There is no doubting the fact that the economy of the country is making tremendous progress, thereby, growing as indicated by the recent mid-term report by the Coordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala.
Nothing that the country’s economy has remained stable in recent times, Dr. Okonjo-Iweala noted that the greater gain made was the capacity of the Goodluck Jonathan administration with the Economic Management Team to ensure that the fur economic fundamentals remained stable despite the ongoing reforms in the country, as encapsulated in the Transformation Agenda and the unprecedented and vicious insecurity challenges especially by the fundamentalist Islamic Sect, Boko Haram, which has led to the death of over 3,000 persons and millions of people fleeing the North and shutting down business.
According to the minister, the economy is doing well with current growth rate standing is 6.5 percent. Available indices showed that this growth rate is the highest in recent years. In the same vein, inflation stood at 9.5 percent, the lowest in the last 30 years. It must be noted that the high rate of inflation in the country has always been used by Money Deposit Banks to raise their lending rates to high heavens. The point must also be stressed that the organized private sector, OPS, has always argued that the poor performance of the manufacturing sector of the economy is a product of the high cost of sourcing funds from these banks.
But can the reduction recorded in the level of inflation in the economy impact on the manufacturing sector, thereby enhancing job creation and employment opportunities? The answer to this puzzle will come in the next two years to this administration. Indeed, the economy must not wait for the next four years or so, perhaps, after the 2015 presidential poll to begin to reap the gains of these positive economic indices.
Also on the positive side of the economy is the increase recorded in the area of foreign reserves now up to US$4 billion. The exchange rate, she also said, she has been significantly stable for the period. The import of all these are many, but not limited to the fact that the economy could accommodate more imports, encourage business planning and also give fillip to potentials investors to come in and invest while allowing the domestic investors to do more.
Yet this has been the case because of some other variables in the economy, relative weakness of the Naira to the United States of America’s dollar, for instance. What this means is that government should strive to address these variables, including strengthening the Naira against the Dollar and the deficits in public infrastructure particularly power supply.
The growth in non-oil exports is remarkable, rising to 30 percent of total export earning, up from 10 percent in the last three decades. The last time the country earned appreciable revenue from non-oil exports was in the 1980s when the country’s manufacturing sector was upbeat with the textiles subsector hosting millions of jobs.
Today, the textiles industry is a shadow of itself, while its capacity to host jobs has fallen by as low as less than 10 percent of what it used to be. Only recently, the National Union of Textiles and Garment Workers alerted the nation that no fewer their 400 textile firms have been shut down over the years due to inclement conditions, leaving in their trail job losses and massive unemployment and poverty.
Although there has been high level of foreign investment, FDI, into the country, the highest in the last decade or thereabout, the curious aspect is that it has not translated into more jobs or reduction in unemployment and poverty. This observation was also made by the World Bank and the International Monetary Fund, IMF, which both praised the efforts of government to reinvent the economy, but urged it to do more in the areas of employment generation and poverty reduction. No doubt the economy is relatively stable amid macro and micro economic stability. The worry then is why these positives have not generated jobs in the economy to tackle the challenges of unemployment put at over 100 million Nigerians of a population of about 160 million people. The reasons are not far fetched, as, also observed by government officials and other economic experts.
According to Dr. Okonjo-Iweala and the Central Bank of Nigeria, CBN, Mallam Sanusi Lamido, who are both prominent players in the present administration, have at different fora in recent times, noted that insufficient energy delivery services in the economy has just affected its growth and development. Just recently, another senior member of the government and minister of power, Prof Chinedu Nebo, told an alarmed world that as much as 120 million Nigerians do not have access to public power supply. This means that little production is going on in the economy, while very few members of the population are feeding the rest. No economy grows in leaps and bounds without stable energy delivery services. For instance, Brazil, now reputed as one of the newest economic powers of the world, grew its power generation capacity from few thousands megawatts per day to over 100,000 Megawatt per day, it currently generates before her economy could jump-start. It is on record that the country was able to lift over 70 percent of her population out of poverty within a decade as a result of reliable energy. The economy also lifted over 30 percent of the poor into the middle class. Today, the country’s economy ranks among the biggest in the world, despite its impressive corruption records. Whereas it is recognized that the current government has done a lot in the area of investment in the power sector, the reality is that its impact is yet to be felt in the economy. And until this happens, job creation would remain a mirage. This also explained why the FDI inflow into the economy is directed at the oil and gas, information technology and communications sectors, which do not ordinarily create massive jobs because of their highly professional and skilled nature. So, even when they could substantially grow the economy and raise the Gross Domestic Product, GDP, they hardly can create jobs or soak massive unemployment as could the housing, and real estate building and construction, agriculture and tourism sectors of the economy. These sectors are both growth and employment inducing in any economy. But unfortunately, insecurity and deficit infrastructure love impaired them. For agriculture, the review of the country’s land policy should be implemented speedily because large scale agriculture can hardly be carried out with the current land use policy. As presently constituted, the policy is a grave disincentive to agriculture and land resources management. Indeed, with liberal lending policy and easy access to land, more Nigerian graduates would opt for self-employment.
Meanwhile the CBN has extended its cashless policy to five more states and the Federal Capital Territory, FCT, after its pilot exercise in Lagos has been adjudged hugely successful. The states are Rivers, Ogun, Abia, Anambra and Kano. This took effect from July 1, 2013. According to the apex bank, the policy is aimed at reducing the volume of cash in the economy and the cost of risks associated with carrying cash around. The Deputy Governor of the CBN Mr. Tunde Lemo, who is incharge of operations, also noted that Money Deposit Banks have been primed to cope with the challenges associated with the cashless policy and a roadmap for the policy is being followed by the apex bank and the lenders.
Under the cashless policy, private individuals are allowed to withdraw a maximum of N500,000 while corporate bodies are allowed a maximum of N3 million. Also, third party cheques of over N150,000 would not be cashed across the counter. In the same manner, withdrawal above N500,000 by individuals would “attract three percent amount above limit only, deposits would attract two percent amount above limit only”, while corporate withdrawal of amount above N3 million limits “attracts five percent and in the case of deposit, it attracts three percent on the amount above the limit”.
Whereas, since the introduction of the policy over a year ago, more bankers have lost their jobs, the CBN insists that the cashless policy would enhance job creation. How? Nigerians are watching.