If Nigeria is to join the richer countries of the world, she must invest aggressively in technology, improve local production, and cut cost of governance.

These were some of the opinions presented by experts during a virtual colloquium tagged Government Unusual: Innovative Economic Solutions to Unlock Mass Prosperity held on Saturday afternoon.

While making a presentation at the Rauf Aregbesola colloquium, Governor Nasir El Rufai noted that investment in digital technology must become a priority if Africa hoped to join the league of developed countries. He said,

“Investing aggressively in digital technology is the only way Africa can preserve its growth and continue to lift people out of poverty. We must invest in the digital because henceforth, every sector of governance and living will depend on the digital.”

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He added that one of the lessons from the COVID-19 pandemic was the need for Nigeria to embrace technological advancement so that Nigerians could benefit from the numerous opportunities that came with it; and pointed at the recent decision to crash right of way charges as the first way to go.

In agreement with his position, CEO Lotus Capital, Mrs Hajara Adeola, added that investment in technology was the best way to get Nigerian youths to take advantage of global opportunities without migrating to other countries.

“Nigeria needs to look for a way to move from the agrarian and industrial into the services sector, and ICT is a way to do that. Our youths are innovative and capable, so if we can train our youths in technology, then we can get homegrown solutions to some of our issues without them having to migrate” she said during the panel discussion.

Infrastructure for business

Unless infrastructural developments are shaped and directed towards business developments, the country will continue to invest in infrastructure which have no benefits.

“You don’t shape infrastructure as how you think it makes sense. you do it in a way that follows the money because ultimately that is where prosperity comes for everybody,” Chairman of Citibank Nigeria limited, Yemi Cardoso said.

The global terrain continues to change and Nigeria must develop a framework to align its growth strategy with the changes, identifying and eliminating bottlenecks as we go forward.

The colloquium, which was held online (via zoom), had over 700 participants across several countries, and was also streamed live on Youtube.

Panelists at the colloquium were Mallam Nasir El-Rufai, Governor, Kaduna State; Sen. Abubakar Bagudu, Governor, Kebbi State; Mrs. Hajara Adeola, CEO, Lotus Capital Limited; Mr. Bismarck Rewane, CEO, Financial Derivatives; Dr. Joe Abah, Country Director, Development Alternatives Incorporated (DAI); Dr. Yemi Cardoso, Chairman, Citibank Nigeria, and Boason Omofaye, the Moderator.

Dr Yemi Kale, Statistician General of the federation and CEO of the National Bureau of Statistics (NBS) was also present.

To achieve the Sustainable development goals, public-private partnerships (PPP) is not just an option for Nigeria but a necessity. That is because it is not possible for government alone to raise the kind of money needed for it.

According to Dr Joe Abah, Country Director, Development Alternatives Incorporated (DAI), the government needs to provide a safe and stable environment for the private sector to invest, and also restructure public-private partnerships in order to get more value out of it.

Speaking during a virtual conference on Saturday, he referred to a report from the United Nations general assembly which stated that Africa needs “an incremental amount from $200 billion to $1.3 trillion per annum to be able to achieve the SDGs”.

This, he noted, calls for restructuring of public private partnerships, to harness the strengths of both sectors towards sustainable development.

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“We need to develop greater capacity for our public service to engage in public private partnerships. PPP is not a gift. The public sector is not charity and so you need to understand what you are doing with them.

“We need to monitor performances very closely and that is one thing that the private sector does very well that we don’t do in the public sector,” he stated adding that the public sector needs to have delivery target tied to remunerations.

Removing socio-economic constraints

In his presentation, chairman of Citibank Nigeria limited, Yemi Cardoso stressed the need to remove constraints that hinder people from thriving.

“In one of the studies done where they looked at 8 high-growth countries, they discovered that there were no identical policies in all of them, but there was a common theme – liberate people from their societal economic constraints and they flourish,” he said

He explained how tax rates and regulations that frustrate free enterprise could also impede a countries growth and pointed out countries that had removed such bottlenecks.

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According to him, the negligible tax rates in Hong Kong are a source of encouragement to businesses, and so is the ease of doing business in Singapore.

“There is also Macedonia where the sectoral competitive strategy is focused on attracting foreign direct investment (FDI) in automotive industry. Malaysia has also reduced dependence on agricultural exports by paying attention to manufacturing,” he added.

If Nigeria could focus on her competitive advantage, tweaking it as the time changes and attracting strategic investments to the country, she would well be on her way to economic prosperity.

The world is in a fix. Covid-19, unprecedented as it is, has led to economic shocks owing to severe disruptions in the global supply chain, rising levels of corporate and public debt, rising levels of unemployment, negative shocks to commodity prices, and more. To cushion the negative impacts on economies around the world, global leaders have put policies in place hoping that it will stop or, at least, slow down the negative trajectory of these failing economies. It was in the same light that the Central Bank of Nigeria decided to lower the MPR rate to 12.5% from 13.5%.  

How the Decision Came About 

In a meeting held by the CBN’s Monetary Policy Committee (MPC) on Thursday this week, a majority of the members voted to cut the rate from 13.5% to 12.5%. During an earlier meeting held in March, the decision to hold rates had been unanimous. However, given the deepening challenges of the present time, seven out of the 10 members at the MPC meeting voted to cut the rate. Even more interesting is the fact that the rest of the panel opted for a more aggressive easing, with two voting for a 150 basis-point reduction and one for 200 basis points. 

Why the Decision Was Made 

COVID-19’s adverse effects on the global economy have been unprecedented and severe. During the meeting, which was broadcast live on Thursday 28th May, the MPC had noted key observations in the macroeconomic environment resulting from the adverse impacts of COVID-19 as well as the drop in crude oil prices. Some of the key highlights of the current economic situation include: 

• The significant decline in Manufacturing and non-Manufacturing Purchasing Manager’s Indices (PMIs) to 42.4 and 25.3 index points, respectively, in May 2020, compared with 51.1 and 49.2 index points in March 2020. 
• The marginal growth in broad money (M3) to 2.66 percent in April 2020 from 2.42 percent in March 2020, largely due to increases in Net Domestic and Foreign Assets.
• The significant growth of aggregate net credit by 8.07 percent in April 2020 compared with 4.90 percent in March 2020 (still below the indicative benchmark of 16.85 percent for the year. 

The committee also mentioned the gradual improvement in macroeconomic variables, particularly the improvement in the equities market, the containment measures of the COVID-19 induced health crisis, as well as the impact of the increase in crude oil price on the external reserves. It also noted the stability in the banking system as shown by the increase in total assets by 18.8 percent and total deposits by 25.52 percent (year-on-year).  

Given the overall economic situation and its impact on the average Nigerian, the MPC was of the view that any tightening of policy stance is, for now, inappropriate as it will result in further contraction of aggregate demand, thereby leading to a decline in output – which is necessary to sustain the supply chain for growth recovery. For the option of holding previous policy stance, the MPC believed holding may indicate that the monetary authorities are insensitive to prevailing weak economic conditions. Also noteworthy is the fact that this move to cut rates have been carried out by many other central banks across the globe, including Australia, Malaysia, and the U.S. Federal Reserve. 

The Impact Of The Decision 

The expected outcome of the decision of the CBN is to ensure that the economy reverses from the recession quickly. As such, the decision is geared towards stimulating growth and swift recovery. The cut, being the lowest in four years, rests on the optimism that it will possibly avert a recession. It, however, has its limitations. A clear challenge is the impact the rate cut will have on inflation which has been way above the target range of 6% to 9% for five years. There is also the issue of increasing pressure on the naira.  

The rising question is whether the rate cut will do enough to prevent a recession. This is an important question, taking into account the volatility in the crude market – a sector that accounts for about 90% of exports and more than half of government revenue, the fall in private sector credit of 61% from just a year earlier, as well as all of the same challenges that spurred the making of the decision in the first place.  

We are on the brink of a recession. Whilst policies like these could offer a buffer, the prolonged existence of the pandemic on the economy is one nail in the coffin that can only be halted by the provision of a vaccine. It is only when life reverts to normalcy that we can begin to undo the damage thus far.