When we write that South Africa’s stock market is valued in excess of $1 trillion, and Nigeria’s is about $60 billion, we are not happy. When we write that South Africa’s budget is about 4X Nigeria’s budget even though Nigeria is more than 3X the population of South Africa, we remind ourselves how much work remains ahead.
Nigeria’s budget is low because we have a huge informal economy – a part of any economy that is not easily taxed or monitored by the government. Our stock market is small because of the same reason where just a handful of companies are formalized and traded in the bourse. The implication of that is this: some citizens in Nigeria have more money than the local governments.
I would like to read a paper from the Central Bank of Nigeria or from any of our universities which can show how Nigeria’s informal economy – about 60% of the GDP – is acting during this current economic turbulence.
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Is the informal economy affected in the same way the formal economy is being affected? Largey, now some manufacturers are declaring negative asset positions, what could be happening to these informal sector players? We already know that many are struggling since if fewer people are driving cars, the mechanic will have limited customers. Also, if many lose their jobs, the hairdresser may not have frequent visits from their customers.
Yet, I posit that the informal economy could be the reason why many communities are holding up, despite the avalanche of economic shocks, as these informally operated companies are not fully connected to the federal government tools. Research would be necessary to know the extent of this correlation, if any. Econs PhD students, you have a research topic in Nigeria!
When we write that South Africa's stock market is valued in excess of $1 trillion, and Nigeria’s is about $60 billion, we are not happy. When we write that South Africa’s budget is about 4X Nigeria’s budget even though Nigeria is more than 3X the population of South Africa, we… pic.twitter.com/daMxJYERCu
— Ndubuisi Ekekwe (@ndekekwe) February 25, 2024
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We churn out hundreds of thousands of graduates annually, a small percentage of them enter corporate spaces, the vast majority settle for low grade jobs and informal businesses. The graduates that join informal economy, do we have a framework that helps them to formalize their businesses and not doing same as their parents and grandparents, since they have gone to school?
The percentage of population involved in betting, what if they were taught stocks trading and capital markets earlier, won’t we be having vast majority of the citizens that are knowledgeable about capital markets? Won’t that in turn lead to listing many companies in the local market?
If there is one thing we are grossly deficient in, it’s having the intellectual rigour to see hard things through. It’s what is also fueling relocation, but because we are good at misdiagnosis, we always locate the problem elsewhere.
We also have over 300k young people on NYSC annually, which we can easily use to grow food banks and make food the cheapest thing in the land, without spending big on labour, because it’s part of ‘national service’. We don’t think, we are too incapacitated, we only yammer and complain. Tomorrow we will still be asking for solutions…