Economic revitalization of Nigeria

DONALD Trump was quoted in an interview with Nora O’Donnell of CBS news in NYC on June 22, 2016, saying “I’m the king of debt. I’m great with debt. Nobody knows debt better than me, I’ve made a fortune by using debt, and if things don’t work out? I renegotiate the debt. I mean, that’s a smart thing, not a stupid thing”.  Trump was alluding to the fact that the American economy is based on debt. The American dream of homeownership and a car(s) is available to anyone with an income and debt payment history. The American dream is available to native-born Americans as well as immigrants. Simply stated, America Runs on Debt. As of December 2021, America’s national debt, including debt held by the public and debt held by the federal trust funds is approximately $29 trillion. Why should Nigeria, a manifestly poor country operates a cash-based economy? The American dream of owning a home and a car is made possible by the availability of loans at low-interest rates. The federal reserve sets the fund rates on loans to commercial banks, and as of December 2021, the fund rate was between 0.00 to 0.25 per cent. The commercial banks set the prime interest rates on loans to consumers and as of December 2021, the prime interest rate was between 3.25 to 5 per cent. The accessibility of loans at low-interest rates is the secret to the American dream.

Conversely, the Nigerian dream if one exists is largely driven by family or individual aspirations. In the early 70s and early 80s, most Nigerians aspire to university education which promises the life of a middle class, characterized by 1 to 3 bedrooms flat with a guaranteed loan to purchase a car. Those of us who grew up around this period remembers a vibrant society that was relatively safe and secured. The discerning mind can appreciate the similarity of the loans afforded to the middle class in Nigeria of that time and the relative ease of obtaining loans in the USA today. Now compare Nigeria’s economy of the 70s and 80s with a quasi-credit economy to the current situation. During this period, the Naira was relatively stable with a value higher than the dollar. If Nigeria had maintained the trajectory and expanded the loan guarantee to business creation, just imagine where Nigeria will be today? How can Nigeria recreate a thriving middle class with minimal government investments?

Strategies for the economic resuscitation of Nigeria

It is not an exaggeration to surmise that Nigeria today is comatose, with most economic activities grounded to a screeching halt. Most Nigerians are familiar with the negative indices of inflation, unemployment, decadence, corruption, insecurity, lack of commerce etc. The purpose of this exercise is not to regurgitate Nigeria’s malaise nor is it designed to flagellate government officials. The intent is to proffer solutions that could mitigate our current predicament. I am hopeful that this piece will encourage a robust debate that will coalesce into policies that can lift Nigeria out of the current morass. We only have one country, and we might as well make it better. It might be tempting for some in the diaspora to be nonchalant and dismissive of the situation in Nigeria. I dare ask you to imagine being unceremoniously deported to Nigeria for any reason. Take the case of a Nigerian attorney who is currently in jail for obtaining US citizenship with false information, his citizenship was revoked and will be deported after serving his jail term. There was also a recent case of a man who claimed to be falsely accused of child molestation.

This man who has resided in the USA for 40 years will be deported upon completion of his prison sentence. Of course, anyone who commits a heinous crime should be punished, but this case highlights a generally unfavourable attitude towards immigrants. There is a nationalistic fervour around the world with disdain for immigrants. For example, the UK is currently debating nationality and border law that will allow the government to strip people of their citizenship without notice. In the USA, thousands of Haitians were recently deported, and the US supreme court recently ordered the Biden administration to maintain former President Trump’s policy of not allowing refugees on American soil. Many immigrants recently died at the border between Poland and Belarus after being denied entry into Poland, and similarly, scores of immigrants recently died between the border of Turkey and Greece. With the foregone narrative, I think it is the right time for us in the diaspora to be engaged in the process of fixing our country, and with that in mind, I want to humbly propose three phases of economic revitalization with the objectives of resuscitating Nigeria’s moribund economy. Phase I: Short-term Economic Revitalization: 1) Re-evaluation of Nigeria’s Monetary policy. 2) Attracting investments from Nigerians in the Diaspora 3)         Incorporating local vigilantes into the security architecture. Phase II: Medium-term Economic Revitalization: 1)Encourage Black Pilgrimage to Africa.  2). Investments in Education. Phase III: Long term Economic Revitalization: 1) Create an enabling environment for Industries 2) Invest in Quality Health Care. Phase I: Short-Term Economic Revitalization:

Re-evaluation of Nigeria’s monetary policy

The re-evaluation of Nigeria’s monetary policy with the goal of lowering interest rates and the liberalization of lending policies will reignite Nigeria’s economy with implications for wealth creation, massive employment, societal stability, security, and the general well-being of Nigerians. Compare the following statistics: As of December 2021, the prime interest rate in Nigeria was 11.61 per cent. As of December 2021, the prime interest rate in Rwanda was 4.5 per cent. As of December 2021, the prime interest rate in the USA was 3.25. As of December 2021, the Prime interest rate in the EU was 1.75 per cent. As of December 2021, the Prime interest rate in UAE was 1.25 per cent. Given the interest rates above, if you are looking for investment opportunities, where would you invest? Now consider the cost of doing business in Nigeria. Consider the cost to power your operations, consider the security costs and consider the cost of pilfering by your staff. Are you surprised at the level of unemployment and by extension are you surprised at the designation of Nigeria as the poverty capital of the world?

How should Nigeria mitigate this situation?

I want to share a personal experience. In 2015, I decided to invest in a property in Lagos. Upon identifying a property, I approached the Imperial Homes Mortgage Bank in Lagos for a loan. After an interminable process, I was approved for a N38 million loan. The interest payment on the loan would’ve doubled the principal amount by the time the loan was paid off. I had no choice but to turn down the loan. Imagine the potential employment opportunities of such investments? If I had converted the property to short term vacation rentals, I could have hired a porter, a cook and probably a driver. Now imagine 20 million people in the diaspora with similar opportunities, you are looking at about 60 to 100 million employment opportunities. I recently came across the story of pastor Tunde Bakare’s N9 billion loan default, and I was not surprised. Say what you may about the wisdom of such a loan to a non-productive sector, the fact is that the current interest rates in Nigeria is not sustainable and discourage investments. It is pastor Tunde Bakaretoday, how many more loans will default in the future?

Solutions:

The monetary policy must be reoriented for the economic wellbeing and investment opportunities of Nigerians. The central bank should mandate banks to slash their interests to no more than 5%. This can be accomplished by the central bank charging no more than 1 – 2% on loans to commercial banks. The central bank must encourage commercial banks to liberalize their lending policies to individuals who may not have the collateral for borrowing. Think about the local tailors, think about the carpenters, think about the farmers, think about the street vendors, etc. To qualify for such loans, there must be a requirement for job creation and the timely payment of reasonable wages. I recognize the concerns for potential defaults and frauds. But if other countries are successfully prosecuting such loans for economic growth, Nigeria should be no different.

Attracting investments from the Diaspora

Attracting investments from the diaspora is an untapped pot of gold waiting to be explored with the right strategies and inducements. I make bold to surmise that should the government create the enabling opportunities, Nigerians abroad will invest in Nigeria. According to Nigeria’s Central Bank, Nigerians in the diaspora remitted about $9.2 billion in the first half of 2021, with more than $20 billion forecasted for the year. The strategies and inducements to attract investments from the diaspora could potentially increase remittances by 50%. Some of the strategies should include but are not limited to, investments in security, and the creation of an office of investment devoted to transparency, integrity, and expedition. This office will be charged with instilling confidence and channelling investors into productive opportunities. There’ve been too many instances of Nigerians in the diaspora losing their hard-earned money to fraud in their quest to invest in Nigeria. The office of investments will be responsible to guide against such occurrence. If the government provides an atmosphere that minimizes fraud and corruption, the trajectory of Nigeria’s economy will be stratospheric.

Incorporating Local Vigilantes into the security Architecture

Growing up in Lagos in the seventies, I recalled the constabulary forces who were ubiquitous in the neighbourhoods. The constables do not carry guns but instead are armed with batons and handcuffs. Their benefits go beyond the types of weapons at their disposal. They serve as the eyes and ears of the police. The government should formalize local vigilantes by hiring them into a constabulary force with responsibilities for specific locations and accountable to the divisional police command. Their presence and intelligence gathering will go a long way in minimizing crimes and the perception of crimes.

Phase II: Medium-term Economic Revitalization:

Encourage Black Pilgrimage to Africa

Most black people from other continents are yearning to discover their roots. Take Saudi Arabia and Israel as examples: Saudi Arabia was a barren dessert controlled by the ottoman empire of present-day Turkey. The house of Saud eventually claimed the piece of barren land and constructed what today is the home to Mecca and all Muslims are encouraged to visit Mecca at least once in their lifetime. In 2019, the Hajj revenue was 7% of the Saudi’s GDP amounting to more than $12 billion. It is estimated that the revenue from this sector will continue to grow. Israel is another example, a country that was created with the adoption of the United Nations Resolution 181 on November 29, 1947. In 2019, Israel realized about $8 billion from tourist on pilgrimage to the holy land. Nigeria should borrow a leaf from Saudi Arabia and Israel to create a pilgrimage for blacks around the world yearning to come back to their motherland.

Investments in Education:

The ultimate solution to Nigeria’s doldrums lies in the investment in a rigorous educational curriculum. Such investments will require a reappraisal of the educational standards. It is unfortunate that the history of the catastrophic slave trade which carted away millions of Nigerians into slavery are not taught in Nigerian schools. Contrast Nigeria’sexperience to the Jewish pogrom where six million people were annihilated during the second world war. Every Jewish child is taught about the genocide from childhood, culminating ina collective clarion call of “Never Again”.But in Nigeria, history is completely absent from the educational curriculum. We are instead taught about Mongo Park discovering river Niger and about Mary Slessor, as the saviour of twins in Calabar. Even worst, we have yet to identify those Nigerians who benefited from the slave trade. It is important that the history of Nigeria be taught to create a resolve of “Never again” to slavery and subjugation. Nigeria will also need to revamp the curriculum on science, math, and technology to give our children a competitive chance in a global economy. The ongoing covid pandemic should be a wake-up call to invest in the sciences necessary to be self-sufficient for the next pandemic. The government should invest in technical institutions to train Nigerians in computer coding with the objective of making Nigeria the technology hub of Africa. These investments can yield enormous benefits for the future of Nigeria.

Phase III: Long term Economic Revitalization:

Creating and enabling environment for industries:

It is a sad commentary that 60 years after independence, Nigeria is a consumer economy that lacks productive capacity. Nigeria was the second leading producer of cocoa in the 70s. Palm kernel was transported from Nigeria to Indonesia which today is the leading producer of palm oil products. Crude oil, which is the mainstay of Nigeria’s economy is refined abroad and imported back to Nigeria for local consumption. Rwanda is a country of about 13 million people who recently experienced an internecine ethnic cleansing, but Rwandatoday has metamorphosized into an industrial hub of Africa. The country now boasts of the only gold refinery destination in Africa, the country produces smartphones for local consumption and foreign exports.

Nigeria can become another industrial nation in Africa. To accomplish this status, the government should establish low-interest loans for establishing manufacturing in the country. Government grants should be established for manufacturers in national security equipment, industrial equipment, automobiles, CCTV, drones, etc. To qualify for the low-interest loans and government grants, manufacturers must commit to utilizing local raw materials thereby creating ancillary industries.

Nigeria should invest in the agricultural sector with the goal of becoming Africa’sbreadbasket. The government should provide low-interest loans to farmers with a guarantee to purchase farm products not sold by the end of the season. Government should establish giant silos across the country for the storage and preservation of the purchased foods. Such food can be distributed to indigenes in Nigeria and across Africa thereby engaging in food diplomacy. The government should implement free lunch programs in schools to encourage learning. The point is that with the right leadership, Nigeria can rebound into a productive and self-sustaining economy.

Invest in Quality Health care:

Some of us have heard fabled stories of leaders from other countries patronizing Nigeria’s hospitals for first rate medical intervention. How did we go from a medical destination country to a medical tourism country? Successive governments neglected to invest in quality Health care thereby turning this sector into death traps. Government should investigate the possibility of organ sales as a cause of the incessant deaths in Nigeria’s hospitals. Hospitals and private clinics should be required to provide information on all encounters that resulted in deaths for peer reviews. Hospitals must be required to maintain operational diagnostic equipment to diagnose patients before treatment. Finally, the government must pass a law that mandates hospitals to provide lifesaving intervention to patients without regard to their ability to pay. The current dynamics of requiring payments before life savings treatment must be abolished. The investments in this sector can make Nigeria a medical destination again.

The narrative above is by no means exhaustive as I am certain that there are multitudes of ideas not explored in this piece, but as I stated above, this piece is designed to present my thoughts on the potential economic revitalization of Nigeria. I am hopeful that this writing will spur others to come up with other ideas and hopefully, we can arrive at cohesive and workable solutions to pull Nigeria out of its current spiral.

• Okhiria, vice president of Revenue Cycle Management in New York City, United States, writes in via Felixokhiria01@gmail.com

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