As the Federal Government strives to diversify the economy of the country to agriculture, solid minerals and manufacturing, among others, to achieve increased economic growth for the country, it has become necessary for us to look at some of the critical factors militating against government’s efforts in this direction.
Recall that the developed economies that we now borrow millions of dollars from developed their economies using technology and innovation to bring about the desired change in their economies. It therefore stands to reason that we must embrace new knowledge in science, technology and innovation to modernise the Nigerian economy. But, in doing this, the government must put in place the required economic framework that would help drive the country forward towards achieving its desired goals.
It has been well proven that there is a strong correlation between a low interest rate environment, credit accessibility and business growth. What this means is that if we want the economy to achieve quantum growth, we must move away from our current high interest rates that make doing successful business nearly impossible in the country.
As we rightly know that up to now, the major deterrents to business growth in Nigeria are high interest rate and inaccessibility of credit from banks. If the interest chargeable by banks are low, millions of Nigerians with good and bankable business ideas will approach banks for loans and repay the loans as and when due.
It must be understood that high interest rates translate to higher cost of the manufactured goods and lower profit for the companies, while lower interest rates would ginger people to take loans from the banks for their companies and would also enable them to pay their loans in time.
Consequently, the Central Bank of Nigeria would need to lower its benchmark interest rate to single digit so that the banks too can lower their interest rate to single digits, especially, when it comes to lending to the real sector so as to stimulate economic growth.
It is true that Nigeria is improving its ease of doing business to make local and foreign investors invest in the economy. But, it needs to do more than it is doing now to attract investments into the economy. In particular, the most needed infrastructure for doing business are too inadequate and they must be improved without delay.
The infrastructure deficit in the power sector is terribly challenging. Experts point out that Nigeria, with a population of close to 200 million needs about 98,000MW of electric power per day. Unfortunately, this country currently generates about 7,000MW daily, creating a whopping power deficit of 94,500MW. The implication of the large population when put against the abysmally low power generation is that the cost of power supply in Nigeria is too costly.
Since power supply is a major part of the operating expenses for every company, the products of any investor who puts his factory in a country like Nigeria with high cost of power supply will be uncompetitive with those manufactured in countries with low cost of power supply.
Also, the country’s budget is always too heavy on the side of recurrent expenditure. A government that spends less than 50 percent of its budget on capital expenditure is an enemy of development of the country. We need massive development of the social and economic infrastructure of the country particularly the roads, rail, schools and healthcare, etc. Henceforth, the capital expenditure vote both at the federal and state levels must significantly move up to not less than 50 percent of the budget.
Recall that it was on account of high cost of doing business, particularly the high cost of electricity, that made many companies to relocate their factories away from Nigeria to other ECOWAS countries like Ghana, among others, where the cost of doing business is lower than that of Nigeria. If anything, Nigeria must learn a lot of lessons from such companies.
Also, both the federal and state governments must jointly make the operating environment more conducive for businesses to thrive. A situation where hoodlums and local urchins take high profile business men and expatriates as hostages in order to extort money from them is anti business, retrogressive and sends bad signals to other parts of the world. In fact, such anti-development behaviours should never happen in the country again if the government is serious about growing its economy. Such terrorist attacks often dissuade local and foreign investors from expanding their current businesses or starting new investments in the economy.
Going forward, it must be recognised that development cannot happen where there is violence in many areas of the country. Therefore, peace must be restored in all parts of the country. Also, the herdsmen-farmers clashes in the Middle Belt which became frequent in the last few years must be brought under control so that peace can reign in the middle belt and to stimulate more agricultural production for the country.
The country must also quickly put an end to Boko Haram terrorist attacks, particularly in the agrarian North Eastern Nigeria to enable those living in those areas to be able to contribute their own quota to national development.
