By Ismail Sirajo
AS Nigerians across different cities of the country eagerly look up to the APC-led federal government of President Muhammad Buhari to revamp the country’s economy and stimulate growth, there is no doubt that the government would require more time if we will tell ourselves the honest truth. But more importantly, a number of efforts would also have to be make to bring about the much-needed turn-around of Nigeria’s dwindling economy.
The current state of our economy is not helped by the fact that oil prices crumbled and forex inflow went south as a result. Indeed, while monthly forex inflow into the country hovers around $1 billion, the monthly forex demand in the country, according to figures from the Central Bank of Nigeria (CBN), is around $3.6 bn. This puts enormous pressure on Nigeria’s foreign reserves, which have depleted by 25% in the last 18 months.
Of course, the gravity of the situation we have in our hands is illustrated by the fact that we risk complete depletion and total disappearance of the country’s FX reserves if things are not well-managed. That we have for long been an import-dependent country only made the situation further complicated. And in this, lies the sense in the CBN’s decision stopping forex supply for the importation of some items, 41 of them, which it believes can be locally produced by Nigerians companies. Some of these items include soap and cosmetics, rice, Indian incense and toothpicks, tomatoes/tomato pastes, wheelbarrows, head pans, and roofing sheets, among others.
Although the apex bank did not create the present FX challenge since the factors driving the crunch are outside of the Bank’s and control, however, it has, in line with its statutory responsibilities, been battling to stabilise the Naira and Nigeria’s foreign reserves. It is a difficult battle and there are no easy or painless ways out. This really is not the best of time to be CBN Governor. And that is why I seriously emparthise with Governor Godwin Emefiele.
Some of the measures put in place by CBN have also come at some costs. But I believe doing nothing could not have been an option. At the same time, some of the alternative policy options being prescribed by critics of the bank, such as devaluation, are not cost-free and do not necessarily address what is essentially a supply problem.
Meanwhile, for those who may not understand, the CBN couldn’t have waited until the cabinet was sworn in last October by President Buhari before doing what it ought to do in the best interest of the country. The apex bank, with the statutory responsibility of managing the key rates – forex, inflation, and interest – had to act fast especially in the absence of fiscal policy support to address the imbalance in the country’s international trade. And this was even aside its efforts at providing forex to Nigerian manufacturers who need to import machinery and intermediate goods to remain in business. This was to encourage “Made-in-Nigeria” products and services, a campaign which is already catching on well among the populace and gaining traction.
However, despite the CBN’s seeming good intentions to revamp the economy, I doubt if this can achieve the desired result for the economy if not complemented by other initiatives. I think what we currently have on our hands now can be likened to the case of a student who has an examination to write before he graduates but chooses to focus all his attention and energies on one particular course only while neglecting the others. Even if he scores an ‘A’ in it, he will still most likely come out a failure since he had a poor preparation for the other courses. That is why I think we are not realistic if we assume that it is only the CBN governor, Godwin Emefiele and his team who will successfully fix the challenges confronting our economy.
We all need to help the CBN help our country’s economy. This is because all that need to be done are clearly beyond the scope of the mandate of the apex bank. If we will be realistic, ministries, departments and other agencies of government also have critical roles to play. And one of these roles, is using tariffs to discourage the importation of foreign products Nigerian businesses can produce here at home. This must be done to protect our own local manufacturing industries. And this is where the Ministry of Finance comes in. As a matter of urgency, I think the Finance Minister, Kemi Adeosun, must put in place proactive fiscal policies that will go a long way in encouraging the local industry and discouraging importation through the appropriate tariffs.
Another is the need to enforce industrial policies that will help complement the CBN’s efforts; and this is where the Ministry of Trade and Investment also comes in. Even the Ministry of Power, Works and Housing, under the former Lagos state governor, Babatunde Fashola, must work tirelessly to improve power, expand road and other critical infrastructure in the country towards boosting local productivity and helping Nigerian industries to grow. This would be a major step forward for Nigeria. Moreover, the billions of naira Nigerian companies and private businesses spend on diesel and running their generators are funds which could have been put into better use. If these are sorted out, Nigerian companies would be able to compete at a higher level with their foreign counterparts. But when imported goods appear to be cheaper than local-manufactured products, we’re not helping our case but only worsening the situation.
Also helpful to Nigeria’s economy is the need for the Customs to tighten the country’s porous borders so that banned goods are no longer smuggled into the country thereby defeating the Buy-Made-in-Nigeria campaign and losing the gains being made on the monetary side. The reforms being carried out by the no-nonsense Col. Hammed Ali (rtd), Comptroller-General of Customs, need to be stepped up. Such types of good works are needed so that the Customs can perform its job more effectively at our country’s borders.
Overall, the federal government must urgently roll out incentives to encourage local manufacturing, not just for Nigerian companies but even foreign investors who want to set up their factories and production plants in the country.
This would boost local manufacturing and so must not be delayed. As a country, this is also the right time for us to engage ourselves in serious introspection and take concrete steps at finally diversifying Nigeria’s economy through agriculture, manufacturing, tourism, and entertainment among others. We have mouthed this for too long. Now is the time to take action. Further procrastination would spell doom for us.
•Sirajo, an agricultural expert, writes from Lagos.