It was a surreal moment in the Nigeria’s financial history. The time was in the beginning of the second quarter (Q2) in the year, precisely, in the month of April, 2014, when Nigerian economy was rebased, to become the largest or rather, the biggest in the continent of Africa. Almost, exactly a year after, in the month of April, 2015, to be precise, a progression of four quarterly economic indices reports, Nigeria elected a new democratic government into office, to direct the affairs of a country facing the challenges of development, in the beginning of an era of an emerging and sustained low oil prices.
One of the first acts of the administration was to commission a series of exploratory economic policy reports, inform of an opinion-editorial that would crystallize into an economic blueprint, which would highlight the economic direction of the new political regime.
One of the discoveries in the research-report, was the distinct similarity between the Nigeria and Greek economic condition, mind you, as at that time of the rebasing, Nigeria was country enjoying tremendous economic growth, while Greece was facing a debilitating financial reversal, in fact, it is on the throes of an economic recession, which became confirmed and sustained just a year after.
Yet, a Nigeria that is enjoying an economic boom, at least, by the data and figures in the Gross Domestic Product (GDP) indices, had a higher Unemployment Rate (UR) of 28% percent, as against the Greek Unemployment Rate (GUR) of 25% percent. Obviously, an economic misnomer and anomaly, because, an economic recession is defined as a succession of two negative economic growths indicators, which is premised on a reversal in economic activities, thus, a reduction in revenue generation and a loss of government income.
But, while those features were so glaringly evident in the Greek economy and in fact, it was acknowledged, as a consequent result of its economic downtown turn, Nigeria exhibited exactly a similar characteristic trait.
Which according to the managers of the economy, as at then, entailed a theft of over four thousand barrels crude oil per day, economic activities not matching revenue generation, in fact, without the high oil prices of that time, an exemplary economy much cherished because of growth, could as well be a financial system portraying clear signs of economic anemia.
Basically, what I sought to infer above about a recession, was that economic conditions usually comes into effect in a cyclical fashion, with intervening periods of positive prosperity and negative growth, most importantly, it usually occurs when a distortion happens in the economic system, either from monetary disequilibrium or fiscal deficiency, which negatively impact on the structural fundamentals.
It is because of this inherent weakness in the Nigerian economy, even in a rosy period of economic growth, apriori, the administration of President Mohammadu Buhari (PMB), premised and promised a restructuring of the Nigerian economy, to be tailored towards the support and encouragement of Small and Medium Enterprises (SME). In fact, it is why the government resisted, even to the level of obstinacy, the removal of the petroleum subsidy.
It is an established and confirmed fact by many business study, that the provision of energy constitutes a significant proportion of working capital in Small and Medium Enterprises (SME), thus, for a country having challenges with availability of electricity, hiking the operating price of alternative power sources, negatively impacts and affects such entrepreneurships.
Just like the United States of America (USA) that shed a lot of jobs in the last recession of 2008, the redemption for recovery and regeneration of economic activity, lay in the creation of newer jobs, not merely of the white collar type, which entails being an employee, rather, it must be in the position of a blue collar entrepreneur.
Principally, this is the easiest way to recover from an economic recession, of course, lack of electricity and exorbitant cost of maintaining alternative energy sources, remains an impediment to the success of such entrepreneurial ventures, yet, government public service and big manufacturing industries, could not be able create as well as maintain large workforce, as to considerable reduce unemployment in a national scale. After all, we are in a new technology driven age, where far less a number of personnel, could do the work of many a plenty.
The informal sector of the Nigerian economy must be formalized, with government support in form of targeted specialized credit facility, because, it employs the greatest number of Nigerian youths, also, rather than agriculture being seen as the occupation of the old people, it must be incentivized to be profitable as well as modern, in the mold of Central Bank of Nigeria’s (CBN) Anchor Borrowers Program, which would attract the younger people to participate and gain wealth.
Simply put, it is the only way to escape an economic recession, because, a recession is not affliction that one only cures by prayers, for a divine intervention that causes the price of crude oil to rise, rather, we could as well work and generate economic activity to get out of it.
And this other thing:
FIRS CONFIRMS PMB POLICY RESOLVE
Continuing on the same theme of the commissioned economic policy framework of the President Muhammadu Buhari (PMB) administration, it is worth noting that on the 20th of August, 2015, a literary feature which appeared as an opinion-editorial, with a title heading: Why Nigeria Must Never Follow Greece. Generally, it was an analytical economic comparison of the troubled Greek economy, as against the rosy picture of a rebased Nigerian economy, which aggregately produced a similarity in material ailment afflicting both economies.
Basically, high unemployment rate and low revenue generation was discovered as the cause of the two country’s economic dysfunction. The recommendation was to shield the Nigerian economy from the economic affliction, which has turned an atypical prosperous European nation, into a debt ridden country that is trying to drag down the rest of Europe, if not the greater international economy into a global economic meltdown. However, by the evening of that day, two things had happened that validated the article.
First, the much troubled Greek government of Prime Minister Alexis Tsipras offered to resign, while within the hour, perhaps, as a gut reaction and by sheer impact of a past reputation, the individual whom have been credited with the rise in revenue of the Lagos state government was elevated. The administration of President Muhammadu Buhari (PMB), appointed the Chairman of Lagos Internal Revenue Service (LIRS) to head the Federal Inland Revenue Service (FIRS), albeit, an action that elicited some criticism.
By last week, at the time of low economic activity and in a season of an economic recession, the Federation Accounts Allocation Committee (FAAC), had distributed funds that were 70% percent collected outside crude oil revenue and most importantly, over N500 billion naira was shared, which is one of the highest in recent times, confirming the fact, Nigeria’s economic recovery lie in effective revenue collection.
Follow me on twitter: @neeswaid
