AMONG the many contending external shocks, as Nigerians prepare for another general election in 2015, are the sliding global oil prices and the net effect on fiscal and external buffers culminating on an extensive pressure on Nigeria’s domestic currency. These externally induced events may undermine Nigeria’s fiscal capacity to steer the nation away from retardation and endemic macro failure in the emerging multi-polar world. Again, the rapid depletion of Nigeria’s foreign reserves and a regime of negative fiscal or external buffers leave the domestic economy vulnerable to other contingent external shocks. The preponderance of non-economic issues (especially, the insurgency and other politically motivated violence) may severely undermine domestic output and heighten inflation to the detriment of the already weak economic structures.

The effects of these may severely affect the veracity of the nation’s on-going political process to initiate enduring political and economic institutions that support egalitarianism. Egalitarian society is anchored on efficient and all-inclusive institutions, which permits an even spread of the nation’s commonwealth. Nigeria’s evolving political culture may indeed face a myriad of complex economic and non-economic problems due to past economic policy failures. The most urgent problem is the task of establishing an appropriate economic institution that would guarantee macro-economic stability and thus avert domestic economic and financial implosion following the elections. The devaluation of Nigeria’s non-convertible currency and double digit inflation may add to the economy’s immediate challenges, which if untamed, might reverberate into a vicious cycle of domestic financial implosion, circumscribed in a severe classic and structural unemployment, and capital flight.

The perspective of Nigeria’s current travails and her capacity to manoeuvre them in the face of unwinding global uncertainties are worsened by declining foreign investments, especially, in the oil sub-sector. Government’s apathy and legislative paralysis in endorsing a highly debated and important Petroleum Industry Bill have skewed the pendulum against foreign interests in the oil sector.

A major immediate concern is that already the ripple effects of these nascent economic events have begun to creep into the structures of the financial markets, thereby increasing market risks and dousing investments. A synergy effect of increased market risks juxtaposed within a benign external environment and domestic economic uncertainties may have found expressions in the prevailing cold feelings and investment apathy by both foreign and local investors. At the moment, major financial market aggregates such as the All Share Index (ASI), market capitalisation, EPS, and interest rate are trending towards a trajectory of persistent and systematic decline. Also, banks and other financial institutions are currently undaunted with doubtful or outright bad debts as a result of hedging activities and credit defaults. These developments are already manifesting in Bank’s aggregate performance in terms of EPS and unstable market prices of banks’ products.

Therefore, the on-going political process must form the basis of a new national entity geared towards a proactive strategic approach that focuses on how to weave a future Nigerian entity into a great nation. The current oil glut is an important second-time wake-up call for Nigeria after the 1985 episode. The major challenge in the present Millennium is for nations already trapped in the quagmire of poverty and underdevelopment to rise above their pedigrees and evolve a proactive strategic approach towards a sustained development. Nigerian leaders must be worried about fiscal deficits and domestic imbalances, which in 1985, landed the nations into the petrifying IMF and World Bank Structural Adjustment Programme.

Today’s emerging multi-polar world with emphasis on regional hegemony and group survival douses any hope of reliance on foreign loans, credits or hand-outs as a vent for assuaging domestic economic implosions. The era of IMF or World Bank intervention under the guise of deregulation is far beyond the challenges and realities of the current decades. Therefore, any national debate whether driven by political exigencies or any other consideration but devoid of proactive strategic design may end up accelerating the national level of disorderliness, which is akin to promoting anarchy and domestic implosion.

Nigeria’s recent posturing as Africa’s growth champion can only be sustained by the degree of the nation’s political turnaround. The impressive economic performance of Nigeria in the decade of the 2000s based on rebased per capita GDP was of no consequence to the nation’s rating in the world as a poor country. The nation’s standard of living and poverty headcount are still at a very scandalous level. Ironically Nigeria’s short-lived economic boom in the decade of the 2000s based on an adjusted per capita GDP growth rate of 6.1 per cent was anchored on an elusive global commodity market. Sustaining the momentum for growth in a less benign external environment requires a proactive and strategic model by political leaders. The growth was driven by a combination of two critical junctures – surge in global commodity prices driven by growth in Chinese domestic economy, and the huge debt reliefs and write-downs by some western creditors.
Also increase in aggregate domestic consumption and huge capital inflows from FDI aided in that interim domestic growth.

The trend was short-lived due to inadequate all-inclusive institutions. The burden of establishing virile democratic institutions to ensure that the future of Nigeria is not anchored on an unpredictable volatile external markets hinges upon the intensity and relevance of on-going political processes. On-going political processes in Nigeria must regard current economic and non-economic issues as important national “Critical Junctures” vital to reconstitute, reconstruct or modify existing political and economic institutions. Indeed, 2015 must be seen from all perspectives as a vital turning point in the nation’s long and arduous journey towards egalitarianism and stability.

Throughout history, major institutional changes occurred as a result of the interaction between existing institutions and “Critical Junctures.” Critical junctures are simply major events in the life of any nation that tends to disrupt existing political and economic balance in seeking congruence with citizen’s desires and expectations.  Today’s events in Nigeria that constitute  critical junctures include the volatile global commodity market, the emerging multi-polar world, fiscal deficits, rising youthful political exuberance, Islamic fundamentalism, increasing wave of pandemic diseases, etc. Each of these “Junctures” presents an array of opportunities to alter, modify existing institutions or establish new platforms to ensure a compatible political economy necessary for greatness. Politicians from all shades must learn how to convert “Critical Junctures,” to opportunities to achieve a great Nigerian nation of our dream.

Politicians should be aware that sustained economic growth and equitable distribution of national wealth, egalitarianism, reduction in poverty are critical elements of inclusive institutions. Such an inclusive platform should provide stability and growth, rule of law, innovation and improved standard of living necessary to maximise the gains of Nigeria’s democratic institutions.

• Dr. Adimmadu is a lecturer at the Federal University of
Technology, Owerri.