Opinion: Six Policies to Address Economic Challenges in Nigeria – Philip Williams

With a GDP of more than $1 trillion ended in 2022 last year. Nominally, Nigeria boasts the largest economy in all of Africa. Although we are the major supplier of oil and gas and which is the major source of revenue for the government. also, the country is expanding into other industries, including manufacturing, services, and agriculture. But what can be said of a country that is currently faced with multiple challenges?

Despite our oil wealth, Nigeria is ranked in the “low human development” category on the Human Development Index. A dire combination of increasing rapid inflation and rising energy costs; a shortage of foreign exchange (FOREX); a weak naira and an almost paralyzed aviation sector. What about the poor infrastructure and insecurity, corruption, high unemployment, a growing public debt; diminishing Foreign Reserves, and a declining educational system? All these remain major challenges to the economic growth and development of our dear country.

Although the government’s efforts to revive the economy are commendable, Thanks to the Bola Ahmed Tinubu administration, who had taken a bold step in addressing the issue of rising fuel subsidy expenses. But there is still a need for a more comprehensive strategy because these challenges are threatening to lay bare the country’s economy.

Nigeria’s Economic Challenges: A Matter of Urgency

Nigeria is currently suffering major economic difficulties that require swift intervention. Many economic issues, such as high unemployment rates, poverty, and inequalities, are present in this country. Millions of Nigerians are suffering as a result of these difficulties, which are also a threat to the stability of the nation.

Reasons why Nigeria’s economic challenges are a matter of urgency:

• High unemployment: Around 33% is the estimated rate of unemployment in Nigeria. This indicates that there are around 60 million unemployed Nigerians. Over 50% of Nigeria’s youth are unemployed, which is an exceptionally high unemployment rate for this age group.
• Inequality: Nigeria is one of the most unequal nations in the entire globe. Over 40% of the nation’s wealth is held by the richest 1% of Nigerians. Inequality plays a significant role in Nigeria’s poverty and unemployment.
• Poverty: Around 40% of Nigerians are thought to live in poverty. This indicates that more than 80 million Nigerians are living in poverty. Over 60% of rural residents live below the poverty line, making rural areas one of the poorest in the country.
• Insecurity: Numerous security risks, including terrorism, banditry, and kidnapping, are present throughout the nation. Economic growth is significantly hampered by these security risks.

The government of Nigeria needs to take urgent action to address these economic challenges. This includes implementing policies that are aimed at diversifying the economy, developing infrastructure, reforming education and healthcare, and providing social safety net programs. The government also needs to fight corruption, enhance good governance, and encourage foreign investment.

The Importance of Addressing Economic Challenges In Nigeria

One cannot overestimate the significance of addressing economic difficulties. A flourishing society requires a strong economy to provide everyone with the chance to improve the quality of their lives. Several issues can arise when the economy is weak, such as:

• Higher unemployment: Businesses are less likely to hire new staff when times are tough. This might result in increased unemployment rates, which would be disastrous for people and families.
• Reduced economic growth: Slower economic growth can result from a poor economy. People may find it more difficult to start businesses, purchase homes, and save for retirement as a result.
• A rise in poverty: People are more prone to living in poverty when they are unable to find employment or make enough money to support themselves. Numerous societal issues, including crime, homelessness, and bad health, may result from this.
• Low productivity: Businesses in Nigeria are not producing as much output as they could be due to the country’s low productivity.
• Corruption: A serious issue in Nigeria that threatens the rule of law and dissuades investment.

Although it is a difficult effort, addressing economic issues is crucial to building a brighter future for everyone. We can contribute to the development of a more robust economy that benefits everyone by making investments in education and training, assisting small businesses startup, and promoting entrepreneurship.

Six Policies to address economic challenges in Nigeria

Here are some specific Policies that can be taken to address economic challenges:

• Monetary policy: The CBN should use contractionary monetary policy to control rising inflation and stimulate economic growth. This should include raising interest rates to slow down the volume of the money supply. Also, the open market operations of selling government bonds to the public reduce the total money in circulation. The CBN Naira re-design policy is part of the measures taken by Apex Bank to drain out the circulation of the old note, but due to political reasons, the policy Failed!
• Fiscal policy: The government can use fiscal policy to stimulate economic growth and reduce unemployment. Which includes an increase in government expenditure on infrastructure and social programs, the financing of the educational sector should not be left out too. On the real sector of the economy, the government should work in hand with the central bank of Nigeria to resuscitate it. Nigeria as a country needs to become again, the Germany of Africa in terms of industries and production of industrial goods for both export and local use.
• Foreign exchange policy: The CBN should use a foreign exchange policy to control the fluctuation in the value of the naira in the international market to promote exports. This should include devaluing the naira to make exports more competitive and restricting access to imports, only when we’ve developed our real sector. Also, the unifying of the exchange rate should be pursued because this will attract a lot of foreign investors to our economy.
• Financial sector reforms: The Apex Bank should implement several financial sector reforms which will improve the efficiency of the banking system and make it more accessible to businesses and individuals. This includes the digitalization of the banking sector to be more mobile, and allow for more digital banks to operate, eg. Fintech. Also, The CBN should strengthen the regulatory framework, and improve the payments system.
• Trade promotion: The government should promote more international trade by signing free trade agreements with other countries. This has helped to increase exports and reduce imports. Also, the government should open up our markets to trade, from there, we can increase our access to new markets and new customers, and innovations and ideals will be welcome. This can help to create more jobs for individuals which will thereby lead to an increase in aggregate demand and boost economic growth.
• Microfinance: The CBN should promote and enhance the operation of microfinance banks to provide access to credit for Start-ups, SMEs and individuals. This has helped to reduce poverty and stimulate economic growth and development. Also, Apex Bank should make good and effective loan facilities available to Tech-start-up, this will greatly improve our servicing sectors.
• Infrastructure development: The government should invest more in infrastructural development, easy access to ram material will have a positive change to the general price level most especially, consumer goods. Government investment in constructing roads, railways, and airports is essential for a strong economy, and this can help to improve the efficiency of the economy and attract foreign investment.

These are just some of the approaches that the government and the CBN should adopt to address economic challenges in Nigeria. And by working together, I believe they will make progress in stabilizing the economy and laying the foundation for future growth and development.

The Way Forward

The way forward is a complicated and multidimensional problem. Many different factors need to be considered, and there is no single solution that will work for everyone. However, the general principles and policies mentioned above can be used to help us find solutions to the challenges facing our economy.

And I’ll like to tell Nigerians that one important principle is to focus on the long term. Short-term solutions are appealing, but they frequently come at the expense of the long-term. Cutting taxes, for example, may boost the economy in the short term because people will have more money to spend and will be able to meet their daily needs in the supply and demand market, but it may lead to increased deficits and debt in the long run. Yes, the government can generate income from other available sources, but the government will incur losses if this occurs. Instead, I believe we should concentrate on policies that will foster a sustainable economy that will benefit all.

Finally, we need to be courageous and stand in support of public policies which are met to address these issues for our betterment. The challenges we are facing are great, but as a patriotic Nigerian, I must say we also have great opportunities and I believe the new government will not stop working until we achieve our goal, ‘THE BETTER NIGERIA”.

References

[i] World Bank. (2023, March 8). Nigeria Economic Update: Resilience through Reforms. Retrieved from https://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-update-resilience-through-reforms

[ii] CGDEV. (2022, February 14). Nigeria: Fiscal Policy and Economic Policy Coordination at a Crossroads. Retrieved from https://www.cgdev.org/blog/nigeria-fiscal-policy-and-economic-policy-coordination-crossroads

[iii] The State House, Abuja. (n.d.). Economic Recovery and Growth Plan. Retrieved from https://statehouse.gov.ng/policy/economy/economic-recovery-and-growth-plan/

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