As Nigeria Yearns For Economic Lobotomy

The last time I checked, ‘lobotomy’ remained a medical term that could be described as a surgical operation in which some of the nerves in the brain are cut to address a severe mental imbalance.

It isn’t anymore news that Nigeria’s economic status is currently undergoing a grievous mental disorder that requires such major operation as lobotomy.

At the moment, Nigeria’s economic countenance is characterized by low crude oil price, instability in the main oil-producing regions, lack of foreign currency and monetary strengthening.

Recently, the naira has been weakening against the U.S. dollar (USD), precisely since June 2016 when the Central Bank of Nigeria (CBN) scrapped the currency peg that had kept it at an artificially-high value of about #198 per USD for over a year.

After the peg was removed, the currency lost over 40% of its value against the USD and fell to #282 per USD. While the CBN had pledged to move to a free-floating exchange regime, it tactically intervened in the foreign exchange market some weeks after the devaluation to keep the ravaging naira between a narrow range of 282 to 285 NGN per USD.

However, in mid-July 2016, the apex bank withdrew its interventions, thereby causing the naira to depreciate further. On July 28, the currency fell to a record-low of #322 per USD, which marked a 14.2% depreciation within a month as well as 61.8% depreciation in annual terms. Since then, the naira has been fluctuating at low levels. Right now, it’s sold at about #411 per USD and about #570 at the parallel market.

Notwithstanding, several analysts cum commentators were of the view that the removal of the currency peg was long overdue. The exchange rate flexibility awakened hopes that the shortage of hard currency and restrictions on imports, which were partly responsible for the country’s unwholesome economic performance in the first quarter, Q1 of the fiscal year, would ease immensely.

It’s noteworthy that the onward deterioration of the naira prompted the CBN to hike interest rates to a record high in July 2016, in an effort to tackle soaring inflation. In spite of the various perceived remedial approaches, the economic stagnation still lingers.

Statistics show that Nigeria’s Gross Domestic Product (GDP) growth rate declined to 0.36% in Q1 of 2016 compared to 2.11% in Q4 of 2015. The GDP had earlier contracted to 3.86% and 2.35% in Q1 and Q2 of 2015 respectively, before rebounding to 2.84% in Q3 of 2015 and further shrunk to 2.11% in Q4 of same year.

The decline as at 2016 represents the first contraction since June 2004, signifying a twelve-year low. Similarly, the unemployment rate climbed to 12.1% in Q1 of 2016 compared to 10.4% and 9.9% in Q4 and Q3 of 2015 respectively.

The National Bureau of Statistics (NBS) equally stated that, as at May 2016, daily oil production reduced to 2.11 million barrels per day (mbpd), or 0.5mbpd lower from production of 2.61mbpd in Q4 of 2015, which wasn’t unconnected with the lingering vandalism of the oil facilities by the Niger-Delta Avengers (NDA). That was a basic symptom of recession.

Since Nigeria still depends on mono-economy, it’s apparent she would continue to suffer from an epileptic economy till further notice. The bitter reality is that the oil price has dropped tremendously across the globe; it’s currently sold at about $76 per barrel as against $145 its initial price as at Q1 of 2015.

So, even if Nigeria can boast of up to several mbpd, it will yet not solve the ongoing economic quagmire. Needless to say that it’s high time the country stopped thinking about oil toward concentrating on other revenue sources. It’s indeed appalling that, amidst the dwindling oil revenue, a state like Lagos still discusses discovery of more oil wells; this alone implies the leaders are yet to face reality.

First; the CBN needs to revisit the drawing board. It’s apparent that most of the ongoing challenges in the money and capital markets are occasioned by the CBN’s miscalculation. Every policy introduced lately by the Godwin Emefiele-led CBN seems to have failed woefully.

Hence, it’s time to have a rethink. The overall policies must be reviewed for the country’s good. I’m of the view that a single-digit interest rate is the only way out if we are truly concerned about diversification, particularly industrialization.

Devaluation of the currency was never an option. Such policy would only end up enriching the rich while the poor get poorer. Any policy targeted to be one-sided, can only constitute more nuisance than good.

A genuine policy must be neutral, strict and result-oriented. The naira deserves a currency peg or a fixed exchange rate, which guarantees accurate long-term predictability for business planning. In addition, the parallel market must be adequately checkmated by the apex bank toward curtailing lapses.

It’s also time we start doing the ‘talking’. I’ve come to agree that Nigeria’s prime predicament remains laying much emphasis on theory, thereby relegating practical approach to the background. In agriculture, farmers, or prospective ones, need to be conscientized to specialize on a particular farm produce; such a proposed measure would definitely boost productivity.

No farmer should mix crop and livestock farming; mixed farming may come up in the long run after we must have actualized our primary motive. Thus, specialty must be upheld at all costs. Governments at all levels must equally be willing to subsidize the cost of tractors, so that, crude system of farming would become a thing of the past. Mechanized farming is the answer.

More so, our young ones, especially the youth, ought to be integrated into agriculture, and should be encouraged to study various agricultural disciplines in higher institutions by showering them with innumerable incentives such as bursary and what have you.

The ongoing tourism mantra ought to be decentralized, or liberalized, whereby it would become mainly a regional/zonal affair. Such measures need to be extended to the security sector, so that each geo-political zone would be answerable to their peculiar security challenges.

Furthermore, it’s needless to intensify taxation in a growing and struggling economy like Nigeria; rather, the governments are bound to concentrate on eradication of tax evasion and leakages.

Nigeria must also revive various technical-oriented practices and institutions, that are moribund, to include the Students Industrial Work Experience Scheme (SIWES), Teaching Practice (TP), and technical colleges, among others.

Millions of the country’s young ones are deeply talented and experienced in numerous industrial fields such as ICT, thus they require an enabling environment in which they can commercialize the patents. By doing so, foreigners would be trooping into the country to purchase her trademarks.

But, it’s pertinent to note that, all these would end up being a jamboree if the federal government overlooks the ongoing power instability. Nigeria must think beyond the hydro-electric generation pattern, thus other power generation sources like biomass, solar, coal, that are abundant in the country, need to be embraced. Also, there’s a need to decentralize the transmission grid.

Summarily, towards a successful lobotomy, every concerned authority must endeavour to extend the hand of fellowship to the cognoscenti.