By Prof Mike Ozekhome SAN
INTRODUCTION
The last part of this treatise recommended a range of measures for resettling the agenda of our economic transformation such as project financing, diversification and public-private partnership. This week’s episode continues that theme with the following suggestions: Human Capital Development, Military Tightening, Enhancing Infrastructural Development, Strengthening Governance/Fighting Corruption, Leveraging Regional and Global Trade Opportunities, Fostering Entrepreneurship and Innovation, Strengthening and Security and Stability. Enjoy.
HUMAN CAPITAL DEVELOPMENT
A country’s greatest asset is its people, and for Nigeria to be competitive in the global economy, it must invest in its human capital. Despite having the largest population in Africa, Nigeria has struggled to fully leverage its human resources due to inadequate investment in education and healthcare. As of 2020, Nigeria’s literacy rate stood at 62.02%, which, although an improvement over previous decades, remains below the global average (Macrotrends. (n.d.). Nigeria literacy rate 1991-2023. Macrotrends. <https://www.macrotrends.net/global-metrics/countries/NGA/Nigeria/literacy-rate>. Accessed on the 1st of October, 2024.) .
Education reform is a critical part of Nigeria’s path to global competitiveness. The country has one of the highest numbers of out-of-school children, with an estimated 13.2 million Nigerian children not attending school. This is particularly pronounced in the northern regions, where insecurity and poverty have kept many children, especially girls, out of the education system.
The Nigerian government must prioritize education by increasing public spending, which currently accounts for only 6% of the national budget, far below the UNESCO-recommended 15-20%. This increased funding should be directed towards improving the quality of education, building new schools, training teachers, and expanding access to education, particularly in underserved regions. In addition, the government should promote vocational training and technical education to equip young Nigerians with the skills needed for the 21st-century job market.
Healthcare is another critical area that requires urgent reform. Nigeria’s healthcare system is underfunded, understaffed, and overstretched, resulting in poor health outcomes. The life expectancy in Nigeria is 54.33 years, one of the lowest in the world (Onwube, O., Chukwu, A., Ahamba, K., Emenekwe, C., & Ogwuwike, M. (2021). Determinants of life expectancy in Nigeria: An autoregressive distributed lag approach. Journal of Sustainability Science and Management, 16, 177-192. <https://doi.org/10.46754/jssm.2021.12.012>. Accessed on the 1st of October, 2024.), while maternal and infant mortality rates remain alarmingly high. To improve healthcare, the government must increase healthcare spending and ensure that resources are distributed equitably across the country. The focus should be on primary healthcare, which forms the backbone of a robust healthcare system.
Moreover, Nigeria must address the brain drain of healthcare professionals, many of whom leave the country for better opportunities abroad. This can be achieved by improving working conditions, increasing salaries, and providing better training and career development opportunities for healthcare workers. By investing in education and healthcare, Nigeria can build a workforce that is healthy, skilled, and capable of driving economic growth. Human capital development is essential for Nigeria to compete in a globalized economy, where innovation, knowledge, and skills are the keys to success.
MONETARY TIGHTENING
The Central Bank of Nigeria should continue its recently announced monetary policy stance of tightening the money supply for the next 24 months at least until inflation is brought under firm control in the single digits. At a moment of crisis such as this, a choice must be made between macroeconomic stability, in particular price stability and growth.
Some have criticized the central bank’s rate hike by a dramatic 400 basis points (4%), noting that Nigeria’s present hyperinflation is more cost-push in nature than demand-pull. This criticism, while understandable, does not consider the full picture. First, forex instability is a major cause of cost-push inflation. Loads of Naira sloshing around in loose monetary conditions contribute to the huge demand pressure on the US dollar and other foreign currencies as capital flight intensifies. This vicious cycle must be broken. Doing so will help achieve both price stability and exchange rate stability in the medium term. It is also calculated to increase confidence among investors, who need attractive yields to bring in portfolio investments that will help stabilize the exchange rate and do not wish to invest in high-inflation environments that erode value.
The CBN must also keep an eye on financial stability, as high interest rates will stress the ability of businesses to repay or obtain loans. Non-performing loan rates will likely increase. The CBN must now proactively wear its risk management hat to manage the implication of its newfound hawkish monetary policy stance for the banking sector. Granted, the CBN’s actions may be geared more toward the short or medium-term, and the Bank needs to develop a longer-term perspective regarding its mandate. But the Bank’s efforts are part of a necessary multidimensional onslaught. Our weakest link in the financial sector, however, remains Nigeria’s fiscal management.
ENHANCE INFRASTRUCTURE DEVELOPMENT
Modern infrastructure is the backbone of economic progress. Nigeria must invest heavily in critical infrastructure like energy, transportation, and digital connectivity. The power sector, which remains a bottleneck for industrialization, requires urgent reforms, including privatization of transmission and distribution networks and investment in renewable energy sources like solar and wind. The success of Morocco’s Noor Solar Project demonstrates how renewable energy can reduce power deficits and contribute to sustainable growth.
Transportation networks—roads, railways, and ports—must also be upgraded. Public-Private Partnerships (PPPs) should be leveraged to fund large-scale infrastructure projects, while digital infrastructure should be expanded to connect rural areas, enabling broader economic participation and fostering innovation in the tech sector.
STRENGTHEN GOVERNANCE AND FIGHT CORRUPTION
Good governance is essential for sustainable development. Nigeria must strengthen anti-corruption institutions, such as the Economic and Financial Crimes Commission (EFCC), and ensure their independence from political interference. Adopting technology-driven solutions like e-governance platforms can increase transparency in public procurement and budgeting processes, reducing opportunities for graft.
Policy consistency is another critical element. To attract long-term investments, Nigeria must provide a stable and predictable regulatory environment. This includes clear policies on taxation, foreign exchange, and trade that transcend political cycles and inspire investor confidence.
LEVERAGE REGIONAL AND GLOBAL TRADE OPPORTUNITIES
Nigeria’s participation in the African Continental Free Trade Area (AfCFTA) offers immense potential for economic transformation. To maximize the benefits of AfCFTA, Nigeria must address trade bottlenecks such as poor customs procedures and non-tariff barriers. Streamlining these processes will enable Nigerian businesses to compete effectively in regional markets.
Moreover, Nigeria should focus on developing export-oriented industries, such as textiles, processed foods, and machinery. Establishing trade facilitation hubs and logistics parks in key regions can boost efficiency and attract foreign direct investment (FDI). Nigeria can draw inspiration from Kenya, which has successfully positioned itself as an East African trade hub through investments in trade infrastructure.
PROMOTE ENVIRONMENTAL SUSTAINABILITY
Environmental sustainability is integral to long-term development. Nigeria must transition to a green economy by investing in renewable energy, promoting sustainable agriculture, and implementing robust environmental protection policies. The adoption of climate-smart farming techniques can improve agricultural productivity while conserving natural resources.
Efforts to reduce pollution, particularly in the Niger Delta, and reforestation initiatives to combat desertification are equally critical. Establishing a green bond program, as seen in South Africa, can mobilize funding for environmentally sustainable projects while contributing to global climate goals.
FOSTER ENTREPRENEURSHIP AND INNOVATION
Entrepreneurship is a key driver of economic growth. Nigeria’s burgeoning tech ecosystem, evidenced by companies like Flutterwave and Paystack, demonstrates the potential of innovation. To further nurture this ecosystem, the government should provide grants, tax incentives, and access to funding for startups. Expanding digital infrastructure to underserved areas will also enable more entrepreneurs to participate in the digital economy.
Creating business incubators and innovation hubs across the country can provide young entrepreneurs with mentorship, resources, and market access. Streamlining business registration processes and reducing bureaucratic hurdles will further encourage entrepreneurship.
STRENGTHEN SECURITY AND STABILITY
Insecurity remains a significant impediment to investment and economic growth. Addressing this challenge requires a multi-faceted approach that includes military action against insurgents, community-driven development programs, and social interventions to reduce poverty and unemployment. Building trust between security agencies and local communities is critical for fostering long-term stability.
CONCLUSION
In conclusion, the pursuit of strategic economic reforms in Nigeria represents an imperative step toward unlocking the nation’s immense potential and charting a course for sustainable development. The challenges Nigeria faces overreliance on oil, inadequate infrastructure, pervasive corruption, and widespread unemployment are deeply entrenched but not insurmountable. These systemic issues require bold, innovative solutions that prioritize economic diversification, good governance, human capital development, and environmental sustainability.
As highlighted, Nigeria’s demographic structure, abundant natural resources, and participation in regional and global trade initiatives present unparalleled opportunities. Harnessing these assets requires deliberate policy consistency, robust institutional frameworks, and unwavering leadership. A shift towards a diversified economic model, exemplified by countries like Malaysia and Botswana, illustrates that transformation is achievable through strategic planning, investment in key sectors like agriculture and technology, and prudent management of resources.
The foundation of these reforms must rest on the pillars of accountability, inclusiveness, and innovation. Empowering Nigeria’s youth, the country’s most valuable asset, through education, digital literacy, and entrepreneurial support can catalyze a wave of creativity and productivity. Similarly, leveraging renewable energy and sustainable practices can mitigate environmental challenges while addressing the country’s energy deficits.
Ultimately, Nigeria’s journey toward economic resilience and global prominence will demand a collective effort from all stakeholders, including the government, private sector, and civil society. The rewards of this transformation; a thriving economy, reduced poverty, and a higher standard of living are well worth the effort. With strategic foresight and decisive action, Nigeria can overcome its challenges and realize its vision of becoming a global economic powerhouse.
By committing to these reforms, Nigeria not only secures its future but also positions itself as a beacon of hope and inspiration for the African continent and beyond. (The end).
THOUGHT FOR THE WEEK
“Sustainable development is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship and strengthen governance”. – Ban Ki-moon.
Other Articles
