By Sunny Chuba Nwachukwu
The world grapples with imminent multiple economic recessions across several nations. With this unfortunate, but obviously looming financial crises, in the face of the ‘new normal’ of COVID-19, it would be wise for policy apparatchiks in Nigeria to tread with utmost caution while overseeing the affairs of state and in discharging their fiduciary duties to the entire citizenry, by towing the path of careful and strategic steps required for this critical time, so as to stem and contain the situation.
The reason is that the spiralling effect could ignite a chain of reactions against the stability of our now very fragile economy; not with the naira already showing huge signs of weakness in its loss of grounds to other currencies. Our financial experts (fiscal and monetary), I believe, are equal to the task and the ministries of finance and national planning, petroleum resources; with the CBN, DPR and NNPC need to work in synergy over this challenge, to effectively mitigate the potential negative fall outs.
If not properly handled and managed at this auspicious time, watching from what is happening globally, this should not be allowed to affect our financial institutions at all, otherwise, there’s a possibility that we might face a total collapse of the economy, where federal government recurrent expenditure may be difficult meet.
A quick and urgent intervention, therefore, needs to be worked out between players in the oil industry and their banks, in a way that could involve the banks further extending relief packages, or loans, to enable the indigenous oil companies stay in business and weather through the present storm. It should be seen as a rescue bid to keep the indigenous oil companies from grounding their operations completely, pending whenever crude prices appreciate again on the global market. This arrangement will keep every activity afloat until the situation normalises.
We have various sectors in the economy, including agriculture, tourism and services, among many others, that are not yet significantly developed to contribute to GDP at a high level. And this is because our focus on crude oil as the major source of our foreign exchange earnings blinded us from developing other areas. We certainly did not plan well for this “rainy day” that has now come upon us. Even with our crude oil resource we failed to establish a strong downstream sector that should have been taking up our daily crude outputs and conveniently processing them, especially in a situation like we have now, where we are facing a market of crude oil glut.
No matter the level or extent of madness or recklessness in the life of a person, a people or a nation, as long as an individual is sane enough and is visionary, never would they joke with their future, like we have recklessly done as a country. If you are conscious of a hostile operating environment, it continuously signals to you future threats, reminding you constantly, to soberly reflect over economic survival (successes and accomplishments). It surely will always point to putting sustainable measures in place; otherwise, system failure or sudden fatal and total collapse might instantly occur!
This analogy applies to poor planning in the handling of a nation’s economy. The pressure of the financial burdens on governance comes with poor budgetary benchmarks and forecasts, should the unexpected happens during implementation. In our present situation, the initial 2020 budget benchmark of $57 per barrel of crude on the projected 2.18 million barrels daily output has completely changed. This has now been adjusted to a new benchmark of $20 per barrel on 1.7 million barrels per day.
It is, therefore, expedient to suggest a diversified non-oil export portfolio that should be vigorously pursued in the post-COVID-19 pandemic era; one with non-oil exports controlling over 60 per cent of the nation’s foreign exchange earnings. This is a long over-due economic transformation plan; that should be pursued through major sectors like manufacturing and agriculture. This can be realised if the federal government is truly determined and supports the initiative with the matching political will that it deserves. This is more achievable, if we borrow a leaf from the Dubai economy. This certainly will proudly and favourably position the Nigerian economy among the fastest growing among many nations.
Again, the fact that our currency is losing value is a function of poor productivity. If our economy shifts from its large dependence on the import of food and refined petroleum products, and becomes self-sufficient in our daily requirement of these two major items, and then export excess of these to other nations, of course, we will definitely have no business whatsoever with the language of being a local “weak currency”. Our currency will become stronger because, its strength will then be determined by the strength and the volume of our foreign reserves. And these things are achievable! All that is required of us now is patriotism, diligence, financial prudence, absolute commitment to duty, devoid of corrupt practices, and industry in our economic tasks and assignments, privately and corporately.
It is disheartening that after 60 years Nigeria is still acting like a toddler, economically, because, we have absolutely nothing to show for it (as an oil rich economy)! China that started its national planning in the ‘70s, under the initiatives of the likes of Deng Xiaoping, has reached and surpassed all expectations. We can use the realistic “vision” of the ruler of the Emirate of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, as a test case. Dubai was a desert before 1960. It is now one of the best cities in the world. It takes just determination to turn things around, and build a virile economy. We must not always rely on the oil money alone. Copy the visionary leadership of the leader of Dubai, who wanted his people to have better education, best health care system, good and affordable housing.
We need to practise the true meanings of the content of our National Anthem that we sing and recite almost every day, by walking the talk, for the purpose of achieving our national economic goals, and make Nigeria truly, the economic and commercial hub of sub-Saharan Africa and beyond. The Nigerian nation, surely, presently, needs to surmount this raging economic Tsunami.
Nwachukwu, a graduate of pure and applied chemistry with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce.
Sunny Chuba Nwachukwu (FICCON, LS)