The Inflection Point: Nigeria after Covid-19
‘We know from chaos theory that even if you had a perfect model of the world, you’d need infinite precision to predict future events. With sociopolitical or economic phenomena, we don’t have anything like that.’ Nassim Nicholas Taleb
The year began on a promising note with business projections and plans. Like other professionals, we had looked forward to the coming months with pomp and zest – beaming with excitement to improve the previous year’s results. Alas! The shock of the decade – a global pandemic! The first week, ‘well, it will be fine soon.’ The second week, ‘it is mostly in a certain region of the world.’ Month 1, 2 and 3, and we are just slowly settling from the impact of the pandemic – health, livelihood, businesses, and the economy at large disrupted. According to McKinsey, ‘the pandemic could tip Africa into its first recession in 25 years. Also, it is believed that as many as one-third of all jobs in Africa could be affected. Africa’s high degree of informality and relatively low levels of social protection exacerbate the risk even further.
I posit that Nigeria, like other African countries, must see from a different lens to address the accompanying impact of the current pandemic. Whilst there are universally expected outcomes, some of the resulting measures for sustaining economies will vary. Nigeria will need to address some strategic dependencies to stem the tide:
- Mono-cultural Economy: An economy such as Nigeria’s typifies this, as its oil export accounts for over 90% and forms 80% of the government’s annual budget. The economic story in over three decades has never been more unilinear. In the face of the current pandemic and impact on world oil price average, economies are being constrained to look inward and re-assess trade terms.
- Stimulation of non-oil sectors: According to the Nigeria Bureau of Statistics (NBS), Nigeria’s non-oil sector contracted in Q2 2019. It grew by 1.64% in real terms during the period under review by 0.40% point, lower than the 2.05% recorded in the same quarter of 2018, and -0.83% point lower than the first quarter of 2019. Overall, this sector remains the main contributor to Nigeria’s GDP. Key contributions to the sector in Q1, 2019 were recorded from: Information and Communication, Mining and Quarrying, Agriculture, Transportation and Storage, as well as other services. How do we accelerate growth across these sectors?
- Informal Sector Participation: We currently have a large informal sector that is most vulnerable to the effects of the pandemic, yet, ironically,a significant contributor to the Nigerian economy; accounting for a substantial portion of employment and national GDP. According to the International Monetary Fund (IMF), the sector accounts for approximately 65 percent of economic activities in Nigeria. In sub-Saharan Africa, the informal sector contributes about 72 percent to employment, excluding agriculture. The current pandemic has dealt a significant blow on the sector and it requires dire oxygen! A social development framework aimed at accelerating growth, creating access, upskilling, and connecting services in the sector with structured platforms would ease the current impact and sustain overall development in the long run.
- Local Content: As a policy direction, this has been touted as one of the ways of encouraging productivity and inclusiveness locally. The agenda to drive local content will require a focused attempt at building local capability, an enabling environment, policies to encourage participation and local infrastructure to drive growth. This can increase economic and industrial growth as well as general spillover effects appreciably
- SME Stimulation: Efforts at stimulating local economies to be prioritized over federal, as SME programs guarantee quicker implementation and supervision in the post-COVID-19 economic recovery plan. The segment constitutes the heart and nerve of African economies, hence deserves the utmost attention. Any effort contrary will leave the nation in a contrived state of recovery at best; cathartic, to say the least!
- Digitization Agenda: There is a strong need to leverage Science, Technology, and Innovation (STI) to build a knowledge-based economy. In the age of world wide web, we are a connection away from our neighbour in Honolulu. Digitization brings the world to our doorsteps and increases growth linkages and connections beyond our wildest imagination. Beyond the E-Government Plan, we require a more robust policy and framework that engenders a seismic shift in ICT development. Re-imagine Nigeria in June 2020, with a digital economy as big as its South Africa counterpart, what level of impact would that have had at this point during Covid-19? The current rural and urban divide in digital penetration would have been much thinner, mobile banking indices in the rural areas would have been more encouraging.
While the road ahead is far more daunting than ever, we need to find our true North as a nation. Prioritize our development goals, focus on human capability development index as a way of driving sustainable growth. Our need for change is not to just be ready for another global disruption, but to insure the average populace against suburbia and squalor.
– ‘There is a popular saying: ‘The sibling you ignore today, becomes a source of worry tomorrow.’ #MAKEITCOUNT