2022 economic outlook: Prioritisation for a desirable outcome
The possible outlook of the Nigerian economy in 2022 has elicited comments from various stakeholders over the past few weeks. There has been this looming apprehension of the great challenges to the survival of the ordinary Nigerian due to the likely rough time the populace may confront in the course of the year. This has been predicated on recent government policy pronouncements through the federal budget document and various statements by political office holders, particularly Zainab Ahmed, the Minister of Finance on the likelihood of increased taxes and removal of the subsidy on refined petroleum products. In 2022, Government plans to run a budget deficit of over N6 trillion and thus continue with its unbridled borrowing spree. This has indeed sent shivers in the spine of many Nigerians who thus feel that 2022 may indeed be a tough year. This is notwithstanding the effects of the ravaging Omicron variant of the COVID-19 pandemic in the global economy with the attendant uncertainty it has brought to the global economy, with the Nigerian economy not exempted from these. Hence, in order to generate a desirable outcome in 2022, government needs to develop a strategy for coping with these factors both the exogenous and otherwise, in order to chart a sustainable path for the growth and development of the Nigerian economy. Thus, there are a number of critical steps governments at both the federal and state levels would need to take to manage the implied uncertainties in 2022.
First, government needs to stop official profligacy or in other words, its reckless extravagance or wastefulness in the use of resources. A government that intends to borrow over N5 trillion to partly finance its huge budget deficit, as implied in the 2022 budget document, should not be seen as wasteful at all. Though the electioneering season appears to have started, government should resist the strong temptation to divert public resources to satisfy private ends, particularly that of political office holders. This is not the year for profligacy in governance. In fact, at no time is profligacy good in economic governance. The Muhammadu Buhari administration should cut down on the cost of governance. For example, the bogus security votes at both the state and federal levels should be drastically trimmed, except when absolutely necessary under obvious security threats. The executive as well as the legislative arms of government have paid lip service to this issue of cutting the cost of governance. This is the time to walk the talk.
Second, public-interest projects should be the focus of government in 2022. The country cannot afford the luxury of white elephant projects with its scarce resources. For many Nigerians, the borrowings already procured cannot in all honesty be clearly linked to very clear and visible public projects which have the capacity to generate income to service the loans. If loans are project-tied, that would make it easier for the populace to identify with government in its venture of continuous borrowing. This is particularly so when the government is contemplating removing the controversial subsidy on refined petroleum products and when the labour unions are poised for a fight on this issue.
Third, there is the need for the country to consider the restructuring of the country for a better performance of the economy. Currently, the country is primarily operating a “sharing economy” and not a productive one. The usual monthly Federal Accounts Allocation Committee (FAAC) where sharing is done regularly may not be the way forward for the Nigerian economy. The Nigerian society needs to operate on a fiscal federalism arrangement, as was applicable in the First Republic. The year 2022 may be a good time to revive this seemingly contentious issue, particularly since the ruling party had set this in motion years ago, through the constitution of the Governor El-Rufai-led Committee on restructuring. This would definitely help to diversify sources of income for the government. Even without any serious talk of restructuring the country, the focus should be on ensuring that the economy is truly diversified in generating other sources of income apart from crude oil.
Other areas of focus for government in 2022 include the need to intensify the provision of security for the safety of lives and property in the country, as well as the enhancement of economic transactions across the length and breadth of the country. Without adequate security, 2022 will be worse than 2021 in the performance of the economy particularly with the 2023 elections just months away. Businesses need an environment conducive for their operations as well as the inflow of the much needed foreign capital into the country. The Muhammadu Buhari administration is well advised to consider these issues if the outlook for 2022 would be anything to be desired.