Growing the economy amid revenue crash
There is little doubt, even among unrepentant optimists, that the Nigerian economy is in dire strait in the past few months, particularly after the onset of the COVID-19 pandemic. While this has elicited great concern among the average citizens who are bearing the brunt of hyperinflation and massive job losses, there is little effect of any government policy being put in place to either reverse the dangerous trend or cushion the crushing effects on Nigerians. Surely the government can do more.
This sorry state of affairs cuts across virtually every segment of the Nigerian society from the federal and state governments to the private sector and households generally. Inflation, job losses, unemployment and underemployment are increasing. There is misery in the land. People now find it very difficult to eke out a living for themselves and their families. There is a great need for decisive action to reverse this ugly trend.
One reason given by government for the poor performance of the economy is the shortfall in revenues to service the economy. According to Zainab Ahmed, the Minister of Finance, Budget and National Planning, the main problem Nigeria is having is primarily that of revenue, hence their resort to domestic and foreign borrowing. The argument for more borrowing is based on an orchestrated narrative that infrastructural development will suffer if borrowing is discontinued. However, the supposed capital projects for which these borrowings are deployed are hardly visible, given the huge sums involved.
Undoubtedly, the Federal Government’s finances have been less than desirable in the past few years. In servicing official operations, virtually every government savings, namely the Excess Crude Account, Stabilisation Account and even the LNG Dividends have been accessed to address the revenue shortfall, all to no avail. At the Federal Accounts Allocation Committee (FAAC) meeting of March 2021, the amount available for sharing to the states, according to Zainab Ahmed, was short by about N50 billion, an amount which Godwin Obaseki, the Governor of Edo State, said was printed to make up for the desired figure, which may be about N650 billion monthly. This sadly is one ugly effect of the sharing, rather than productive structure of the Nigerian economy, as reflected in regular state government officials converging in Abuja every month for allocations. There is need to give serious thought to calls for a total restructuring of the economy such that the engine of growth is returned to the states or sub-national governments as it was in the First Republic, the basis on which the Nigerian nation was negotiated by the country’s founding fathers. Similarly, it’s about time that the states are allowed to own their mineral resources.
However, the assertion that poor revenue is the problem has been challenged by many stakeholders across the country. While it is obvious that the dwindling state of the earnings from crude oil, the major source of Nigeria’s foreign exchange earnings is a major contributory factor to the economic challenges, there is also the unquenchable appetite of this administration for frivolous borrowings with its consequence of an overbearing burden of servicing humongous and ever growing public debt. Government has also failed to address high cost of governance which is partly responsible for the country’s current challenge. Unfortunately, the President has been missing in action while the country depreciates. This poor economy has also truncated the 2021 growth projection of 3%, raising posers on how the growth targets can be achieved in the prevailing circumstances.
In the meantime, the wellbeing of the average Nigerian is being eroded continually. The private sector is having serious challenges coping with their operations and staying afloat that they are hardly creating new jobs while many businesses are shedding jobs. Unemployment rate has plummeted to about 33% of the labour force. This is scary, given the link this has with growing poverty in the land. Statistics from the National Bureau of Statistics indicate that only about 30 million Nigerians are in employment while another 15 million are considered underemployed, which is, working just less than 20 hours a day, struggling to fend for themselves and their families.
Indeed there is suffering in the land. With increased inflation at over 18%, many fixed income earners and the jobless are increasingly finding it difficult to survive in Nigeria. Food inflation is higher at about 23%. Added to the increasing spate of insecurity across the land, prices of various staples such as meat, oils, milk, bread, garri, yam and others have increased by about 50%, and are no longer within the reach of the ordinary Nigerian. The family economy in Nigeria is shrinking, the family needs urgent salvation.
Where’s government in all these? Certainly they have been merely reacting rather than being proactive to market forces, thus rendering official policies inadequate to relieve citizens of poverty and misery. Stakeholders, particularly MAN, NACCIMA and the organised private sector have expectedly called for more decisive action by government. Increasing poverty breeds crime and societal instability. Government needs to rise to the occasion and address this critical issue drastically. It is not enough for government to admit that Nigerians are facing hard times; it needs to do something to alleviate the sufferings.
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