Experts Proffer Solutions to Nigeria’s Challenges

By Emma Okonji

Some experts have highlighted solutions that will help businesses recover fast from the adverse effect of COVID-19 pandemic on the Nigerian economy.

Speaking during a recent Webinar on the second quarter 2020 economic outlook organised by Nairametrics, the experts spoke about factors that would drive economic activities post COVID-19.

The Head, Investment Research Arm of Sigma Pensions, Wale Okunrinboye, in his presentation, gave an overview of the current state of affairs in the Nigerian economy.

According to him, the drastic decline in global oil prices had thrust Nigeria in a difficult financial position, even as the country’s external reserves continue to deplete.

This, he said, had also resulted in the devaluation of naira’s official rate from N305/$ to N360/$.

“Although the revised budget assumes a 40 per cent dip in revenue projections to N5.1 trillion, which is about three per cent of GDP, it amounts to one per cent decline in revenues from 2019 levels, which is about 3.6 per cent of GDP.

“Deficit financing remains unclear in the meantime, even though possibilities abound that the federal government may have to borrow heavily to plug the budget hole over 2020.,” Okunrinboye said, adding that recession was imminent for Nigeria.

He attributed it to the volatility in crude oil price and the fact that many Nigerian businesses have been at the receiving end of the negative effects of the pandemic, particularly those in the entertainment, tourism, and international trade spaces.

Also speaking during the webinar, the Lead Partner at SBM Intelligence, Cheta Nwanze, examined the series of unfortunate developments that have been working against the Nigerian economy since the outbreak of the Coronavirus, including the decline in oil prices, Nigeria’s lack of preparedness to handle the outbreak, the adverse effects of the weeks-long lockdown across the country, and even Nigeria’s rising inflation.

According to Nwanze, “Nigeria’s rising inflation has caused interest rates and capital importation to go down. Some of the implications of Nigeria’s depleting foreign reserves and the exchange rate crisis, have being the fact that Nigeria’s federal allocations are increasingly becoming smaller.

“There was a devaluation in between February and March this year, So, because of that devaluation, the March figures appear to be higher.

“But if you convert everything to dollar at the prevailing rates of such sharing, you will find that the money is actually consistently getting smaller.

“This again has implications in terms of social unrest, security, and the larger economy. States don’t have as much money. It means that some states will just go straight up and owe staff. “Some states will downsize, and the bottom line is that the unemployment market is going to get much larger.”

Speaking on the country’s electricity and agriculture challenges, a UK-based Nigerian Accountant and Policy Analyst, Feyi Fawehinmi, stated that Nigeria’s lingering power problems could never be resolved without a holistic solution.

According to him, such a solution would only be possible when the big and small consumers are brought together in a single power pool.

He argued that farming should be a choice, rather than the last resort of a wide segment of the population as a way out of poverty.

Addressing the issue of investment, Dr. Ola Orekunrin Brown of Flying Doctors, approached her discussion from the healthcare standpoint by emphasising that the virus does not move unless people move; hence, the need to maintain social distancing.