The NTU-SBF Centre for African Studies released an exclusive report that lays out a roadmap for Nigeria to achieve sustainable growth over the next 10-years amid pressing economic challenges. The report ‘Back to Growth: Priority Agenda for the Economic revival of Nigeria‘ is the work of Amit Jain, Director of the NTU-SBF Centre for Africa Studies and was launched on Friday, 18 August at the Singapore Business Federation.
As many as 50 attendees graced the event, with backgrounds ranging from academia to business, and hailing from all corners of the globe, lending diverse perspectives to the discussion which centred around how Nigeria can leverage partners from Asia, Europe, US and closer home in Africa, to realise its destiny as not only Africa’s largest economy but also home to one of its youngest populations.
Singapore to Nigeria: Great times ahead
The agenda for the seminar was well fleshed out by SBF Director Ray Kwan, and the event was headlined by SBF Chairman Ranveer Chauhan (pictured to the right, in the photo below), who is an African aficionado with over three decades of experience across economies in West Africa, having worked with Olam International in vibrant parts of the continent such as Nigeria and Ivory Coast.
He started the discussion by noting that SBF is a very Singaporean creation, founded on April 1st, 2002 with a combination of economic opportunity and government enthusiasm to support such opportunity.
“Singapore has over US$370 million of trade with Nigeria across various sectors. Be it Olam, Tolaram, or Wilmar, all these business houses have grown their ventures with Africa. Nigeria is the first country I landed in, within Africa and I can still feel the rhythm of the market all the way back in 1993. I believe Nigeria has great times ahead,” he noted.
Taking over the floor from him, Amit noted that the report looking at a 10-year roadmap for Nigeria’s economic revival is the most ambitious project undertaken by the NTU-SBF Centre for African Studies at the Nanyang Business School so far. He explained that CAS was supported in the ‘heavy lifting’ needed for the comprehensive report running into almost 150 pages with initial research by McKinsey Africa, and noted that ‘Nigeria needs political will to make these hard choices that will allow it to grow well into the future. By 2050, Nigeria will be the most populous nation in the world.’
Vicious cycle: Eroded forex reserves, high inflation and low business confidence
He soberingly remarked how dwindling forex reserves, hurting inflation and collapsing business confidence were causing a serious setback to the African economic giant’s growth prospects. On this note, he outlined four factors that would help decide Nigeria’s fate – price of oil, fiscal stability, infrastructure improvements and investor confidence – while emphasising that growth will come from 5 key sectors – trade, agriculture, infrastructure, manufacturing and extractive industries.
He went on to paint the full picture of poverty in Nigeria, at best 45% of the population or 95 million (going by the World Bank definition of extreme poverty at less than US$ 2.15/day) or at worst, 90% of the population or 190 million (going by the IGET definition of US$ 5.5/ day). He also noted worrying regional disparities in poverty and explained that key measures such as controlling inflation, reducing trade barriers, ending fuel subsidies, making direct cash transfers, and curbing oil theft & insecurity would go a long way in helping Nigeria achieve its aim of pulling 100 mn people out of poverty by 2030.
Over the longer term, Amit rued that, while education, health and governance were critically needed to have been put in place by phase III of the strategy (over 10 years), the youth-heavy economy currently spent only 5% on health and education put together (as against the 17% recommended by the report), while corruption was a persistent scourge.
Some silver linings achieved, others lie ahead
Amit outlined that the report also notes how, given low receipts from exports and as Nigeria continues to be a net importer of crude oil, it is important that extractive industries be prioritised. Here, the attractive prospect of the Dangote refinery starting production later in the year continues to hold out hope, as it would increase production by 650,000 barrels a day, against the current crude production of 1.3 M barrels/day (of which 0.2M was lost in oil theft and pilferage) when the actual potential production could be as high as 2.5 M barrels/day.
He mentioned another silver lining to Nigeria’s immediate growth prospects by noting that, since the report was published, the government had already removed subsidies on oil. Indeed, in May 2023 itself, the Nigerian government announced that it would dismantle long standing fuel subsidies to overcome pressing concerns such as the trade deficit of US$20 million recorded in November 2022 from the low crude oil export receipts, develop local production capacity, and end fuel import dependency.
Moreover, such subsidy was riddled with corruption, manipulation and mismanagement, causing the economy to be trapped in a vicious cycle that has seen debt balloon to 22.97% of the GDP. Additionally, if the senate approves the president’s request to convert US$53 billion worth of temporary loans to the government from the central bank into 40-year bonds, debt could swell up further (to as much as 37.3% of the GDP), but the interest savings would be enormous.
Finally, Amit advised that the currency fluctuations were another key concern, as the Naira has been extremely volatile. Here, he mentioned that the official rate of the Naira in December 2022 was 445 to a USD while the black market put it at a whopping 737 NGN to a dollar, indicating the urgency in aligning the rates before the exchange value gets out of hand.
Way forward: Sensible monetary policy and goal setting with fiscal oversight
On monetary policy, the report recommended that the government must set a framework for the Central Bank of Nigeria (CBN) to intervene and allow the Naira to float – but within a band – and peg the Naira rate against a basket of currencies. As against this, Amit noted that the IMF has recommended a free float such that commercial banks are allowed to set forex rates freely but that Singapore’s experience better bears out a flexible float.
Amit ultimately unfolded the report’s final recommendation, based on the Nanyang Governance Improvement Framework which is an overarching framework for more effective governance. The strategic plan inspired by the Nanyang Governance Improvement Framework involves controlling inflation; stopping oil theft; establishing a set of priorities, targets and outcomes; setting up delivery units as well as an overarching monitoring and evaluation authority; further tightening of fiscal oversight and allocating budgets based on impact per spend. He concluded on the note that, “The roadmap is not a panacea for all challenges Nigeria faces but it is a guide. If it implements the recommendations of this report, we believe that Nigeria can emerge as one of the top 20 economies in the world.”
Here, Ranveer interjected to say that the report might make the future sound challenging, but while the population of Nigeria has doubled in 30 years, GDP has grown 9 times and large business groups have grown even as much as 10 times.
The floor was then laid open to audience questions, which came thick and fast on various fronts. Key concerns echoed around the importance of putting governance in place at the outset rather than in phase III of the report recommendations (to which Amit replied that good governance may be a North Star but it would take time to get there), and if Africa is indeed China’s next frontier (to which an NUS academic explained that there is a need for Africa to diversify its sources of learning and cultural interaction beyond UK, US and the EU).
Final, golden words of advice came from Mr Shabbir H Hassanbhai, who has served as Singapore’s Non-Resident High Commissioner to Nigeria since 2007. He thought-provokingly remarked that parallels can be drawn between Singapore in the 1950s and Nigeria’s challenging circumstances today, “In the 1950s, Singapore was a backwater and overcame corruption through education, housing and employment. We used to get involved back in the day in capacity building through Enterprise Singapore and most Nigerians were interested in managing corruption. We achieved a lot in the decade from 2007 to 2018, of which key was setting up CAS. While there is an entire chart on the opportunities in Nigeria that Amit presented, the easiest way for you to help Nigeria is to invest in anything – be it consumables, diapers or white goods – as Nigeria needs plenty of everything.”
He also made a crucial distinction between lack of material wealth and poverty of the mind, noting that, though Nigerians are poor, they are kind, good and willing to learn. “They are cash rich so in that sense Nigerians are not poor, but their living conditions are difficult. In the end, Nigerians are very sincere and hard-working, and that offers a key way out of the challenges being faced by the economy,” he concluded.
The event ended with a lucky draw for participants in the session, with the winner receiving a bottle of wine made in Africa, while the seminar spilled over into a networking session over cocktails and nibbles to allow the audience to peruse their exclusive hard copies of the report more fully and to delve deeper with clarifications from the report author, Amit Jain.
It was a good report on Nigeria’s economy. Anyone living and doing business in Nigeria today will not fail to know that the biggest obstacle to its economy is CORRUPTION!. This derives from bad governance. It therefore follows that the obstacle needs to be dealt with the greatest efforts across levels of governance if any meaningful results are to be recorded by 2030.
I congratulate the Centre for the this great academic work of practical relevance to not only Nigeria but to other countries in Africa.
As a Nigerian economic modeller, I would be grateful to have a copy of the report sent to me.