Nigeria a Sub Saharan Africa’s largest economy, relies heavily on oil as its main source of foreign exchange earnings and government revenues with efforts from the present government to diversify its source of revenue to non oil sector.
Nigeria’s economy in 2019 did not only improve but it was rated among the top five global economies that excel.
The World Bank in its report declares Nigeria as one of the most improved economies of the world in the year under review.
It counted Nigeria amongst the few countries that implemented one-fifth of all reforms recorded worldwide in 2019.
According to the report “Doing Business 2020 which is a World Bank Group flagship publication, in an annual study which measures the regulations that enhance business activity and those that constrain it, found Nigeria to be one amongst the few countries with the most notable improvement.
“Others countries are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China and India.”
Stakeholders who spoke with the News Agency of Nigeria (NAN) on how Nigeria’s economy performed in 2019 and prospect for the new year said the country needs to promote and implement policies favourable to non oil sector to be able to touch the lives of average Nigerians.
They said that was the only way an increase in the Gross Domestic Product (GDP) will affect the living conditions of Nigerians.
The year 2019 saw an upscale in tax administration particularly the increase of VAT on more items and other charges like Stamp duty on every Point of Sale transaction (POS) among other government policies to drive the economy.
Also, the Economic Recovery Growth Plan (ERGP) and the Ease of doing business are part of the policies of the government that pundits believed would impact on the lives of Nigerians if well implemented and sustained.
Mrs Lolade Adesola an economist and Chief Executive Officer of L.A. Consult in Ibadan said the country’s GDP so far is growing from 1.91 at the end of 2018 to 2.17 at the third quarter of 2019.
“We believe that by the time the last quarter of 2019 is released it would have grown to about 2.23 for the whole of 2019.
“For me essentially naira has been stable and with the new economic team that was put together by President Buhari headed by Dr Doyin Salami, Mr Bismarck Rewane and Dr Chukwuma Soludo among others, these are the only positive things that happened in 2019.
“There seems to be more negative things that happened in the economy in 2019 than the positive things,” she said.
Adesola said some of the events that took place in 2019 included continuous rise in inflation due to the border closure, lower external reserves.
According to her, the stock market lost its value and the cost of living continues to grow higher and the treasury bill rate drops to 4 per cent meanwhile inflation is almost at 12 per cent.
“Things were coming through the land border couldn’t come in any more because of the border closure, hence the price of rice and other goods caterported, so that affected inflation.
“The stock market has sunk so far and it has now begin to close the year 2019 at a lower rate than what it was in the year 2018.
“Because the cost of living continues to grow higher and the inflation rate is almost at 12 per cent.
“if you put money in the bank at the end of 30 days you will have less than the money because inflation has eroded the money and the interest you are getting is not compensate for these negative things that plagued the economy in 2019.”
The economist however expressed optimistic in the new economic team and the fact that Value Added Tax (VAT) has gone up on some items.
She affirmed that “The fact that there is going to be better tax administration and transparency portal set up as well as the new economic team, these are some of the things that would contribute to the improvement of the economy.
“We pray for the new economic team that they would be able to come up with effective policies to work on.
“The price of crude oil will stabilise may be around 60 dollars and it will help the economy to be better than it did in 2019.”
Dr Olumuyiwa Alaba, a policy economist however said Nigerian economy by GDP has improved a little but the issue is how has the growth translated to lives of the people.
“If the government would talk about the increase in GDP it would say, Nigeria recorded one of the best growth in the world in 2019 because the last GDP grew about 2.23, which comparable to many countries is modest.
“GDP measures domestics activities that people are involved in but if their lives are not better and poverty level has increased it doesn’t justify the increase in GDP in the lives of people.
“The level of inequality does not also justify the kind of growth we experienced.
“Government needs to do more to ensure this is not so in 2020,” he said.
Alaba said in retrospect it was as I’d the economy in 2019 did not maximize its potentials unlike during the recession period.
“The policies made during the recession especially on diversification to non-oil sector have not translated to growth in the said sector.
“And it is the non-oil sector that really employs more people and I don’t think we have any appreciable growth in this sector.
“Government needs to critical look into this sector and address issues that would drive the non-oil sector. “
He noted that what the various policies especially on increased taxes have done was to burden people.
“We have driven more taxes than welfare,” Alaba said.
The economist however urged government to borrow externally as it has more advantages than internal borrowing.
“And when the economy is in problem we tend to spend more but we don’t have so we borrow, which was what the government did.
“But government borrowing internally has been pressuring and crowding out the private sector.
“Because government remains the largest domestic borrower in Nigeria, the banks thought it more guaranteed more lucrative because of the money policy rate when they loan government.
“When government sell treasury bill every two weeks it is actually borrowing and when government borrows too much in an economy it will crowd out what the private sector has access to.
“By this the residual fund in the market will go up and become offered at a higher price, that is why the interest is about 25 per cent; this is the effect of government crowding out the service sector in an economy.
“The alternative is if the government wants to borrow externally borrowing is actually the way to go as it has an edge.
“External borrowing gives an inflow of forex, which means it can decrease the pressure on the country’s foreign exchange flows; meaning naira can appreciate.
“Secondly, foreign borrowing come at a very low interest rate and the country can negotiate the rate which makes it better than domestic borrowing.”
He noted that the most important thing is for the country to use the money borrowed for the purpose it was meant for and particularly on things that will grow the economy.
Alaba further said government in 2020 must be purposeful in terms of direction to change the tide of events for the nation in the coming years.
“There should be a concrete economic policy; the Central Bank of Nigeria has put monetary policy rate at a slight decrease for some quarters now just like it was some five years ago.
“The monetary policy rate has remained at the same level because of some basics CBN want to maintain but you can’t do something the same way and expect different outcomes, this won’t work.
“We need to be consistent in our border closure if we want to get something good out of it.
“How consistent was the issue of border closure with respect to trade protocols and agreements signed with other countries and regions.
“The protocols leave room for manipulate some safeguards and remedies but you need to inform your neighbours as well as justify the need for the border closure.
“More importantly we need to put measures in place to take advantage of the border closure so that when we eventually open our manufacturers would have been committed to producing quality goods that would compete anywhere in the world.”
The policy economist said government cannot continue to intervene in foreign exchange markets as it is not a sustainable solution anywhere in the world.
He said the government can invest the millions of dollars used to defend forex every week or periodically on infrastructure.
He noted that this would bring the desired outcome that would boost production and manufacturing sectors that would in turn grow the nation’s economy.
Alaba said with the current arrangement of defending forex is a business for some people who are making a profit for themselves as the black market rate is higher than the official rate.
“Government cannot hold forex market forever however it should leave the market find its own path.
“The money expected to be spent on forex should be used as an intervention fund for infrastructure.
“If the economy boom and we are able to export non-oil sector goods to other countries, we will generate that forex that would stabilise the market.
“For instance Qatar and Ghana are increasing their non-oil sector, Nigeria should do the same,” he said.