stagnated in the last six years. Nnabue said: “We have persistently pointed out the folly of one-man-show in the governance of the sector. As we all know, there has being no governing boards for all the agencies in aviation, and the CEOs being direct employees of the Minister of Aviation, and the Minister being the Chairman of all the so-called Interim Boards, the affairs of the entire aviation industry has been contrived to be totally in the hands of one man.
“This is extremely dangerous, preposterous and truly objectionable. All our protestations on the subject over the past years have fallen on deaf ears. That stakeholders in the industry have tolerated this circumstance for all of six years is incomprehensible.”
Nnabue added that whereas a state government like Akwa Ibom has since successfully launched its airline without any fanfare, “our country has woefully failed in its attempt to birth a national carrier after over 10 years of labour and colossal financial waste.
“The proposed aircraft leasing company, national aircraft Maintenance, Repair and Overhaul (MRO) facility and aerotropolis development, all flagship programmes of this federal administration, have all suffered paralysis, despite massive support from all stakeholders and informed Nigerians.
“They all followed the same path; bitten by the bug of hidden agenda, suffered the ailment of ill-motive to death, presently in the coffins of infidelity to the national cause, and waiting to be buried in the grave of onemanism.”
The union leader also described the airport concession as a travesty, allegedly aimed at draining the nation.
“The case of selective airport concessions is already well known. Our irreversible opposition to the unjustifiable programme is based on unassailable evidence of unwholesomeness and is well documented. We call on the National Assembly, the Federal Executive Council and the Presidency to work together to put a halt to the travesty called airports concession and save our dear Nation from further draining of the national treasury.”
Member of the Aviation Safety Round Table Initiative (ASRTI), Olumide Ohunayo, said the sector had retained a good measure of stability in six years; sustained safety standard and retained Category-One rating, got good approvals from the Federal Government and received palliative during devastating COVID-19.
Ohunayo said the only drawback was the non-implementation of the aviation roadmap components.
“I still hope that something can be done in the next two years. But in doing this, I hope the government can set aside pride and see how the economy can grow through aviation by allowing private initiatives to come into the road map. That it is a road map does not mean that the government can lead it. Just provide an enabling environment for private hands to make business aviation work. See how private airlines are coming up. All components of the road map can also attract investors if the government is not holding on to it as a pet project,” Ohunayo said.
WHILE investment drive is key to revving up the engine of growth, stakeholders have said that the Ministry of Industry, Trade and Investment failed in its mandate to support economic growth since 1999.
The Chairman, and Chief Executive Officer, the Pan African Development Corporation, Odilim Enwagbara, said that the downturn of the economy inflicted on the nation can be traced to poor economic policies put in place by unqualified persons in authority.
Enwagbara insisted that the Ministry of Industry, Trade and Investment has failed to be business-friendly to young entrepreneurs who would have possibly impacted their God-given skills on the economy.
He said: ‘’The Ministry of Industry, Trade and Investment has failed to pursue a nationalistic economic policy, trade diplomacy that would have protected Nigeria’s trade relations interest, it would have also been very concerned about the protection of intellectual property with a view of attracting more investors and entrepreneurs, the ministry should also be concerned with intellectual property outlook that could attract and engage more investors.’’
He explained that frantic efforts must be made for patents’ worthiness stressing, ‘’unfortunately, the Ministry’s patents are worthless, they are as good as written –off and this is sad’’.
He urged the government to imbibe the novel knowledge-based economy, adding that intellectual property is the new economic innovation all over the world, stressing, ‘’the Ministry must put in place equity investment banking of Nigeria’’ to provide seed money for small scale businesses.’’
He stressed that the ministry must be more business-friendly, ‘’It must invite all small scale business owners to come together with their technical notch that can promote rapid economic development.’’
Prof. Omo-Ogun Ajayi of the University of Calabar said the Ministry of Industry, trade and Investment has not done well in promoting investment inflows into the nation’s economy.
The Professor of agricultural economics noted: ‘’Everyone can see that businesses are closing down, many companies are even relocating to neighboring countries like Ghana, South Africa, all of which, has led to the loss of jobs for Nigerians, the Ministry of Trade and Investment must re-strategise to promote industrialisation to further boost the country’s foreign exchange earnings.”
However, in its latest document, the Ministry of Industry, Trade and Investment refuted claims of non-performance since 1999. In the document titled, ‘’Ministerial Performance Report on the Presidential Priority Projects,’’ the Minister of Industry, Trade and Investment, Otunba Richard Adeniyi Adebayo, listed the achievements of the ministry to include, the implementation of initiatives that have expanded facilities available to the Micro-Small and Medium Enterprises (MSMES) by improving access and cost of finance while providing shared facilities for their operations such as the N100 billion MSMEs intervention Fund approved for the Economic Sustainability Plan; Ease of Doing Business that has made Nigeria risen by 15 places in the World Bank’s doing business ranking in the last one year from 25 places since 2017; Trade Promotion and Facilitation where Nigeria signed on to the African Continental Free Trade Zones Area (AfCFTA) and the establishment of the National Action Committee for its implementation.
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