State of the Nigerian economy in 2018
In its analysis, Yahoo! foreclosed a recession by November 2020 because economic indices made that impossible in spite of any disaster.
By the same token, let us by analysis chart a course for the Nigerian economy in the light of President Muhammadu Buhari’s performance, so far. Throughout the world, employment is crucial for the development of nations.
Which was why in the United States, creating policies to achieve full employment was vested in the Presidencial Council of Economic Advisers.
Thus, economists have established links between employment rate and economic growth and development. And these indices are those used in judging the greatness of leaders during their tenure.
It is because Trump has created so many jobs and maintained such a low unemployment rate that Americans are unlikely to abandon him in 2020. As at 2010, Nigeria’s unemployment rate was 5.9 percent. It rose steadily to 8.19 percent in 2015 at which point Buhari acceded to power.
By 2017, the unemployment rate had more than doubled, peaking at 23.10 percent. Moreover, underemployment had also jumped from 26.53 percent in 2015 to 43.3 percent in 2018.
In real terms, 20.9 million Nigerians are currently unemployed while 18.2 million are underemployed. This brings their total to 39.1 million people out of a labour force of 90.4 million.
The youth (45 percent of the population) accounts for the majority of the unemployed. Indeed, 44 million youth is active in the labour force. From this only 19.73 million, representing just 45 percent of the active youth labour population.
The other 55 percent are just trying to eke out a living, like me hustling with no full time employment.
Sadly, unemployment has intensified since 2015, fuelled by a weak economy with huge unrelenting population growth. But the problem isn’t about finding new jobs alone; the problem is that those in employment losing their jobs owing to factories closing shop.
While 1.5 million jobs were created in 2016, a total of 7.9 million Nigerians became unemployed between January 2016 and September 30, 2017. The import of this is clear, the Nigerian economy isn’t creating opportunities for employment and growth.
Certainly unemployment for the ballooning youth population is fuelling kidnapping, insurgency and armed robbery. Unfortunately, Nigeria’s lack of adequate electricity supply isn’t helping matters.
More than five years after the privatisation of power supply, there have been no noticeable change in electricity supply.
For me, I will place the blame on the federal government which has callously refused to allow full blown privatised transmission.
While government has privatised the generation of electricity and its distribution; she has refused to privatise transmission without any justifiable reasons whatsoever. Which leads me to believe that Nigeria’s messiah has not arrived. Those Nigerians with the right mindset have not come to power.
We’re holding government responsible for keeping us in darkness. This is because there is no where in the world where you ask a company to sell its products below cost price without compensation in the area of subsidy to enable it make profit.
A terminal subsidy in the power sector can only enhance power delivery as it will enable discos pay gencos for power generated.
The gencos too will be able to pay gas suppliers, enabling them to generate more power. This situation in the power sector mirrors the situation in our oil and gas industry. There, several dozen licences have been given to build refineries since 2003 but no refineries have been built.
The stall in the refinery building trade was caused by banks refusing to finance the building of new refineries without a proper pricing of refined petroleum. Meanwhile government refused to remove subsidy for political reasons.
In effect, for more than 20 years now government has been unable to provide refined petroleum. Nigeria thus continues to import petroleum consuming trillions of dollars in the process which could have built thousands of refineries.
As I see it, I don’t see the present crop of leaders to be able to solve the problem; in fact they are part of the problem.
Indeed, inadequate power supply is responsible for unemployment in the private sector. The multiplier effect of regular power supply includes: job creation through the establishment of startups, small and medium scale enterprises. Also, the improvement in the quality of life of the people cannot be ignored.
On the International Monetary Fund’s Executive Board 2019 report advising Nigeria on how to grow our economy, with the exception of subsidy removal, we should accept its advice. Moreover, we could remove subsidy within the next one year.
This is possible if Nigeria could sell off all existing government refineries, provide interest free lending funds for refinery builders, promising builders to remove subsidy immediately Nigerians could refine enough fuel for domestic use.
Buhari should sell 40 percent of the Nigerian National Petroleum Corporation to a foreign oil managing company; retain 30 percent and sell the remaining to the Nigerian people via the Stock Exchange.
Certainly, Buhari has been less reckless in spending and has reduced the free- for- all plundering which characterized 16 years of the Peoples Democratic Party’s administration.
This has enabled the Central Bank of Nigeria to build external reserves of $44.14 billion as at March 2019; had grown our Gross Domestic Product by 1.9 percent in 2018. There is still much work to be done by Buhari. He must lead the charge to build an enabling environment for foreign and domestic investments to thrive.
Like in the United States, Buhari should separate the economy from politics by creating a Council of Economic Advisers manned by professional economists, statisticians and demographers. He should also sell off all state owned enterprises and banks.