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Opinions of Wednesday, 29 September 2021

Columnist: Dr Aderohunmu

Post-pandemic: What’s next on Nigeria economy?

President Muhammadu Buhari President Muhammadu Buhari

Nigerians are asking what’s next on the economy post-COVID-19 pandemic. But first, we can identify with the fact that Nigeria’s economic structure is a factor of endowments that evolves from one level of development to another.

Therefore, the country’s economic growth will be different at various levels of development, which means Nigeria’s economy requires corresponding infrastructure (both tangible and intangible) to facilitate its operations and transformation. Nigeria needs to create more opportunities for markets in Africa and beyond. Make no mistake about it, Nigeria indeed needs institutional changes where efficiency drives progress.

To transform the country economically, we must emphasise on the importance of education, training and hard work. We can also say that Nigerians work hard and not afraid of hard work. Even the President acknowledged the slightest need for preparing for the next stage. It was manifested recently, when the President, Major General Muhamadu Buhari (retd.), said, “This administration approaches a critical phase in its second term, hence the need to rejig the cabinet to strengthen weak areas, close gaps, manage the economy and improve the delivery of public good in the country.”

When government is willing, it can be done even though the expectation was greater than the action. Government can always do better. This is clear evidence than ever that Nigeria needs to transform the country’s economic systems of production and we need to do it now.

Post-COVID-19 pandemic is providing a new kind of economy as the global economy is changing face into a sovereign national economy, resulting into a sort of local and regional economic development: Take good care of your business and we shall do the same.”

Looking ahead, 2021 represents a year of continued searching for economic strategies to reduce the pandemic effect and to accelerate domestic market development. It is time to switch and develop an import substitution approach and agribusiness to move the agricultural sector from export of raw products to agro-processing and exporting of processed products.

The COVID-19 crisis has hit the most vulnerable economies and exposed the worsening inequality between countries, government has to rely on borrowed money and international organisations are compelled to reach an historic agreement to issue of special drawing rights (SDR) to deliver credits to poor countries based on providing economic sustainability. The pandemic has also brought a new approach to doing business as we live in more intercontinental world than before. Nigeria like many other countries is pressured to make good use of the resources efficiently to attract more trade and investments from other countries.

As many countries cautiously reopen for business, government policies and utilisation of available resources remain crucial barometers of progress towards ending the COVID-19 crisis.

In other words, Nigeria has to focus on the domestic market despite the challenges at each given level of development. The market is the basic mechanism for effective resource management allocations. However, economic development as a dynamic process entails structural changes, involving upgrading industrial policy and improvements in tangible and intangible infrastructure at each level. Such upgrading and improvements require an inherent coordination, with large externalities to firms’ transaction costs and returns to capital investment. Thus, in addition to an effective market mechanism, the government should play an active role in facilitating structural and institutional changes.

However, before going into the 2023 political cycle, what should be the government’s economic priority areas for the rest of 2021? Obviously, one of these moves should be investment policies for SMEs for measurable economic growth and job creation while the private sector focuses on business innovations and partnership for business development.

Government must also adopt a barrier-breaking approach as a most important tool to redefine strategies for new business development to open Nigeria’s economy for the private sector essentially through; institutional changes to support value change.

The county has great potential for economic recovery for the next generation of Nigerian leaders but government must be responsible to its role on the supply side by providing solid foundation to build the economy.

This implies that economic development and transformation proceed in two related but separate tracks: economic growth and development policies. Nonetheless, some of the key ingredients of modern business growth still remain competitive behavior and equilibrium dynamics. This includes investment in skilled labour through knowledge acquisition, mentoring, partnership and research for development.

Looking through the economic performance and sectors that attracted private sector’s investments, for instance, agricultural and energy sectors stood out as the backbone of the economy. They are indicators that show structural features of Nigeria economy in analysing the process of internal market development. On the other hand, the role of the state in facilitating structural change in the country’s economic transformation cannot be overstressed.

Reasons for private sector-driven economy will stimulate contributions for import substitution by moving from raw material exports to processed exports.

Policymakers must derive mechanisms in identifying sectors where Nigeria may have a latent comparative advantage and remove binding constraints to facilitate private firms’ entry into those sectors.

Agriculture is the most productive sector of the economy, between January and March 2021. It contributed 22.35 per cent of the total Gross Domestic Product. Nigeria needs a strategy aimed at increasing employment intensity and sustainability of its growth performance. Supporting the private sector by reducing government in business will change the narratives.