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Nigeria’s Unsmiling Economy And Its Collapsing Forex Revenue Base

The Oasis Reporters

March 17, 2020

The 2008 economic meltdown in Nigeria started from a stock market high. We went from partying to praying, hoping that it would get better, or as the street slang in Lagos, the country’s economic capital would echo it, “ee go better”.
At least, we started on a high, before the sigh.

Conversely, this looming meltdown is starting from an economy that is not smiling at all. Where do you go from “not smiling” when your fx revenue base collapses by about 30% and other nations are shutting in as a result of a global pandemic?

For years, Nigeria has refused to address it’s deficits on infrastructure, just as meaningful economic reforms are not tackled. Just imagine this: In 21st century Nigeria, the governor is the owner of all lands in the state, with no credible unified land registry. Some would swear by their grandmother’s tomb that an ex-governor can sign certificates of occupancy and backdate them to his time in office. Talk of dead capital, talk of land in Nigeria. When the domestic cost of producing rice is more than the combined cost of producing rice in Thailand, export taxes and transport costs to our border, you know we have played ostrich to transportation infrastructure – along with the scandal of corruption, humorously tagged “wetin you carry” bottlenecks line the transport routes.

Lagos, which is said to be “business friendly” is a multiple taxation bedlam hurtling with fury to infrastructure collapse. In what is the biggest market in Nigeria, it is impossible to keep three appointments in a day in Festac, Victoria Island and Ikeja. Try it for a month and observe how suicidal that impossible task can be.

The country’s reserve bank, known as the Central Bank of Nigeria (CBN) last week said market fundamentals do not support a Naira devaluation, yet this week it is cutting interest rates. We have an opaque position on our unencumbered foreign reserves, but the CBN Governor insists on “defending the Naira”. Our revenue base is not increasing. Operational leakages abound, not to talk of the endless tales of resource defalcation in government. Our debt obligation is the stuff of a Stephen King horror story. Yet we are borrowing anew. The stock market report have more reds in it than a blood bank, wealth is being eroded faster than the laterite embankments of Anambra, a state in South East Nigeria.

At some point, we will have to confront this ugly truth – how low can we go before the bottom gives way?

But before I am accused of proffering no solutions which is not true, let’s try by looking at some solutions by agreeing that there is a problem and taking a stance that is antithetical to the cause of the problem.

Take for instance, the tried and tested to fail policy of defending the Naira. The solution, scary as it may appear, would lie in removing exchange controls as they exist. CBN involvement in retail Fx transactions is obtuse, if one is being kind.

Take the Land Use Act for example. It is economic suicide by another name. How about repealing it? The Executive and Legislative arms of government are controlled by the same party.

The pseudo-intellectual stance that the solutions to our problems lie in some complex set of policies or arcane science is pretentious and masks a deeper unwillingness to hold those elected to govern to task.

Most of the solutions to our problems are commercially available, never mind that they are not that complicated.

Written by Tèmítáyò Fábùnmi.

Tèmítáyò Fábùnmi is an Obafemi Awolowo University, Ile-Ife educated graduate and he once worked in financial controls at Guaranty Trust Bank, a top tier five bank in the country. He recently came back to Nigeria from his academic and work sojourn in Europe, because “there is no place like home.”

Greg Abolo

Blogger at The Oasis Reporters.

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