Follow Us on Google
The World Bank and the World Trade Organisation (WTO) have advised the federal government to effectively and efficiently manage public spending in the interest of the country and the people. The World Bank’s country director in Nigeria, Shubham Chaudhuri, said the financial institution has commenced high-level discussions with the government on how to chart a new course for the economy.
He disclosed this when he led a delegation of the bank on a visit to the Minister of Budget and Economic Planning, Atiku Bagudu. Similarly, the director-general of WTO, Dr. Ngozi Okonjo-Iweala, has enjoined the federal government’s policymakers not to neglect open trade, saying that doing so will cause price instability, inflationary pressures, weaker growth prospects and poor global competitiveness.
Okonjo-Iweala gave the advice at the recent Jackson Hole Economic Symposium hosted by the United States’ Federal Reserve Bank of Kansas City. She noted that predictable trade has become a source of disinflationary pressure, whereas fragmentation of trade into rival blocs has led to costly consequences.
The neglect of open trade and predictable trade will cause diminished competition and greater price volatility. Nigeria is currently rated below average, at 48 per cent by the World Economic Forum (WEF) on global trade competitiveness. The country’s economic prospects have also been downgraded by Standard and Poor’s and Fitch, two renowned global rating agencies.
The World Bank and the International Monetary Fund (IMF) have also downgraded Nigeria’s economic outlook for 2023 to about 2 per cent. The timely advice from the World Bank and WTO boss should be heeded. That is the best way to resolve Nigeria’s economic crisis. With over 90 per cent of national revenue spent on debt servicing, Nigeria’s economy is at a crossroads unless government implements measures that will revive it.
There is need for good governance, incentives for private investments and a drastic cut in the cost of governance. For the economy to recover, government should create more jobs for women and youths. Let the government establish more economic empowerment programmes for the poor. So far, the economic reforms by the current administration have not been satisfactory. They are merely scratching the surface of the socioeconomic challenges facing the country.
For example, the government’s palliative measures can neither improve the welfare of the people nor stimulate economic growth. As at last year, the National Bureau of Statistics (NBS) revealed that 133 million Nigerians were multi-dimensionally poor. The figure may have increased following the hasty removal of fuel subsidy.
Nigeria needs development assistance projects with components of loans and grants that will be judiciously invested in productive areas of the economy. Good enough, the government has heeded the advice of the Debt Management Office (DMO) and halted further borrowing. The national debt is over N49trillion, excluding the N23trillion Ways and Means from the CBN by the immediate past administration of Muhammadu Buhari.
We believe that prudent management of resources is key to reviving the economy. Nigeria’s economy needs comprehensive reforms and diversification that will boost revenue generation. Emphasis should be placed on agriculture and food security, as well as the development of other non-oil sectors. Figures from the NBS show that the non-oil sector declined by 11.8 per cent to $1.72billion in the first quarter (Q1) of 2023. Also, trade costs for agricultural products, manufactured goods and services decreased by 12 per cent over the past few years with increased digitalisation and trade in services potentially becoming a powerful disinflationary force.
Besides, falling trade costs for goods mean that globalisation can lead to increased growth, efficiency that will create economic opportunities, while also contributing to price moderation. Nigeria needs a vibrant policy framework anchored on a strong and effective rules-based multilateral trading system. Altogether, the government should put detailed measures in place to address the challenges that affect business operations.
The ease of doing business in Nigeria has not been encouraging. More work needs to be done to ensure good policies that will stimulate economic growth and improve the welfare and security of the people. Small and Medium Enterprises (SMEs) and the power sector should be given generous stimulus package with low interest rate. This is the right time to chart a new course for the economy. To achieve the fiscal savings of approximately N2trillion in 2023 and accelerate growth, the government should strive to increase non-oil revenue, reduce inflation and give social protection to the poor and the vulnerable.
