The economy needs new thinking - THE NATION
Posted By: Zayyad I. Muhammad
SIR: It is no more news that Nigeria has come out of her worst recession in two decades. The state of the economy is the greatest challenge facing the Buhari government; despite having recorded successes, over the last two years, in many areas – security, anti-corruption war, stability in the downstream sector of the petroleum industry, restoration of Nigeria’s good image in the international community and plugging leakages amounting to billions of naira.
The Buhari government inherited an economy which wasted $480billion between 2010 and 2014; no tangible savings in the Excess Crude Account with corruption ruling every aspect of governance.
The administration has taken precise steps towards the full diversification of the economy to reduce the country’s continued dependence on oil and to conserve our foreign exchange. One of such steps is the Anchor Borrowers Programme aimed at facilitating commercial banks’ lending to farmers of rice and wheat and other agricultural products. Despite this, the transformation of the agricultural sector into a major income earner for the nation demands more advanced thinking. This writer once advocated for a new agricultural scheme that encourages an all-inclusive participatory technique- where youths, communities, local councils, states, the federal government and the private sector (financial institutions and private investors) will be major participants.
Financial institutions and private investors will be the financiers; governments at all levels will have well-defined roles, while the youths and small scale farmers shall be the primary targets. In addition, the scheme should be designed to be in four categories- ‘export oriented’, ‘large’, ‘medium’ and ‘small’ scales, along with a well-defined time-frame for government to complete handoff from the scheme. The federal government would be the guarantor of funds to be provided by financial institutions or private investors. This will be done through the issuance of federal government bonds. The scheme would work in such a way that local councils and state governments would provide lands and other logistics. The private investors or financial institutions involved are not to give money directly to the government in order to receive the bond-certificates, but it would be a kind of barter arrangement; where the investors, either financial institutions or private individuals would set up farms and put in place all structures required in a standard farm. Afterwards, a bond certificate equivalent to the cost which is to be determined by both parties and NGO’s will be issued to them. This will completely eliminate corruption which is the main cause of failure of most good programmes in Nigeria. To encourage investors to participate in the scheme, before the maturity of the bond, the investor would take a prescribed stake, between 5% and 10% in any of the farms they setup. They will also assist in monitoring progress on the farm. Besides being an added value to the investors, this will also give them rights to shares from the farms’ profit.
Experts in the economy always inform us that variables such as low foreign exchange, the unstable or depreciating value of the naira, an import-dependent market, a mono economy and the crashed global price of the oil are the main reasons for the unstable prices of goods and services- the main reason most Nigerian are suffering. A study in the CBN Journal of Applied Statistics Vol. 7 No. 2 (December, 2016), stated that “inflation in Nigeria, was driven by the pass through of import prices to domestic prices via markup pricing by firms. This was aided by domestic inflation being persistent.”
The experts and managers of our economy are yet to come up with an economic system to keep prices of goods, services and the value of the naira stable. Of recent, when the value of naira suffered depreciation, there was debate on whether the naira should be floated or fixed by the government; none of the sides (to float or not to float) won.
Nigeria needs to develop home-grown and off-the-shelf approaches to tackle the unstable prices of goods and services and the stability of the naira, import payments and redistribution of wealth.
Our economic team needs to be expanded to include other ‘laymen’ such as the real local players in the markets, social commentators, farmers etc – these will increase the pool of opinions in the economic team. Let us look at the monetary system and local and international transactions – why can we not allow other currencies like the dollars, The West African CFA franc; Chinese yen to also be legal tenders in our economy, and asking our international trade partners to make some of their payments in Naira. This may be the silver bullet.