After so many years, Nigeria is still listed as a third world country (developing country) while countries like India, Malaysia, Singapore and the likes of china have evolved from being a third world country to becoming part the of first world countries.
Nigeria is a country blessed with both human and natural resources but we have failed to translate our resources to wealth which have led to majority of our populace living in abject poverty. Corruption, lack of power, poor infrastructure, unemployment, inflation, devaluation of national currency, over-dependence on oil, poor management, poor policy formulation and implementation to mention but a few has led to the fall of our economy.
Nigeria has experienced its first ever recession which started early 2016 and has been battling recession ever since its emergence. More than five million people became unemployed in 2016 and more than half of the Nigerian populace is living in abject poverty. Citizens are deprived of basic amenities such as water, good roads, good educational system, good infrastructure, medical facilities etcetera.
The republic of Nigeria used to be the largest exporters of cocoa which was beneficial to the economy before the discovery of oil which improved the economy as well; as a result of over dependence on the oil sector, other sectors in the economy collapsed which is gradually killing the economy more and more. As we all know, every problem has a solution. Below are the problems of the Nigerian economy as well as the way forward.
The problems of the Nigerian economy include the following:
Corruption in Nigeria has become disheartening as it has eaten deep into every fiber of Nigeria’s existence. It has negatively influenced the labour market as every citizen wants a white collar job as it is believed that having a white collar job will bring more money. No one wants to be a farmer but everyone wants a white collar job to make fast and dirty money through dirty means such as bribe, redirection of public funds allocated for provision of basic amenities, building of infrastructure, evolution of states etcetera. Corruption is not only in politics anymore; it is also in the public and private sector in the economy.
· Devaluation of the Nigerian currency and inflation
Naira continues to weaken daily against the other currencies scaring foreign investors who want to invest in the country’s stock and bond and it also affects the business of those involved in foreign trade. If naira has value, it will boost foreign trade and strengthen the currency and if the currency is weak, it makes export expensive and causes inflation domestically. Devaluation is beneficial to countries that are export driven. The Nigeria we know does a lot of importing than exporting. Devaluation is making the rich, richer and the poor, poorer, leading to the increase in the price of goods and services throughout the country which is known as inflation.
· Poor policy formulation and implementation
Policies are formulated often in Nigeria but are failed to be implemented properly. Each government coming into power formulate its policy, agenda, goals and what it wants to achieve during its administration but fails to continue with the policy of the previous government in addition their own policy formulated. Lack of continuity in government policies has greatly affected the economy as most policies made do not support the growth of the economy. For a policy to be tagged as an effective policy it has to attain, produce and realize its goal and objectives.
· Over dependence on the oil sector
The over dependence of Nigeria solely on the oil sector is crumbling the economy. Other sectors of the economy such as agriculture, mining, forestry, natural resources industries and energy are greatly neglected as it lacks attention from the government, local and foreign investors. The country will be richer and the economy will perform greatly if other sectors are given attention.
· Underdevelopment of natural and human resources
The growth of Nigeria’s natural and human resources is stunted as result of mismanagement of our resources by our corrupt and incompetent leaders. As we were unable to develop our human and natural resources our economy fell into recession. For our economy to excel greatly, we must work on developing our resources to its peak.
· High interest and tax rate
The current interest rate in Nigeria is 26.78% – 28% which is extremely high scaring off potential investors and affecting existing investors which is not favourable to the economy. With high tax rate, investors do not get enough benefits from their businesses which result in poor investment and as well causes high rate of unemployment in the country which is affecting the economy.
The way forward for Nigeria’s economy.
· Encouraging export and minimizing import of goods
Exporting of goods should be more than the goods imported into the country. Nigeria has many resources; these natural resources should be utilized and exported to generate revenue which will boost the economy and help the Nigerian foreign reserve. Importing of goods should be regulated and production of goods in the country should be encouraged as it will assist the growth of the economy and strengthen the Nigerian currency against foreign currencies.
· Diversifying the economy
Focus should shift from the oil sector to other sectors of the economy to generate more revenue and strengthen the economy. There are many resources not being utilized; utilizing other sectors will make the country richer and attract foreign and local investors.
· Reviving the manufacturing industries
Industries should be re-established to manufacture goods. These industries; if re-established will generate a lot for the country. It will create jobs and reduce the rate of unemployment and make Nigeria an investment ground for investors and create opportunity for foreign trade.
· Moderate interest and tax rate
Interest and tax rate should be lowered to attract foreign and local investors. The tax system should be reviewed so that entrepreneurs starting businesses will benefit, companies will be set up and jobs will be created which will assist in reducing the unemployment rate.
· Proper policy formulation and implementation
Favourable policies should be made and implemented to boost the country’s economy.
For Nigeria to improve its economy; it should find solutions and follow up the solutions to revive its economy.