3 simple starting points for ending Nigeria’s economic malaise
Nigeria is a country blessed with abundant natural resources, splendid flora and fauna, and an enviable concentration of human capital. Nigeria currently wears the crown of the largest oil producer in Africa and the 11th largest oil producer in the world. In addition to her oil, Nigeria has arable land, coal. Limestone, iron ore, and natural gas among others. Yet, it is unfortunate that the country fails to live up to its expectation among comity of nations.
As at 2016, more than 112 million Nigerians were living below the poverty line of less than $1 per day despite the huge wealth of the country. Sadly, Nigeria’s problems are deeply rooted in the very fabric of its existence and the problems are multifaceted such that the government is practically at a loss on how to fix the country. Nigeria’s problems won’t be solved overnight, but the following three areas are as good as any get started on the serious task of righting the sinking economic ship of the country.
One the biggest reasons Nigeria is suffering an economic malady is the huge infrastructural deficit the country. The roads are bad, the railways are practically non-existent, the seaports are congested, the airports are ancient, there’s no public transport, and the power sector is in shambles. The economy won’t start recording sustainably consistent growth and improvement until the infrastructural deficit is being fixed.
Without reliably consistent electricity, it is impossible to build an industrialized economy because running production plants on privately owned power generators will increase the costs of production substantially. Bad roads make it difficult and expensive to move raw materials to factories and to move finished products to the markets for the end users. It should also be noted that lack of reliable infrastructural facilities make it difficult to attract foreign direct investments, which could in turn spur economic growth.
Accessible SME financing
The Small and Medium Enterprise (SME) sector is the bedrock of any economy and it is important to provide small business with support necessary for them to record success. One of the key supports that small businesses need is financing in terms of startup capital, expansion capital, and short-term credit facilities. Many Nigerian small businesses find it hard to access financing because they don’t have collateral such as landed property, because they don’t have an “active” bank account, or because the banks simply don’t think they are priority clients.
In other developed countries, the governments go out of its ways to create organizations charged with the task of providing small businesses with financing, support, and education. Interestingly, Australia’s SME financing market has developed beyond the offerings of the government—private lenders now offer different kinds of financing options to small businesses as part of efforts to keep the economy alive at the grassroots.
A committed effort to diversify away from oil
The oil and gas sector accounts for about 35% of Nigeria’s GDP and petroleum exports represent about 90% of total exports. The overreliance on crude oil expects puts the Nigeria economy at the mercy of the demand and supply dynamics of crude oil. Unfortunately, the players in the international crude oil market are many and they have different interests. Hence, the Nigerian economy is subject to undue volatility and uncertainty as the conflicts of interest continue to rock the markets.
The government needs to make a determined effort to steer the economy away from an overreliance on crude oil exports. Nigeria was an agricultural power broker before the discovery of crude oil and there’s nothing stopping the country from getting back into the agricultural revolution. The country also has many sound, innovative, ambitious and young minds by the virtue of its large population – an increase in human capital development could turn Nigerian into a technology of finance hub that drives innovation for the rest of Africa.
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