Whither the Nigerian economic direction?



It is not in doubt that Nigeria is in crucial economic times. Any keen observer must therefore be concerned about the prospects of Lagos State which controls the largest share of the Nigerian economy. Lagos is, in many ways, the nation’s gateway to global business.

On a general note, the economic situation in the country has clearly worsened over the last few years for a variety of reasons. First is the decline in crude oil prices from $120 per barrel in June 2014 to the current $48 per barrel, which invariably has exposed the weakened structure of the Nigerian economy. The violence and acts of terror in the North-East part of Nigeria has also created an unprecedented instability, without forgetting the concerns relating to the Ebola outbreak in West Africa, which also added to the uncertainty in the country.

This current downturn just adds to the existing problems of inadequate power supply, poor infrastructure, more than half of the population living in poverty and significant levels of unemployment. The effects of the crisis are being felt at all levels of society but as is often the case, it is the poorest that are particularly vulnerable.

It is pertinent to stress that while it is not the role of government to create employment directly – especially in a country like Nigeria with a small tax base and reduced oil receipts, there is still much that the government can do.

The first important consideration, therefore, is the need to make Nigeria more competitive. The cost of doing business in Nigeria is high. We often think we are a low cost economy because wages are low but the truth is that businesses here face very high costs. Equally important is the need to do something about the ease of doing business in Nigeria. The World Bank ranks Nigeria at 170th in its index. This is not good enough for a country with our level of ambition and expectation.

This is another factor weakening our competitiveness. In some crucial areas we are even worse – for example, on registration of property, we rank 185th. This is one of a number of areas where Lagos must revolutionise the current position through an ambitious investment in a new digital land administration system.

And then there is the issue of security. The perception of our country is tarnished by terrorist attacks and violent crimes. The public sector has a non-negotiable duty to protect its people and government must not tolerate unacceptable behaviour.

Yet, we can glean from some foreign investors that Nigeria appears to be adopting an attitude which is too insular and protectionist. But opinions from other local producers favour protectionist policies such as tariffs and banning the importation of some products. However, in some cases rather than protecting local industry it can protect inefficiency, poor quality and high prices which create a significant cost for us all as consumers.

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