The issue of diversification of the Nigerian economy can no longer be put away to a later day. Our recent experience drives home The Point that we do not have a choice but diversify, if we want to move forward as a country. This is because it is no longer realistic to live in a monolithic economy. Oil as a single resource for the country is no longer feasible.
Recently, I attended a made-in-Nigeria fair exhibition and the experience, speaking with some of the exhibitors, spotlighted the challenges Nigerian SMEs are facing with little or no institutional support. This trade fair also opened my eyes to the very potential that we are laying waste due to our over reliance on oil, which has left us with a weak economy base.
As I had mentioned, I asked one of the exhibitors, a young man in his 30s, who is into shoemaking, he had lined up some handmade shoes (that in my view could compete favourably in any market, but for the material used), what his greatest challenges have been in growing his business. He told me that the challenges he faces are huge and affect most of them in the industry. According to him, over 2,000 of his colleagues have closed shop recently as a result.
These challenges, according to him, include the unavailability of foreign exchange to buy some of the raw materials they use, leading to very high cost of these raw materials; and lack of loans. He said to me that the banks are unwilling to lend to them, unless they want to trade and where these loans are available, the terms are simply onerous for business to survive. His other complaints included constant power failure, tax rate and the preference of Nigerians for foreign products. According to him, he has been trying to get a loan that makes sense for a small new business, like his for four years now to expand his business but has continued to meet brick walls.
When we took over the leadership of the Senate, we were immediately confronted with the slowing global economy and how the massive fall in the price of oil in the international market was beginning to take its toll on economies like ours with heavy reliance on oil. We are already witnesses to the significant hit our economy has been taking ever since.
We knew by the way things were going that we could not afford to act as if we were living in an usual time. No. We knew immediately that we needed to do things differently, methodically and deliberately. In this regard, the Senate immediately began the process of setting out an economic intervention agenda for itself. But first, we started by engaging the private sector, including MSMEs, large enterprises, consultants, economists, government agencies and key stakeholders, to brainstorm on what we need to do to move Nigeria forward. Today, we have a legislative agenda that is significantly modeled, based on research findings and demonstrable consensus. An agenda, which was heavily influenced by the report of this agreement, the first of its kind, is significantly focused on diversification and economic reform. The findings of our engagements reassured us that diversification was the only way to move our economy forward, but this must start from a complete overhaul of the regulatory, institutional and legal frameworks on the which our economy has been running for over four decades now.
We will pursue relentlessly over the next three years the capacity of the National Assembly to play its role as a comanager of the economy with the executive. We intend to do this collaboratively, not disruptively
A little historical perspective will be important at this time. It is important to note that in the early 60s, Nigeria had a much diversified economy and in this period of our history, our development was most inclusive and steady. Our industry flourished because this diversification was anchored on a solid institutional and legal base. The bright outcome of this era and the rich and overwhelming economic indicators all point to show that all we need to do is, provide the necessary incentives and chose the right cocktail of policy and make the right legislative choice that will help us lay the basic foundation necessary to assist our economic diversification.
For the Senate, diversification begins and ends with the private sector. Empowering the private sector to unleash innovative power, enterprise and mobilise capital for infrastructure development, huge enterprise funding, SME financing, and reduce the cost of doing business are the overarching objectives that are interwoven in our legislative agenda. If the legislative proposals we have outlined as part of our agenda are passed and signed into law, we will see significant transformation of the entire business landscape in the country. This will be evident in the reduction in the cost of loans to SMEs, ease of raising cash for businesses, improvement in the means of transportation of goods and services, reduction in logistical cost, including the cost of contracting. We believe there will enough validation of and growth in online and electronic transactions. Infrastructure financing will become easier to attain and innovation, competition and merit will become the template on which market size will be based.
All these will be delivered when we pass such bills as the Nigerian Railway Bill, Federal Competition and Consumer Protection Bill, the Public procurement Act Amendment Bill, the Bankruptcy and Insolvency Act Amendment Bill, the Secure Transactions in Movable Assets Bill, the Independent Warehouse Receipt Bill, the Road Reform Bill, the Agricultural Credit Guarantee Bill, the Companies and Allied Matters Act Amendment Bill, the Investment and Security Act Amendment Bill, the National Payment System Bill, the National Development Bank of Nigeria Bill, the National Transport Commission Bill, the Nigerian Ports and Harbour Authority Bill, the Federal Mortgage Institutions Act Amendment Bill and Credit Bureau and Referencing Bill, are some of the flagship bills that we believe will form the compendium on which we can begin to lay the foundation for a new Nigerian economy. Most of these bills have been passed now. We are also reviewing a whole lot of Acts as well.
It is important for us to seize on the moment of the challenge we face today to act in unison and tread a new path. A new path that we believe will lead to more investment in the country. I am hopeful that we will stay the course of this challenge and use its outcome to build a more virile Nigerian economy.
The Senate legislative agenda is developed with a view to expanding the economic space for business; ensure private sector involvement in infrastructure development, technology integration and the modernisation of the regulatory environment for ease of doing business and the protection of consumers. The implication of the foregoing is at the heart of the diversification drive and underpins the Senate’s determination to provide the legal architectural base on which diversification can be developed and sustained.
Ladies and gentlemen, while we may focus so much on the direct impact of oil on the slowing economy, it will not be a complete narrative, unless we realise that there are other factors that have contributed enormously to the slowing down of our growth and may have contributed to deepening the recession. These include: the harsh economic environment, obsolete laws, weak governance framework affecting public accountability and a justice and regulatory systems that are bogged down by obsolete laws and practices.
In other words, Nigeria is running 21st century economic plan on the wheels of a 20th century legal, institutional and regulatory regime. It is time to reorder the status quo. Therefore, the Senate legislative agenda is designed leaning towards dealing with these problems to expand economic opportunities for our people in a manner that can deliver inclusive growth opportunities while freeing up trapped informal and formal private capital in the system. This is why the following measures is being pursued by the Senate:
*removal of investment inhibitors
*securing investment and private sector equity
*innovation and credit
*improving business regulation climate
We believe in the Senate that without adequate legal, institutional and regulatory reforms, the issue of sustainable diversification will remain a pipe dream.
The expectations of our people are high, our expectations of ourselves are even higher. We have the will and we have the zeal. What we ask for is the support of all Nigerians to go with us all the way. This is time to create the necessary structures for a new Nigeria to emerge. Let me use this opportunity to call upon our brothers and sisters wherever they may be in the world to come join us, as we fashion out a new architecture on which our new economy will stand for our generation and those coming behind us.
We will pursue relentlessly over the next three years the capacity of the National Assembly to play its role as a co-manager of the economy with the executive. We intend to do this collaboratively, not disruptively.
I thank you for your kind attention.
Senator (Dr) Saraki, President of the Nigerian Senate, presented this address at the public presentation of The Point Newspaper and first Annual Lecture on Economic Regeneration, themed: ‘What is the Economics of Change?’