| The global financial meltdown over the last two years | | | | resurgent Nigeria signed the UN Millennial Declaration |
| has had its predictable share of consequences on the | | | | for universal basic human rights by 2015 and adopted |
| Nigerian economy, but nothing has been more | | | | ambitious plans for accelerated economic growth in a |
| unexpected than the impact on the banking sector. | | | | time-bound manner. A number of positive |
| When CEOs of the country's top banks collectively | | | | developments have occurred in the Nigerian economy |
| appealed last year for government intervention to | | | | since 2001: |
| mitigate recessionary effects on the Nigerian financial | | | | |
| environment, it was a moment of national shock. Up | | | | - Under former President O Obasanjo, the |
| until then, the Nigerian Central Bank had been | | | | government embarked on a massive privatisation |
| enthusiastically assuring of the sound health of this | | | | drive, disinvesting in several major oil, steel, mining |
| sector. While none of the country's 25 major banks | | | | and port operations. |
| have officially asked for help, there are apprehensions | | | | - International reserves saw healthy growth from $41 |
| that Nigeria might be tempted to take the bailout cue | | | | billion in 2006 to well over $52 billion in 2009. The |
| from the US and end up partly owning some of | | | | average inflation rate dropped from close to 18% in |
| these institutions. The global example of state | | | | 2005 to 11% in 2008. |
| intervention in failing banks evokes grave misgivings in | | | | - Nigerian lawmakers enacted the Fiscal Responsibility |
| Nigeria, where banking operations were marked by | | | | Bill in 2007, institutionalising the deregulation of oil |
| extensive mismanagement and political interference in | | | | prices. A Public Procurement Bill was also passed the |
| the pre-liberalisation era. The prospect of government | | | | same year. |
| re-investment is therefore understandably upsetting | | | | - In 2004, a bank consolidation plan was executed to |
| for many Nigerians, and not just in the matter of | | | | strengthen financial institutions and improve their |
| banks. | | | | credit capacity for private sector businesses. |
| | | | | - Nigeria's bulk of outstanding foreign debt was |
| For most of its existence since independence in 1960, | | | | conditionally waived off by the London and Paris |
| economic development in Nigeria has been | | | | Clubs, allowing for increased government spending on |
| determined by state planning and direct government | | | | poverty alleviation programmes. |
| participation. Inclement policies pursued by successive | | | | |
| military regimes amid the rough of tumble of Nigeria's | | | | Perhaps the most optimistic of recent signs have |
| chaotic past resulted in massive macroeconomic | | | | been observed in the non-oil sector, which doubled |
| imbalances that are still inherent to Nigeria. The | | | | since 2001 and currently accounts for 7% of GDP. |
| country's historically agrarian economy was | | | | Another success story is the revival of agriculture |
| transformed almost overnight with the discovery of | | | | and its growth to 42% of GDP by 2008. Although oil |
| vast oil and gas reserves, forcing a culpable | | | | continues to be the mainstay of the Nigerian |
| overdependence on hydrocarbons that eventually | | | | economy, contributing 85% of all revenues, recent |
| blocked economic diversification. The oil boom of the | | | | governments have wizened up to the idea that the |
| 1970s brought further devastation to agriculture and | | | | country's tall ambitions cannot be fulfilled without |
| traditional livelihoods and ushered in massive | | | | rapid economic diversification. The answer, given the |
| unemployment and food shortages across the | | | | country's abundant human capital and natural |
| country. Human development indices had plunged to | | | | resources, is rapid business development in the SME |
| among of the lowest in the world by the turn of the | | | | space. Nigeria has a great opportunity and an even |
| 20th Century, and the ‘Nigerian Paradox' of | | | | greater obligation to foment an enterprise revolution |
| extreme poverty despite substantial national wealth | | | | that will radically transform its economic landscape. |
| was born. Even today, 54% of Nigeria's 148 million | | | | |
| people live in extreme poverty on a daily income of | | | | The following are some of the broad parameters |
| less than $1. | | | | Nigeria must be guided by while formulation economic |
| | | | | policy interventions in this regard: |
| Government intervention in the economy during | | | | |
| military rule was mostly characterised by sporadic and | | | | - Creating a central body with responsibility to |
| often ill-informed policies that delivered meagre, if | | | | coordinate all policies relating to start-ups and existing |
| any, results. The IMF-funded Structural Adjustment | | | | enterprises. |
| Programme (SAP) of 1986 was one of the first | | | | - Creating a mass base of viable enterprises across |
| attempts to relax decades of economic regulation. | | | | the non-oil economy by promoting private sector |
| However, there was little domestic consensus on | | | | equity participation. |
| measures outlined in the programme and the tough | | | | - Reinforcing micro-finance institutions to enhance |
| market reforms that the state of the economy | | | | loan-disbursement capacity for small businesses. |
| demanded never really came through. Bureaucratic | | | | - Cutting down on high operating costs with tax |
| incompetence and corruption were largely to blame | | | | breaks and financial incentives directed at |
| for this bad experience in reforms which also strained | | | | entrepreneurs. |
| Nigeria's relations with international financial | | | | - Removing institutional deterrents that lead most |
| organisations including the World Bank. Some positive | | | | new and emerging enterprises to operate in the |
| signs emerged in the mid 1990s, when trade | | | | informal economy. |
| liberalisation brought down tariff rates and import | | | | - Improving technical support for rural enterprises |
| dependence while opening up the economy to | | | | that continue to operate using outdated practices. |
| foreign investors. Further, Abuja revoked laws | | | | - Improving entrepreneurial productivity through |
| allowing monopoly public sector enterprises in | | | | tertiary skills development and vocational training |
| petroleum, telecommunications and power to | | | | programmes. |
| encourage private participation in important areas. | | | | |
| These measures together helped push GDP growth | | | | Given the vagaries of its economic history, Africa's |
| up to 2.5% between 1993 and 1997, reversing an | | | | second largest economy faces tremendous hurdles in |
| average decline of 2% registered over earlier years. | | | | securing a better place for itself in global rankings. |
| However, the recovery came at the price of low | | | | Nigeria has not had a particularly impressive track |
| growth in the non-oil economy, which continued to | | | | record in terms of timely economic intervention, as |
| flounder amid falling demand and low liquidity. | | | | the gathering banking crisis demonstrates. What |
| | | | | Nigeria needs today are aggressive, pro-active policies |
| The peaceful transition to civilian governance in 1999 | | | | that have the full benefit of both its past |
| brought with it relative political stability and paved the | | | | experiences and its future aspirations! |
| way for a more aggressive set of reforms. A | | | | |