Addressing Nigeria’s current economic woes holistically

The recent surge in cement prices across Nigeria has evolved into a critical and far-reaching issue, casting a shadow over both consumers and the construction industry alike. With the unprecedented escalation in the cost of cement, it is crucial to recognise that this crisis serves as a symptom of broader systemic challenges plaguing Nigeria’s economy.

The factors driving the relentless increase in cement prices are multifaceted. While supporting local cement manufacturers is crucial, the current ban on imports has inadvertently worsened the situation, exacerbating an already unsustainable price hike that is wreaking havoc across various sectors of the economy.

This crisis goes beyond the realm of construction and directly impacts consumers who are burdened by the soaring costs. It also poses significant challenges to the construction industry, hindering progress on projects and stalling developmental initiatives. As we grapple with these challenges, it becomes imperative to recognise that addressing the surge in cement prices goes beyond the confines of the construction sector. It is a holistic issue that requires the implementation of comprehensive economic strategies and concerted collaborative efforts to alleviate its impact on diverse aspects of Nigeria’s economy.

To address this pressing issue, the call to lift the ban on cement importation rings loud and clear. Doing so would inject much-needed relief into the market by bolstering supply and fostering healthy competition, ultimately driving prices down to more reasonable levels.

However, it is crucial to recognise that lifting the ban on cement importation is not a standalone solution; it should be integrated into a more comprehensive and strategic approach to address the broader economic challenges facing Nigeria. A holistic strategy may involve policy reforms, trade initiatives, and long-term planning to fortify the economic foundation and ensure sustained stability.

In addition to addressing the cement crisis, it is imperative that the Tinubu administration takes immediate action to review the removal of fuel subsidies. The abrupt removal of subsidies has inflicted undue hardship on the Nigerian populace, exacerbating their already dire economic circumstances. Recognising the gravity of this situation, a thoughtful and strategic response is warranted. Rather than opting for an abrupt removal of fuel subsidies, a phased approach is recommended.

This phased strategy allows for a gradual transition, affording the government the opportunity to introduce concrete alternative plans that can effectively mitigate the impact on ordinary Nigerians. Implementing such a phased approach entails acknowledging the potential hardships faced by citizens.

Setting up a committee to thoroughly review the fuel subsidy removal and consider reinstating it temporarily while alternative measures are put in place is paramount. This committee should outline a one-year plan that includes the rehabilitation of refineries to ensure self-sufficiency in fuel production.

The proposed committee should be tasked with outlining a comprehensive one-year plan that encompasses various critical aspects. One focal point is the rehabilitation of existing refineries.

By prioritising the restoration of these facilities, the committee aims to usher in an era of self-sufficiency in fuel production for Nigeria. This strategic move addresses the root cause of the subsidy-related challenges—the nation’s dependence on expensive fuel imports. The revival of refineries aligns with a long-term vision to reduce reliance on external sources and costly imports.

Among the problems exist the continuous devaluation of the Naira. It is crucial for the government to acknowledge the failures of the current Naira exchange mechanism. The adoption of a floating Naira, while initially intended to bring flexibility, has proven to be ineffective in achieving its desired outcomes.

Instead of stabilising the economy, the floating exchange rate has contributed to rampant inflation, further exacerbating the already challenging economic conditions faced by ordinary Nigerians. The current volatility and uncertainty surrounding the currency undermine investor confidence, hinder economic planning, and contribute to a lack of trust in the financial system.

A paradigm shift in the exchange rate strategy is urgently needed to restore confidence in the currency and provide a stable foundation for economic growth. A revised exchange rate strategy should prioritise stability and consistency to provide a reliable foundation for economic growth. This may involve reassessing the mechanisms governing the Naira’s value, adopting more robust policies, and implementing measures to counter inflationary pressures.

Acquiring the U.S. dollar is increasingly challenging. One of the primary factors contributing to the depreciation of the Naira is the scarcity of the dollar. In simple economic terms, the demand for the dollar surpasses its supply, resulting in its scarcity, and the limited available reserves are allocated to the highest bidder.

One possible alternative to the floating Naira is to peg the currency to a basket of stable international currencies, providing greater stability and predictability in exchange rates.

Additionally, implementing stricter controls on capital flows and speculative trading can help mitigate currency volatility and safeguard the purchasing power of ordinary Nigerians. As the government disburses more funds, particularly through FAAC, there is a consistent weakening of the naira against the dollar. Notably, from June 2023 to January 2024, the exchange rate at the black market has steadily risen, reflecting potential challenges in managing and stabilising the currency.

The increasing disparity between the disbursement of funds and the depreciating value of the naira suggests a need for scrutiny and strategic interventions to address the underlying issues contributing to this trend.

Furthermore, it’s essential for the Tinubu led administration to prioritise infrastructure development and investment in key sectors such as agriculture, manufacturing, and technology. Diversifying the economy and decreasing dependency on oil revenue are essential steps to forge a more resilient and sustainable economic foundation for Nigeria. This approach not only mitigates economic vulnerabilities but also positions the nation for long-term growth and stability across diverse sectors.

Fast-tracking infrastructure projects, strategic investments, and collaboration with the private sector are integral components of a holistic approach to address Nigeria’s economic challenges. These reforms not only create immediate economic stimuli but also lay the groundwork for sustained growth, job creation, and enhanced economic resilience.

Failure to address these critical issues promptly could have dire consequences for Nigeria’s stability and prosperity. The looming specter of anarchy within the next six months is a stark reminder of the urgency with which these reforms must be implemented.

One urgent reform involves the introduction of targeted social welfare programmes designed to alleviate the impact of subsidy removal, particularly on vulnerable populations. Targeted social welfare programmes should be tailored to provide financial assistance, job support, and essential services to those adversely affected by the removal of subsidies.

By identifying and prioritising vulnerable populations, the government can ensure that its interventions are effective and reach those who need them the most. This approach not only mitigates the immediate impact of economic reforms but also contributes to social stability and inclusivity, ensuring policies are not only effective but also equitable, addressing the needs of various segments of society.

The Tinubu led administration must demonstrate decisive leadership by tackling Nigeria’s economic challenges holistically. This entails lifting the ban on cement importation, reviewing the removal of fuel subsidies, overhauling the Naira exchange mechanism, and implementing broader structural reforms.

To successfully work in a complex country like Nigeria’s economy, the president must be blind to tribe, religion, and party affiliations. Failure to act swiftly and decisively risks plunging Nigeria into further turmoil. Now is the time for bold, pragmatic action to secure a brighter future for all Nigerians.

Osilama, V P, North Central, REDAN; Chairman/CEO. Nuel Osilama Global, wrote from Abuja.