By Louis Iba and Uche Usim
IS the economy grinding to a halt? This is the question on the lips of most Nigerians as statutory allocations to states are dwindling, month after month, with no respite in sight. No thanks to the slump in crude oil price at the international market from over $150 to $50 per barrel.
“What is happening in Nigeria is that of a deteriorating financial condition,” said analyst, Bismark Rewane, the managing director of Financial Derivatives Company. “So we need fiscal and monetary policies to actually stabilize the situation before we can have a recovery,” he added.
Industry watchers say the nation’s dwindling economic fortunes have led to apprehension over government’s ability to pay the newly appointed ministers.
The big question now is, how can the nation wriggle out of the woods ?
Rewane, who was monitored on Channels TV Thursday in Lagos, observed that the nation is currently enmeshed in “aggressive mobilization of taxes, rationing of foreign exchange, penalizing people for infractions.” But he warned that the country risks losing a lot of investors if it continues to pursue the idea of excessive penalties for persons or institutions who breach the laws.
“It is important that we send the right signals to would-be investors,ß especially as our foreign revenue earnings have dropped,” he cautioned.
He said debt service has to be reduced as well as the amount spent on fuel subsidy.
But other analysts insist that key non-oil export sectors like agriculture, solid minerals, tourism, maritime and aviation, which were neglected in the past, hold the key to unlocking Nigeria’s potentials and revamping the economy.
Olisa Agbakoba, a seasoned lawyer and former President of the Nigeria Chamber of Shipping (NCS), has urged the government to focus its attention and resources on the maritime sector, saying it has the capability of generating N7 trillion annually if its potentials are harnessed. Agbakoba, a Senior Advocate of Nigeria (SAN), in a letter he once wrote to former Finance Minister, Dr Ngozi Okonjo-Iweala, described the maritime sector as the next economic life raft due to its enormous potentials.
“There is massive untapped revenue in our maritime sector estimated at N7 trillion per annum. I will suggest that you pay close attention to this sector, which, at this time, has virtually collapsed. In order to tap revenue from this sector, there will need to be an overhaul of policy, institutional, regulatory and legal framework.
“There is a raft of legislation pending, in the National Assembly, which have deterred growth in the sector, for example, the Petroleum Industry Bill (PIB), the Ports & Harbour Bill, the Bill establishing the economic regulator (shipping sector), and the Maritime Zones Bill etc. In fact, there is very good reason to review Nigeria’s Ocean Policy to tap abundant national resources”, Agbakoba stated.
Take the aviation sector as an example. At present, it currently contributes about N200billion to Nigeria’s GDP, a far cry from its full potentials which has been estimated at over N1trillion.
Experts have pointed out the existence of so many leakages in the system which rob Nigeria the ability to reap maximal benefits from its aviation sector. For instance, there is the issue of graft by operators and regulatory officials; there is also the problem of the requisite investment environment to attract investors into the industry. Till date, Nigeria has no functional national or flag carrier nor a maintenance hanger, a trend that results in yearly capital flight put at over N300billion.
The result is that “we have allowed foreigners to take the jobs of our pilots and engineers. We have been ripped off by foreign airlines; we have allowed the foreign airlines to do multiple entries into our airports because our policies are so loose and we allow them to take all the passengers to the detriment of the Nigerian carriers,” said Noggie Megison, President of the Airline Operators of Nigeria.
“Nigeria loses an estimated N300 billion yearly to foreign airlines who fly into and out of the country. Until the government puts in place policies that would protect indigenous airlines, the sector’s potentials for growth would remain stunted,” Meggison concluded.
Worried by the low contribution of the aviation sector to the recently rebased Nigeria’s GDP, the Federal Government says it is stepping up investments to stimulate the further growth of the sector in the years ahead.
According to the Governor of Benue State, Dr. Samuel Ortom, although the government was delighted with the new GDP figure now at $510 billion, it was, however, not too pleased by the low contribution (about N200 billion) from a critical sector like aviation to that figure. Ortom, a one time acting Minister of Aviation, said a short term target of N500 billion could be realised if all that should be done is done to attract investments into the industry. But the industry, he said, held the potential of contributing N1 trillion as part of its contribution to the GDP of the economy before 2020.
“Perhaps by 2020, the aviation sector should be contributing N1 trillion annually to the nation’s economy annually and support over 500,000 direct and indirect jobs. The future indeed for the industry is bright,” he added.
Maritime stakeholders say institutionalised corruption, politics, poor regulatory framework, decayed infrastructure, among other blights, are stunting the growth of the sector.
Economic analysts insist that Nigeria being an import dependent country must begin to look for ways to harness and export its abundant natural resources.
They insist that the nation should also unlock the multi-billion investment potentials in agriculture.
Interestingly, President Buhari, in his address at the recent conference of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), called for more private investments in the agro-allied sector of the economy.
“Growing our own food, processing what we produce, becoming competitive in export markets and creating jobs all across the economy are crucial for our national security. Nigeria has huge agricultural potential with over 84 million hectares of arable land, of which only 40 per cent is currently cultivated. The country also has some of the richest natural resources for agricultural production in the world.
“The urgency of unlocking our agricultural potential is even more pertinent because Africa spends about $35 billion annually on food imports. Agriculture should no longer be treated as a development programme; agriculture must henceforth be treated as a business.’’ he said.
While the ideas of how to rescue the nation from the doldrums are being distilled, Vice President, Yemi Osinbajo, has assured the nation that the Federal Government would evolve a robust economic blueprint that would help in swiftly diversifying the economy.
Source : SunOnline