By Dada Ahmed
Nigeria’s economy has been forecast to be amongst the top 20 largest in the world by 2030, according to a recent report of Bloomberg — one of the world’s leading financial services firms — on the new world economic order.
Nigeria is ranked 19th, just above Netherlands, which is graded 20th in the recent forecast report.
Recent global economy reports have placed Nigeria as one of the fastest growing economies in the world; reports which tallied with 2014 re-based Gross Domestic Product (GDP) figures that placed Nigeria as the largest economy in Africa, pushing South Africa to the second position.
Cheering as the Bloomberg’s survey may look; leading economic indicators suggest that the Nigerian economy may be heading for an economic recession, unless urgent steps are taken to avert a repeat of the1980 recession.
Economic experts say that an economic recession implies a fall in real GDP, adding that it also connotes a period of negative economic growth for two consecutive quarters in an economy.
They say that economic recession is primarily caused by a fall in aggregate demand — total spending on goods and services — due to several factors such as financial crisis, rise in interest rates or fall in asset prices, among others.
The experts maintain that the main features of a recessive economy include higher interest rates, which reduce borrowing and investment; falling real wages and falling consumer confidence.
In an economic recession, they add, credit crunch provokes a decline in bank lending and, therefore, lowers investment.
It is also a period of deflation with falling prices, which often encourages people to delay spending, while causing deflation to increase the real value of debt; thus, making debtors to be worse off.
Although this development causes appreciation in currency exchange rates, it often makes imports expensive, while reducing demand for exports.
Mr Suleiman Muhammed, a Lokoja-based economic analyst, said that although the Nigerian economy could not be said to have gone into recession per se, it was very necessary to introduce some proactive measures to forestall the development.
This is not to suggest that President Muhammadu Buhari’s administration is not mindful of the repercussions of the imminent economic recession, as it is taking the necessary steps to avert it.
For instance, the Vice-President, Prof. Yemi Osinbajo, said that plans were underway to create a 25-billion-dollar fund with public and private financing to modernise the country’s infrastructure and avoid an economic recession.
The situation has provoked the government and enlightened observers to ponder on practical ways of saving the nation from the looming economic recession.
For instance, President Buhari, in his address at the conference of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), called for more private investments in the agricultural sector of the economy.
He said that increased investments in the agricultural sector remained the best way to unlock the country’s economic potential and curb its excessive dependence on oil revenues.
“Growing our own food, processing what we produce, becoming competitive in export markets and creating jobs all across the economy are crucial for our national security,” he said.
Buhari, who noted that the agricultural sector was the largest contributor to the country’s GDP, pledged that his administration planned to make Nigeria self-sufficient in rice production within the next two years.
The president said that since Nigeria was one of the world’s largest producers of agricultural products like cassava, improved investments in agriculture would boost the country’s exports and lessen its dependence on proceeds from petroleum.
Buhari said that enhanced private-sector investments in agriculture would also facilitate the fulfilment of government’s efforts to diversify the economy, adding that Nigeria had immense agricultural potential.
His words: “Nigeria has huge agricultural potential with over 84 million hectares of arable land, of which only 40 per cent is currently cultivated. The country also has some of the richest natural resources for agricultural production in the world.
“The urgency of unlocking our agricultural potential is even more pertinent because Africa spends about 35billion U.S. dollars annually on food imports. Agriculture should no longer be treated as a development programme; agriculture must henceforth be treated as a business.’’
However, Dr Tunde Arosanyin, the National Technical Adviser, All Farmers Association (AFAN), underscored the need for increased investments in the agricultural sector, saying that Nigeria was facing several economic challenges which included decline in oil prices and over-dependence on imports.
He said that the other challenges were poor infrastructural facilities such as electricity, roads and water, which inhibited secondary production and industrial growth, as well as corruption and insecurity.
He stressed the wisdom in addressing the challenges pragmatically, insisting that at the moment; Nigeria ought not to be importing products like textiles, biscuits, fruit juice, rice and sugar.
Arosanyin added that considering the vast agricultural potential of the country, it should be able to produce these products, among others, locally.
“It is unfortunate that the Nigerian economy is driven by proceeds from crude oil in the last 40 years.
“The way forward is for the present administration in the country to tackle the problems head-on by focusing its attention on the structured development of agriculture, solid minerals and tourism sectors.
“In driving this policy, the Federal Government should invite technocrats and tested professionals with proven track record to generate a blueprint on how to develop and diversify the economy,’’ he said.
Arosanyin, however, emphasised that the government’s agricultural policy include immediate, medium-term and long-term actions and programmes.
He said that if agriculture sector was well-funded and properly developed, the government’s efforts to avert any economic recession would be fruitful.
He argued that agriculture, apart from solving hunger and food security problems, was also capable of generating over millions of job opportunities; thus reducing the menace of unemployment.
Sharing similar sentiments, Mr Devakumar Edwin, the Group Executive Director of Dangote Group of Companies, said that tangible efforts should be made to reduce the effects of the collapse of crude oil prices in the international market on the nation’s economy.
He stressed the salvation of the Nigerian economy would largely depend on increased agricultural production and local manufacturing.
Edwin underscored the need to fully exploit the vast agricultural potential of Nigeria in efforts to restructure the national economy.
He called on entrepreneurs to invest in agricultural and manufacturing projects to speed up the country’s economic growth.
All in all, analysts believe that increased investments in Nigeria’s agricultural sector will spur the country’s development, while ensuring its economic revival and guarding against any economic recession.