ONE of the most significant consequences of the global public health crisis, the novel coronavirus, was the adverse effect that it had on economies around the world.
As the world faced the greatest public health challenge in most of our lifetimes, we also grappled with the economic effects of lockdowns: limited travel and economic activity, and especially, for oil-producing countries like Nigeria, the rapid decline in crude oil prices.
Our economic condition was worsened not just by the decline in oil prices, but by the weather and security challenges that hurt agriculture, the mainstay of the Nigerian economy. This meant we suffered the double whammy of lower government revenues, driven by the crash in oil price; while shocks in critical sectors also meant a contraction in the economy.
Thankfully, while Nigeria has officially exited recession with the recent GDP report showing a growth of 0.11 percent in Q4 2020, our overall performance in 2020 shows the economy contracted by almost two percent. In a country where moderate estimates suggest an annual population growth of five percent, any economic growth that lags population growth is a recipe for the kind of socio-economic tensions we are now experiencing in the country. As we all know, the massive youth bulge we lay claim to can be an asset and or a challenge; well deployed, they will be the catalyst for our long-awaited economic boom, but if we are unable to provide them with jobs, it can also be a catalyst for social unrests and insecurity.
Social unrests and insecurity
As we note the return to growth, however modest, it is important that we now build on this trajectory, and deliver a period of sustained economic growth to Nigerians. These Nigerians, many of whom rely on daily activity to earn an income, have found themselves struggling to support their families. Businesses have had to shut down, leading to a rise in our already high un- and under-employment numbers. In many cases, where jobs weren’t lost, a significant reduction in income was recorded. But as those who have been elected into positions of leadership, we must continue to strive, to seek, to find, and not yield, as Alfred Tennyson reminds us.
States, as the ultimate custodians of economic activity, must play a leading role, not just in economic recovery, but in the much-needed sustainable growth that Nigeria is crying for. The anchor of our economic recovery is already being laid by the Federal Government, with a significant investment in much-needed and long-overdue infrastructure in the power sector, rail, roads, and our ports. The National Sovereign Investment Authority, NSIA, has demonstrated what is possible with the progress of the Lagos-Ibadan Expressway, the Abuja-Kano Expressway, and the Second Niger Bridge. These projects provide an easy link between states, making transport easier, which not only reduces the cost of doing business but also has a knock-on effect on real estate appreciation along the corridors now opened up by better roads or rail lines.
I am also optimistic that the plan of the Central Bank of Nigeria, CBN, to midwife a much-needed Infrastructure Development Company in partnership with African Finance Corporation, AFC, and NSIA will be anchored on which private capital can invest in both sovereign and sub-national opportunities. To optimize these efforts, the Bankers Committee must take an active role, and help design structures that will encourage Nigerian banks to provide medium to long-term debt to support the other types of capital investment in these opportunities. I have already mentioned agriculture as the mainstay of the Nigerian economy. Through its contributions to exports and government revenues do not reflect its significant GDP contribution, it is a sector we must invest in to improve productivity and move our people from being subsistence farmers to processors, and also create significant wage-paying jobs in the sector. While we prepare our young people for jobs enabled by technology, we cannot lose focus on today’s key sector, which is also critical for food security, in addition to its economic contribution.
We must build better research and data collection capabilities, which are both critical to improving our yield across various value chains. For example, the low yield of cattle in Nigeria is an issue that should be tackled by funding the National Veterinary Research Institute in Vom, whose work can then impact the work being done by Promasidor Nigeria Limited in partnership with the Ekiti State Government, at the Ikun Dairy Farm.
Finally, we must also encourage investments in storage infrastructure; because a situation where a lack of storage infrastructure leads to 30 percent losses, means just investing in storage, without even increasing the yields, will already improve productivity. All these will come together if states can develop Special Agro-Industrial Processing Zones, SAPZ, and I am very excited at the work being done by the Federal Ministry of Agriculture and Rural Development, in partnership with the African Development Bank to deliver a number of APIs in Nigeria, within the next 36 months.
As we protect our mainstay, there is also an equally important task of developing jobs of tomorrow. We have often spoken about the need to support technology, and prepare our young people for jobs of the future. Well, the future is now, and those jobs are now available for those alive to the opportunity. Again, as states, we are rising to the occasion, and a number of state governments have now either reduced the cost of laying fiber to N145 per linear meter or even abolished the charge completely.
IT means Governments and the private sector must collaborate to identify the most critical jobs, and then prepare our workforce for those jobs. But the biggest reason to support the growth in broadband infrastructure is to ensure nobody is left behind.
If we have learned one thing from COVID-19, it is that virtualization is here to stay, this includes remote learning, work, and even social engagements. This means that broadband is no longer a luxury, but a necessity. There have been many suggestions that even when this virus is finally in our past, the world as we’ve known it has changed permanently. To stay ahead of the times, we have to review our ways of doing things. For example, we have to ensure a skilled and healthy workforce is developed. Developing a skilled workforce these days means preparing our youth for the future of work. From digital skills training to technical and vocational training, we must equip our young people with the required skills to take up jobs in the Fourth Industrial Revolution.
I will now touch on land reforms, where States are the dominant organizers of land. As Chairman of the Nigerian Governors Forum, I can confirm we have identified the reform of land management across States as a critical deliverable for 2021, and many States are preparing to deploy GIS, and ensure at least 50% of land and properties in urban areas are registered and geo-tagged. Such land reform, if followed by the appropriate legislation by mortgage and foreclosure laws, which has been enacted in a number of States, including Ekiti, will support the real estate industry and help to drive mortgages. By doing this, we will support the continued recovery of the real estate sector, one of the few to show encouraging signs of growth.8.While I am confident that State Governors will rise to the occasion, we must look beyond our individual States and start to drive regional growth across neighboring States to benefit from economies of scale, and regional integration. For example, security, which is a major constraint to economic activity, can only be resolved if States work together, share intelligence, and adopt a common approach to this problem. We will continue to encourage States to seek collaborative solutions to such problems, so the solutions can be effective and sustainable.
We will also continue to engage with the Federal Government and its institutions, to ensure that States are an integral part of developing and implementing national economic plans. Only last week, we received a brief from the Presidential Economic Advisory Committee on its poverty reduction plan for Nigeria. We will study the plan in detail and share insight from our various sub-national that will enhance the plan, and ensure we also actively participate in its implementation. We adopted a similar approach with the Economic Sustainability Plan, and the collaborative effort adopted has given more impetus to the plan, evidenced by its rapid implementation across States. One example of this is how multiple States have provided land to Family Homes Funds, and also delivered their workforce as guaranteed off-takers when the houses are built.Without the active participation of States, such an exciting plan to improve the housing stock in Nigeria would have a reduced chance of success.
We must remember that a rising tide lifts all boats. As sub-nationals will jointly and severally create an environment that makes it easier to do business, and as a result, attract domestic and international investors. We have invited the Nigerian Investment Promotion Commission (NIPC) to partner with us on this, and the Book of States publication recently released by NIPC is only a first step, which showcases the comparative advantages and investment opportunities across the 36 States. We will deepen this by using peer lessons to adopt proven models of investment promotion, and ensure that no part of the country is left behind. With the adoption of the African Continental Free Trade Agreement (AfCFTA), it is now more important that we focus on both national and sub-national business reforms. This is why we will also work with the Presidential Enabling Business Environment Council (PEBCEC) to monitor and advise States on how to make their jurisdictions more competitive.
As I have said at different fora, many might argue that none of the actions we take at the subnational and even national levels to revive our economy will succeed with a high level of insecurity; and I agree. However, I will repeat that we need to emerge from this crisis with a plan to create jobs and put food on the tables of our people, I repeat this knowing that by focusing on job creation and poverty reduction, we will reduce the lack of opportunity, which remains a big incentive for crime. Where unscrupulous characters insist on crime, we must be ready to tackle them with well-trained and appropriately remunerated security agencies.
I believe we are at an inflection point as a nation, and that with brave, courageous, and emphatic leadership, we will emerge from this period stronger and better prepared for a future of endless possibilities. As William Shakespeare wrote, “there is a tide in the affairs of men, which taken at the flood, leads on to fortune.” It is an important phrase for us to consider, as we are now navigating such a tide. But it is also important to remember how Shakespeare closed this famous passage from Julius Caesar by writing, “on such a full sea are we now afloat; and we must take the current when it serves, Or lose our ventures.”
I thank Vanguard Newspaper for inviting me to this discourse and giving me an opportunity to share my thoughts with such a distinguished audience, and I thank you all for listening
*Excerpts of a keynote address presented by Ekiti State Governor, Dr. Kayode Fayemi, CON, at the Bankers Initiative for Economic Growth Summit organized by Vanguard Media Limited, in Lagos