Wednesday, October 3, 2012

Nigeria’s Economy 52 Years after Independence

As Nigeria marks 52 years of independence from colonial rule on October 1, 2012, a reflection on the state of the nation will show that it has been a mixed grill for the most populous black nation on earth. Opinions are divided on how much progress has been made in the area of the economy and indeed the financial sector. However, there is a near unanimity of view that the country is not where it should be in terms of national development. Yes indeed, we have made progress but not an appreciable one considering where contemporary third world nations like Brazil, South Africa, India, Malaysia and Singapore are.

Nigeria is lucky to remain united in spite of many centrifugal forces pulling it apart.  Nigeria since independence has launched many development plans and articulated a number of visions such as Vision 2000, 2010 and now 2020.  Unfortunately, the country hasn’t got much to show in terms of real development. There is still a lot of infrastructural deficit while unemployment is at its peak, education is in the doldrums while corruption thrives, therefore dwarfing all government effort at nation-building.

In the financial sector, particularly the banking sub-sector,  the crises in that axis which exploded in 2008 are  yet to be over. If another stress test is conducted on the existing banks some of them are likely to go under as the harsh economic environment has not been helpful to our banking industry. Just few days back AMCON and CBN have to release a list of bank debtors who should not be given any further loan. If bank customers are not paying back their debts, how will the banking system survive? Yet it is not altogether the fault of the customers, many of them are being owed billions by various governments, federal and states especially. Many government contractors are not paid years after completion of their awarded contracts. Bank interest rates is also very unfriendly as it is usually in two digits, this in itself has made bank loans a debt-trap.

There are also too many reforms being pursued by the regulators of the banking industry at the same time, CBN, AMCON and NDIC kept churning out reforms that are in most cases ill-digested. The case in point is the attempt by CBN to restructure the country’s currencies and introduce additional denominations of coins as well as N5, 000 notes. This in my opinion is antithetical to the cashless policy introduced last year. Thank God the policy has been suspended. Even the cashless policy of CBN has not been fully embraced in Lagos where it is being piloted. It is also noteworthy that Nigeria is gradually sliding into debt-trap it exited few years ago.

On the whole, much as one can say we have made some progress in the area of economy in the last 52 years, corruption, insecurity, and  bad management have combined to  rob majority of Nigerians of high standard of living, rather we have been inflicted with high cost of living with greater poverty, unemployment and inflation to show for it.