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Finance - October 1, 2020

Nigeria at 60: Is ‘Africa’s Biggest Economy’ Bankable?

Today, October 1, 2020, is Nigeria’s 60th Independence anniversary but the citizens are torn between celebrating and mourning. Even though the Nigerian government believes that it calls for celebration given what the country has been through – the civil war, daunting security challenges, religious and ethnic crisis – but a chunk of Nigerians insist that the President Muhammadu Buhari-led administration is delusional.

Most Nigerians, home and abroad, lost confidence in their country and its leadership a long time ago but their resentment has deepened in the last few years because of the zero political will by successive regimes to reposition the country for greatness. Rather, the elite class continues to plunder the commonwealth and only shared the crumbs with the rest of the population during election seasons, just to cajole the people they’ve systematically impoverished.

If we juxtapose some of Nigeria’s problems and its wins, it will be difficult to argue with the people who posit that Nigeria is a failed state and that celebrating its 60th Independence anniversary would be tantamount to celebrating servitude.

Let’s even try.

At 60, Nigeria is still battling its historic unstable electricity supply despite billions of dollars that have been spent by successive administrations to fix the problem; Nigeria imports refined crude oil as its refineries are in comatose, the security of lives and property is not guaranteed – Boko Haram terrorists, Fulani-herdsmen and bandits are unstoppable – the economy is in shambles, the list is inexhaustible.

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To be clear, Nigeria’s economic failure was not caused by the COVID-19 pandemic, the situation was already dire pre-COVID era. President Buhari’s Independence Day speech hinging Nigeria’s economic crisis solely on the pandemic may be misleading.

Screenshot of President Muhammadu Buhari’s Independence Day speech (in part)

Nigeria’s biggest problem is institutional corruption enabled by the political class, and no government has been able to tame the monster. The Human Environment had reported that Nigeria lost $600 to corrupt practices between 1960 and 2019. And according to PricewaterhouseCoopers (PwC), the internationally revered auditing firm, Nigeria could lose up to 37 percent of its GDP by 2030.

The monumental corruption perpetrated in the corridors of power sunk Nigeria into poverty and birthed a cocktail of other problems – infrastructural, social, religious and ethnic types. In 2018, Nigeria took the baton from India to become the extreme poverty capital of the world, with 80 million Nigerians living below the threshold of $1.90 per day. The World Poverty Clock says the number has grown to 105 million as of mid-2020.

As of 1960, Nigeria’s unemployment rate was 6.6 percent but as the population increased and domestic manufacturing that employed thousands crashed, Nigeria’s unemployment number hit the roof. For example, the textile industry employed 60,000 Nigerians in 1970, 165,000 in 1980, and 250,000 in 1985, but by 2015, it could only employ just 5,000 workers as the country has become dependent on importation.

Despite the ton of issues highlighted above, government officials would still brag about Nigeria being Africa’s largest economy, the unbroken 21-year long Fourth Republic and the negotiated Civil War. Meanwhile, Singapore had a per capita income of $428 in 1960, but had $65,233 in 2019, contrary to Nigeria’s per capita income of $92.96 in 1960 but it fell to $2,028 in 2018.

States men, including Nobel Laureate, Prof. Wole Soyinka, Former Presidents, Goodluck Jonathan and Olusegun Obasanjo, have said the only way to start the rebuilding of Nigeria and to make it viable again is to restructure the entity. They argued that a diverse and multi-ethnic population like Nigeria can only thrive as a federation and not under a unitary style of governance.

Adopting the federalism system would give every state autonomy over its resources and give room for all the 36 states to be competitive with generating internal revenue instead of the current system in which they’re being funded by the central government.

In its current state, experts say Nigeria is not bankable, which is evident in the way foreign and local investors are closing shops, and others who are yet to commit their funds are reluctant. Some months back, Africa’s largest supermarket chain, Shoprite, had divested its business interests in Nigeria citing profitability issues. Mr. Price, Truworth, also South African-owned retailers equally left Nigeria for the same reasons.

In the same vein, iRoko TV, the On-demand movie streaming platform, owned by Nigerian businessman Jason Njoku, recently announced that it was de-prioritising its investment in Nigeria citing harsh business environment among other issues. The company said it would focus on the international markets where larger part of its revenue comes from.


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